Capital Markets Corporate

June 11, 2021

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

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Klarna insists buy-now-pay-later better than credit cards  

Klarna boss Sebastian Siemiatkowski has claimed its buy-now-pay-later model is cheaper for consumers than credit cards and stops them getting into deep debt. The platform doesn’t charge interest or late payment fees and while credit cards offer big borrowing limits, Klarna gives credit on a purchase-by-purchase basis. However, Citizens Advice warned earlier this year that these kinds of products, where usage nearly quadrupled to £2.7bn in 2020, can be a slippery slope into debt and has called for greater regulation. (From BBC, 8 June 2021)

AI increasingly leveraged to scan corporate statements for trading insight 

Fund managers are increasingly using AI to mine corporate reports for profitable trading signals. According to S&P Global, the current average length of an annual report is the equivalent to a 240-page novel, and the swelling volume of corporate statements means that no one can realistically consume everything. The tool to identify tradable signals from text content is known as natural language processing (NLP), an increasingly popular field of artificial intelligence that involves teaching machines how to read and understand the intricacies of human language. (From Financial Times, 8 June 2021)

El Salvador becomes first country to adopt bitcoin as legal tender 

El Salvador has become the first country in the world to adopt bitcoin as legal tender. Its congress approved President Nayib Bukele’s proposal to embrace the cryptocurrency in a bid to promote financial inclusion, investment, and economic development. Alongside the US dollar, the cryptocurrency’s use as legal tender will become law in 90 days and the bitcoin/dollar exchange rate will be set by the market. Salvadorans will be able to pay their taxes in bitcoin and every economic agent will be required to accept the cryptocurrency as payment unless they lack access to the necessary technology. (From The Guardian, 9 June 2021)

Dealmaking tops $500bn for third successive month 

Global deals topped $500bn for the third month in a row, according to data from Refinitiv. $533bn worth of deals were announced in May, meaning total M&A activity for the first five months of the year totalled $2.4trn, a record total for that period. Hot M&A activity may be partly driven by firms capitalising on depressed valuations as a result of the pandemic. (From Private Equity News, 4 June 2021)

Taxman steps up efforts to recover fraudulent furlough cash 

The taxman is stepping up its efforts to recover cash obtained illicitly. More than £1bn of fraudulent or mistakenly claimed furlough cash is set to be recovered over the next two years by HMRC. The tax authority is also launching several criminal investigations into people thought to have obtained cash illegally from the furlough scheme. (From City A.M., 9 June 2021)

 

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