Capital Market

✒ Some arguments on why sometimes losses matter for the central bank to play its role.

✒ US healthcare industry (among other industries) is showing distress in the loan as well as high yield bond market at times where interest rates are becoming much higher. The sector has been operated with high leverage built upon very profit margins, some of the companies are sinking into debt distress as they struggle to … Read More

✒ A short but nice summary of what happened at FTX so far. And I like the title of this article, as I also made the same joke before.

✒ A few points in the letter by Elliott Management worth noting:

✒ The US Dollar is a wrecking ball that is ruining everything.

✒ Some quotes of Mikkel Svenstrup, chief investment officer at ATP (a major investors in private equity funds) in view of the trend that buyout groups are increasingly selling companies to “continuation funds” (different funds that is also under the control of the same private equity group, aka themselves) and to peers: “This is the … Read More

✒ Rising interest rates will likely push more zombie firms into bankruptcy, and it will push more healthy firms toward zombie status. If zombies start dying off, it could be painful in the short run. But it might present acquisition opportunities for stronger companies too.

✒ Zero interest rates created an environment that makes “zombification” of companies, defined as businesses whose operating profits are persistently lower than their interest payments, possible. This is because when interest payments are low, creditors are encouraged to renew financing to unproductive companies to keep these zombies going as investors are desperately hunting for returns … Read More

✒ Something strange keeps happening in the big business of block trading: share prices fall ahead of the large sales more often than not. Was this due to leaking of information by investments banks, employees, or other insiders? Or was it linked to the expiration of lockup periods which can be known via public sources? … Read More

✒ One unintended consequences of quantitative easing is the issuance of trillions of bonds by US companies in the BBB-rated category. Buyers searching for yield pile heavily into lower rated — but are still investment grade — debts. As a result of such surging demand, some of these “prospective fallen-angels” have even lower borrowing than … Read More

✒The FSB warns that the cryptoassets markets are fast evolving and could reach a point where they represent a threat to global financial stability. What worries the FSB might be summed up in four L-words: legality, leverage, liquidity and leakage.

✒ Gradually, then suddenly.

✒ Some prices paid may be unjustifiably high, and founders’ departure after vesting periods may leave competition and innovation stifled. But The Economist has summed it up nicely: “Fintechs are inexorably gaining critical mass: their value has risen to $1.1trn, equivalent to 10% of the value of the global banking and payments industry, and up … Read More

✒ The author proposes to call it “credit money” instead.

✒ Media is a hard business, so it’s important to let investors know that the company is not just a media company. In the filing, on the page which shows “comparable company benchmarking analysis”, the company is put side-by-side with The New York Times (newspaper publisher), Etsy (e-commerce marketplace), Taboola (marketing tech company), Zynga (gamemaker), … Read More

✒ Shares in Deliveroo Holdings dropped as much as 30% on their first day of trading in London. Possible reasons: Dual share structure: shares held by CEO Will Shu have 20 times the voting power of others Regulatory concern: the Supreme Court ruling on Uber’s case means Deliveroo’s “riders” may end up costing as much … Read More

✒ The Cantillon effect in action?

✒ Apeira is creating “venture synthetics” and plan to allocate 30% of its capital betting against overpriced start-ups. This product doesn’t require company’s approval to be created because Apeira is not actually buying or selling the underlying stocks. It is simply an instrument where people are taking opposite sides of an outcome, which can be … Read More

✒ CFTC’s report recommended common definitions and standards for climate-related data, such as modelling and calculation methodologies of carbon pricing. It also called for further financial innovation in environment-related derivatives (such as water futures) offered by exchanges and clearing houses. Whether these derivative products in themselves are ESG-friendly or not, they do help support the … Read More

✒ Pouring $6bn into 5% stakes in Japan’s 5 biggest trading houses. While US stocks are looking expensive and dividends are falling, these Japanese businesses look comparatively cheap (4 out of 5 trading below book value), are paying reliable dividends, and can serve as a hedge against USD decline. These trading houses are shifting from … Read More