Market & Corporate Update 2021.02.22

Filippo Caretti & Daniel de Bruijn

Feb 22th, 2021 BSFS Committee Meeting Market (1/3) US Markets

Interest rates going higher, do we need to worry? ● Real yields on 10-Year Treasuries -0.77% ● Real yields on 30-Year Treasuries 0.026% ○ Possible causes/ Risks Rising rates weights on stocks ● Major indexes ended mostly lower in this holiday shortened week ● Fast-growing tech stocks suffer from increase in long-term interest rate, while bank shares outperformed growth stocks “Green Bubble” ● Enthusiasm for climate-friendly investing and analysts warn that investors are pumping cash into anything that looks “green” ● ”tectonic shift” towards sustainable energy Market (2/3) European Markets

General Overview(Feb 19) ● Core Eurozone Bond yields rise, with 10-year German Bund yield at its highest level since June ● Higher Bond yields hit stocks across , offsetting the boost in confidence gained by the companies encouraging quarterly earnings statements

Covid News ● UK and Switzerland set to ease lockdowns ● European commission struck a deal with another 200 Mn doses with Pfizer and BioNTech, that have yet to deliver the 10 Mn due in December Market (3/3) Asian Markets

Japan ● Japan vaccination campaign started, leading to an optimistic view about a pickup in economic activity ● Nikkei climbed above 30,000 ● PBOC drains RBM 260 Bn from financial system ● CSI 300 -0.5% ● Lunar New Year Complicates the economic signals ○ Consumer spending was strong: consumer-driven activities reported higher sales ○ Travel plummeted in what is normally China’s peak travel season -71% Corporate (1/3) Global chip shortage hits car supply chain

There is currently a global shortage of chips caused by:

● A lockdown-driven boom in games consoles, laptops and TVs

● A dazzling recovery in the 2H of 2020 in China’s car market

● US sanctions on chinese manufacturer SMIC provoked a surge in orders for TSMC, struggling to keep up w/ demand

Many car makers are being forced to wind down plants and slow down production (due to limited inventory (“just in time”)): chips in a car are essential (for power steering to anti-lock brakes)

● GM to close 3 plants, VW may produce 100k less cars in Q1, Ford could see up to $2.5bn in earnings disappear

The shortage is expected to continue into Q2 ‘21 and possibly even longer Corporate (2/3) European IPOs and SPACs

● The european market for initial public offerings has had its best start of the year since 2015

● Companies listing on European exchanges (including ’s) have sold €8.4bn through 16 deals YTD

● 70% of the equity sold was in companies that have benefited from the shift online during the pandemic

Examples of such flashy floats are Moonpig (card retailer), InPost (parcel locker), Auto1 (online car dealer) and Huuuge (mobile gaming company)

Also, the SPAC mania is coming to Europe, with Amsterdam emerging as one of the favourite cities to host new offerings ● Arnault (LVMH founder) and Mustier (ex-UniCredit CEO) launch a vehicle to invest in European financial companies, to be named Pegasus Europe, aiming to collect in the low hundreds of millions of euros ● European venture capitalist Klaus Hommels also launched a SPAC called Lakestar last week looking to fetch up to €275 million, targeting late-stage tech companies, to be listed in Frankfurt Corporate (3/3) Other corporate deals and events

● Online dating app Bumble went public with shares debuting at $76 (sold to investors at $43 just the night before), and raising $2.2bn. Total market cap sits at $8.2bn

● Vivendi plans to spin out Universal Music Group, leading the world’s biggest music company (home to stars including Lady Gaga and Kanye West) to be an independent entity. Vivendi’s board has set a minimum target valuation of €30bn for UMG

● News came out that in recent months approached Pinterest about a potential deal to acquire the $50bn social media company. Pinterest shares have risen 7 fold from the pandemic-lows. However, the negotiations were currently not active

Institutionalisation of Bitcoin: new institutions are opening up to the cryptocurrency

● Mastercard announced it would be moving cryptos directly on its network and BNY Mellon announced it would provide custody services for digital assets on the same platform as traditional securities ● Tesla bought $1.5bn worth of Bitcoin and started to accept it as a payment method for its cars ● MicroStrategy (enterprise software company) announced plans to sell $900mln in convertible debt in order to buy more Bitcoin (w/ 0% coupon)