Notable market news this past week (2-Jul-23)
Here is the Skeptivest roundup of the latest market headlines for the week
🏦 One of the worst years for Mergers and Acquisitions (M&A) and Initial Public Offerings (IPO)
A reflection of poor investor sentiments, whereby a cautious "wait and see" approach is adopted over deploying of capital and pursuit of growth
Down $1.3trillion (42%) year on year: Deal volumes continue to decline in 1H 2023 are are at levels similar to the start of the pandemic. 1H2023 marks the second worst first half for IPO volumes since 08 financial crisis
Contributing factors: (i) Inflation, (ii) higher cost of capital (especially with recent interest rate hikes), (iii) geopolitical tensions and (iv) mismatch over pricing expectations between investors and companies are key factors contributing to the downward spiral in deal activities
💰 The SEC has deemed the spot Bitcoin ETF applications from BlackRock and Fidelity as inadequate
Optimism that was priced in arising from BlackRock's strong track record with SEC application is likely to reverse
The Context: So far, the SEC has only approved crypto ETFs based only on bitcoin future contracts. The SEC has been hesitant to grant approval for a spot Bitcoin ET
SEC claims Inadequate Surveillance-sharing agreement: Applicants provided insufficient details regarding their plans for implementing a "surveillance-sharing agreement." This agreement aims to prevent fraud and manipulation by ensuring that the fund issuer actively monitors market trading activity, clearing activity, and customer identity
Following BlackRock's filing for a spot ETF in mid-June, the price of bitcoin experienced a significant upward surge. After all, BlackRock had a strong track record, having the SEC approved 575 of its applications and rejected only 1. This rally propelled bitcoin from below $26k to reach one-year highs surpassing $31k. It is thus no surprise that we saw bitcoin plunging >3% within mins of the news
☕️ Quick fire happenings to note
- Temasek cashing out on SIA: Temasek is selling 1.85% stake in the airline or c.S$400m worth of shares. Interestingly, it's roughly similar to the losses Temasek experienced from FTX. A sign that the stock is probably overvalued given its recent rally due to its recent good performance
- Apple's market value surpassed $3 trillion: Making Wall Street history and showcasing the unstoppable dominance of big tech in the equity markets. Many however are questioning its sustainability especially amidst global economic challenges. Nevertheless, this also indicates the market's view of Apple being a safe haven due to its durable revenue streams and massive user base
- Semiconductor stocks fell: Following a report by the WSJ, it was revealed that the Biden administration was considering potential additional limitations on the export of AI chips to China. Nvida's CFO said the company is aware of the looming restrictions, and existing demand should be sufficient to stem off any "immediate material impact"
- FTX might be back: FTX is reportedly undergoing a reboot, as CEO John J. Ray III has initiated the process of seeking interested parties, according to the WSJ. Despite allegations of fraud, customers and investors have shown a strong affinity for FTX's business model and product
- Corporate diversity: The US Supreme Court ruled that colleges cannot consider race in admissions after claims against Harvard that it discriminated White and Asian American applicants by giving Black, Hispanic and Native Americans a boost in consideration. This could have a ripple effect into other adjacent spaces like corporate diversity, especially since diversity is a big factor in ESG considerations
