Entries tagged with “investment-research”

Articles

19 articles found for investment-research:

  • Fertilizer Sector on Fertile Ground in 2022

    Fertilizer prices have considerably increased over the last year. Growth was driven by higher demand on account of economic recovery in 2021 after the pandemic, jump in raw material prices (especially for natural gas), ban on exports by major producers such as Russia and China, and geopolitical tensions.

  • Virtual Estate - An Illusion?

    Metaverse is a next-generation system that delivers content and services, probably why it is referred to as the evolution of the internet. Just as radio served as a platform for music and audio content, metaverse will be the foundation for web browsers with organized data and information on web pages and platforms.

  • Tokenization: From Brick to Blockchain

    The real estate industry is swiftly adopting tokenization, and conventional real estate institutions are working with technology suppliers to investigate the tokenization of loan or equity. Increasing investor access to high-quality real estate assets is anticipated to revitalize real estate investment as more technology-driven real estate initiatives come to fruition.

  • IFRS 17: A Move Toward Standardized Insurance Reporting

    After years of intensive discussions and overcoming major concerns of the insurance industry, the International Accounting Standards Board (IASB) issued its new insurance contracts standard IFRS 17 (formerly known as IFRS 4 Phase II), effective for annual periods beginning on or after January 1, 2023. Insurance companies using IFRS standards started reporting as per the new standards in 1H23 and 9M23 with one year restated comparative information. Around 450 insurers are listed under IFRS, with an asset base of USD 13 trillion.

  • USMCA - A Three-Year Retrospective and its impact

    The US–Mexico–Canada Agreement (USMCA), implemented in 2020, replaced North American Free Trade Agreement (NAFTA) and has significantly benefitted North American trade. It led to a substantial surge in trade, with North American trade volume exceeding USD 1.5 trillion in 2022 led by double-digit growth in trade since 2022. This free trade environment created 9.5 million jobs, and the three countries now account for one-third of the world's GDP. Investments in the region posted remarkable growth, with capital investments increasing 134% to reach USD 219 billion. However, USMCA faces challenges, such as trade disputes, and public opinion on international trade has shifted with 66% of Americans now supporting restrictions on imported foreign goods. The agreement's future will depend on addressing these issues before the joint review in 2026. If successful, the agreement could boost trade relations, enhance digital trade, and promote economic growth in North America.

  • Biases and Investor Choices: A Behavioral Finance Perspective

    Behavioral finance is a fast-growing field that focuses on the complex interplay between human psychology, investor behavior, and financial markets. By examining the impact of psychological elements on investor conduct, specialists in behavioral finance aim to explain why financial markets behave in a certain manner, and how investors can take better decisions A plethora of cognitive elements, including but not limited to overconfidence, confirmation bias, herd mentality, and loss aversion, can significantly influence investment decisions. Gaining insight into these biases can offer valuable perspectives on market trends and support investors in making decisions that are better informed.

  • The Current Real Estate Turmoil in China

    China’s real estate sector is in turmoil due to various factors, ranging from low investment to declining trade numbers. It has far-reaching implications and is threatening the country’s economic growth. Therefore, the government has undertaken certain policy measures to limit the damages. However, a more extensive plan is needed to deal with this issue effectively.

  • Reshoring in US: Need for Locally Resilient Supply Chains

    US companies are increasingly reshoring their operations from China in response to supply chain disruptions and global uncertainties. CEOs in the US are investing in emerging technologies to enhance productivity and gain a competitive edge. The reshoring movement aims to build locally resilient supply chains and mitigate future risks. By adopting reshoring, the US can strengthen its manufacturing sector, foster economic growth, and create sustainable jobs.

  • US Economic Slowdown – An Opportunity for India?

    As the US economy edges toward recession, equity investors are seeking opportunities in other countries. The focus is on emerging economies, specifically in Southeast Asia, and the main contenders are China and India. Both countries have positive and negative factors influencing investor decision. Which country would attract the bulk of the diverted investments is yet to be seen.

  • The Future of Internal Combustion Engine

    In 2021, the worldwide internal combustion engine (ICE) market was approximately worth USD 58,514.15 billion and is predicted to reach USD 93,615.18 billion by 2029, growing at a CAGR of 6.05% between 2022 and 2029 showing tremendous growth. It is likely to expand further as demand for passenger and commercial vehicles rise in both established and emerging markets. Electric powertrains are increasingly coupled with ICE to enhance vehicle fuel efficiency, which is driving industry development. The demand for ICE is growing exponentially in industries such as agriculture, construction, mining, and power generation. The global lack of EV infrastructure availability is partly responsible for the ICE market's growth.

  • Thematic Investing on the Rise

    Disruptive technology is constantly reshaping the world. Despite the pandemic-induced lockdown, seamless internet connectivity enabled access to a virtual world where we could work, shop, and even meet people. Due to mobility restriction, labor shortage, and supply chain disruption, manufacturers have turned to robotics. Breakthrough treatments and medical advances in healthcare have helped combat the pandemic crisis. Climate change has shed light on vehicle electrification and the shift to renewable energy. Consequently, technological advancements such as AI, machine learning, blockchain, robotics, and data analytics are gaining popularity. The benefits of these disruptions, or rather “trends” and “themes,” are manifold. These trends are increasingly changing the way investors manage their portfolios.


  • Shrinkflation in the US

    Shrinkflation is a form of inflation where companies reduce the product size, quantity, or quality to maintain or increase their profit margins. A common practice during high inflationary periods, shrinkflation is preferred when companies are hesitant to raise product prices amid rising operating costs. To avoid facing consumer backlash, companies sneakily practice shrinkflation, which, coupled with consumer ignorance, makes it hard to detect. Consequently, consumers may end up purchasing two packets of a product, for example, if its size is reduced by fourth. Thus, shrinkflation may not only help in maintaining margins but also boost sales. When accused of shrinkflation, companies may give several reasons such as health, environment, and better value addition. Inflation is transparent, but shrinkflation is underhanded and thus could be difficult to calculate and tackle.

  • NFTs in Gaming - Where Passion Meets Business

    The gaming industry has risen exponentially over the past few decades. From playing Pac-Man on a 4-feet tall arcade in late-1900s to enjoying 8-bit superhits such as Mario on smaller consoles and immersing in DVD-based action games, for instance, League of Legends, gaming has flourished over time. The Internet revolution accelerated the industry’s growth from a few billion to hundreds of billions of dollars at present. NFT is the new sensation in the gaming business. Supported by crypto capabilities, NFTs are set to boost growth of the gaming industry.  

  • DeFi – Revolutionizing Financial Markets

    DeFi has made considerable progress in a surprisingly short time that would contribute to a more transparent and accessible future in finance due to rapid technological developments. There are now over 4.5 million DeFi users worldwide, which is anticipated to reach two-digit millions in the immediate future. However, the technology seems to be in a nascent stage and is yet to be fully stress tested at scale over an extended period. While there are concerns over DeFi replacing the traditional financial system, experts suggest they can coexist and thus improve the global finance architecture and benefit the economy worldwide.

  • Capturing the Opportunity of Carbon Capture & Storage Technology in Petrochemicals

    The growing need for environmental sustainability has impelled petrochemical companies worldwide to look for ways to reduce carbon emissions and reach net zero emissions by 2050. Industry leaders globally have been collaborating on exploring carbon capture and storage (CCS) technology as a means to significantly reduce carbon emissions from their petrochemical plants. As this technology is in a nascent stage, companies that make an early entry in developing and investing in CCS and related infrastructure would provide good investment opportunities, considering they would largely benefit as CCS technology gets adopted across the petrochemical industry.

  • The Other Side of ESG Investing

    Environmental, social, and governance (ESG) factors play a critical role in investment analysis, actions, and recommendations. Globally, investors are looking at different methods such as positive or negative screening, green finance, thematic investing, shareholder engagement, and activist ownership to include ESG factors. Sustainable investing is the new buzzword for successful investing. However, various private ESG data providers use inconsistent scoring approaches or inappropriate constraints and assumptions. Lack of standardization and transparency makes it tough for investors and analysts to determine the effectiveness of ESG scoring. Additionally, companies having a low environmental score, owing to uncertain emissions reduction targets, but a high social and governance score may not be considered ESG compliant by a few market participants. This lack of uniformity has given rise to issues such as greenhushing and greenwashing.

  • Buy Now Pay Later: The Latest FinTech Disruption in Payments

    BNPL is a FinTech option that allows buyers to buy now and pay over a period of time. Unlike the regular loans, BNPL does not involve paperwork ­– customers can access it almost instantly using their smartphones. Besides helping customers raise credit easily and boosting the sales of consumer goods and other white goods, BNPL helps merchants to explore new borrowers. Accessing credit via BNPL is easy and hassle-free compared to a traditional loan; however, consumers must exercise utmost caution before using the BNPL facility as it is also a type of loan which must be repaid. The sector has faced intense scrutiny from regulators recently over awareness concerns. Nonetheless, BNPL’s future appears very bright.

  • US Pet Food Industry on the Rise

    Pet ownership increased during lockdown when people were confined to their homes. Pet humanization has led to owners treating pets as part of their family. Owners are increasingly concerned about their pets’ health and nutrition and are looking for high quality and nutrient-rich food products. Pet food manufactures have been quick to tap into this rising demand to develop organic, natural, and high nutrition products. According to the American Pet Products Association, pet food sales increased 19.3% year-on-year to USD123.6 billion in 2021. Large pet food and treat manufacturers are expanding their production lines to meet growing demand. The pet food industry has shown resilience during the recent economic downturn and is expected to grow further.

  • Disinflation – The How and Why of it

    In economics, fluctuations in inflation rates can significantly influence the financial landscape of businesses. While inflation tends to erode purchasing power, disinflation – a slowdown in the rate of price increases – presents a different set of challenges, particularly for companies seeking financing. As disinflation alters market dynamics, it can have positive and negative repercussions for businesses. Understanding these implications is crucial for navigating the intricacies of corporate finance and strategizing for sustainable growth.


Blogs

1 blog posts found for investment-research:

  • Founder’s Stock Sale — How Not to Turn it Into a 409A Nightmare

    A Founders’ Stock sale can have serious and far reaching implications on the pricing of stock options due to 409A provisions.
    While the extent of the impact can vary significantly, it’s important to understand when this affects companies the most as well as how they can structure such transactions to mitigate these effects.


Special Reports

42 special reports found for investment-research:

  • ESG: A Bumpy Road to Net Zero

    Achieving net zero by 2050 involves a complete change in how energy is produced, transported, and consumed. The green transition hinges on unprecedented deployment of available clean and efficient technologies by 2030. This would require a significant front-loaded capital infusion into green technologies, especially in key sectors such as automobile, electric utilities, mining, and oil & gas. As demand for green projects and products reaches new highs, limited availability of mining capacities and growing emphasis on sustainable procurement of raw materials have led to significant volatility in the prices of critical metals used in green technologies. Moreover, the green transition could lead to job shifts in some sectors in the short term. Therefore, the initial road to net zero is expected to be rather bumpy instead of a smooth transition.

  • Broadcom Inc. acquires VMware

    Broadcom (AVGO.O) announced its intention to acquire cloud-computing firm VMware (VMW.N) for $61 billion, along with assuming an additional $8 billion of the company's debt in May 2022. On November 22, 2023, Broadcom confirmed the completion of the acquisition. This strategic move positions Broadcom as a significant player in the infrastructure management software market.

  • High Yield – US Spotlight

    After recording a plunge in the US high yield bond returns in 2022, the Federal Reserve’s aggressive monetary policy stance to tame inflation proved crucial in driving asset prices in 2023. The possibility of a soft-landing, where the US Fed could afford to slowdown economy and avoid a recession, has favored higher-beta fixed income assets such as the US speculative grade corporate bonds. We observed this in 9M’23, where the US high yield corporate bond Index generated returns at ~6% whereas the US Investment Grade Bond Index remained flat. Barring Equity and Energy, the US high yield corporate bonds outperformed other asset classes like the US treasuries, gold, and metals. As recessionary fears subsided, spreads across all rating categories of the US high yield bonds (i.e., BB, B, CCC and lower) have tightened. However, due to higher borrowing costs, the number of High Yield Corporate Bond issuances remains below the five-year average. Notably, consumer discretionary and healthcare sectors remain challenged by multiple headwinds, such as muted consumer demand, pricing pressures, high labor costs, and rising input costs. The impact is witnessed from the fact that a major chunk of bankruptcy protection filings has been in these sectors. Overall, bankruptcies in YTD Aug’23 have surpassed 2021 and 2022 levels. We still see value in the real estate, materials, and utilities sector, which recorded relatively lower bankruptcies in 2023.

  • Microsoft – OpenAI Partnership

    Microsoft and OpenAI entered a partnership in 2016, with OpenAI committing to use Microsoft’s Azure as its primary cloud provider. Both companies saw the potential in collaborating and as a result, Microsoft started investing in OpenAI. After investing in OpenAI in 2019 and 2021, Microsoft further strengthened its partnership in 2023 with a US$10 billion investment.

  • US Housing Market Overview

    The surge in home prices in the US in 2021 can be attributed to a combination of factors, including the increased housing demand as owning a house became a priority post pandemic; a shortage of construction manpower leading to supply crunch; and favourable mortgage rates back then in 2021. However, the pandemic triggered uncontrolled inflation and in response to that the US Federal Reserve initiated a series of interest rate hikes, resulting in higher mortgage rates. As of the early months of 2023, new home sales have been on a decline, falling below market expectations through August 2023. This downward trend was also seen in the existing home sales in the country as homeowners who locked in low interest rates stayed put and were hesitant to list homes. Builders' sentiment began to erode in August, as the costs of mortgages, construction materials, and labor wages continued to rise. Mortgage rates are expected to remain above 6% for the rest of 2023, keeping sales volume low. Recent data indicates competition easing faster than normal in the US housing market on the loosening of inventory and home prices ticking down in Sep’23 as sellers slightly lowered their asking price. The US home buying activity is expected to be largely driven by the rising employment in high paying sectors and expectations that the Fed will start lowering interest rates in 2024.

  • M&A in Aerospace and Defense | Q3 2023

    The aerospace and defense (A&D) industry is highly competitive, with a limited number of major players. Consequently, mergers and acquisitions (M&A) activity in the sector is low, but when deals happen, they are often large and transformative. Recently, there has been a trend toward consolidation in the A&D sector, as companies look to gain scale and market share. This has been driven by several factors, including the rising cost of developing new technologies, the increasing complexity of defense programs, and the growing importance of global supply chains. M&A activity in the A&D sector is expected to remain strong in 2024, as companies look to consolidate their positions and gain access to new technologies and markets. Due to increasing importance of artificial intelligence and other emerging technologies in A&D, companies are looking for targets with expertise in these technologies to develop new products and services and improve their operational efficiency. Overall, the outlook for M&A in the A&D sector in 2024 is positive, as it can be a powerful tool for companies to achieve their strategic goals.

  • US Buybacks: Identifying Winners Amid Slowing Momentum

    Share buybacks have become the predominant means of corporate payout, surpassing dividends in the past two decades. The key driver for share repurchases include tax advantages, financial flexibility, and support for stock prices. In the last 15 years, the S&P 500 Buyback Index, which tracks companies with a high buyback ratio in the S&P 500, has outperformed the S&P 500 equal-weighted Index. However, buybacks fell by 22% in the first half of 2023 compared to the same period last year, as corporations reassess their capital allocation strategy in the face of slowing growth prospects. In this backdrop, we identify companies with a strong buyback track record, showcasing consistent free cash flows and a robust balance sheet that are likely to outperform the broader market in the current slowing repurchase momentum.

  • Unwinding the Policy - Japan’s Yield Curve Control

    The Bank of Japan (BoJ) has been using the yield curve control (YCC) as a monetary policy tool since September 2016 to maintain stability in the Japanese government bond market and achieve a consistent inflation rate of 2%. However, following the announcement of the October policy allowing the reference rate to rise to 1%, speculation has intensified, resulting in increased volatility in Japanese government bonds. This has led to discussions within BoJ about further potential YCC adjustments, as the bank could allow bond yields to cross 1% but at a monitored pace. This has triggered speculation about the potential end of YCC, which could lead to disruptions in sovereign bond yields, affect the Yen’s strength, and impact the performance of Japanese equity indexes.

  • China's Economic Slowdown - The Property Crisis as a Drag on Growth

    The slowdown in China can be linked to several factors, including the zero-COVID policy which aimed at curtailing the spread of the virus with China being one of last countries to withdraw the policy; poor consumer spending which was expected to inverse post the lift-off of the Zero-COVID policy and rising youth unemployment which narrowed consumer spending even further. The property sector, which accounts for about a quarter of China’s GDP and a major component of household wealth, slumped in the recent years due to its highly leveraged functioning pattern. This caused big players in the construction industry to default on debt obligations with majority of it being offshore bonds. The property sector crisis spilled over other sectors of the economy, such as the financial sector which faced the risk of contagion and systemic instability; the industrial sector that faced the risk of overcapacity and deflation; and the consumer sector faced the consequences of lower consumer confidence and spending. The slowdown had significant implications on the global economy, trade, investment, and innovation, as well as for China’s domestic stability and development goals. The IMF recently lowered its growth projections for China, putting it at 4.2% in 2024 and about 5% this year. Moreover, rating agencies downgraded outlook on China's government credit ratings to negative from stable. To support an economic recovery in 2024, the Chinese government pledged to spur domestic demand, resolve the country’s spiraling real estate crisis, expand high-level foreign investments, diffuse risk related to local government debts, and prioritize the development of strategic sectors. The government also emphasized on strengthening macro policies, while continuing with its proactive fiscal policies and prudent monetary action.

  • India’s Electric Vehicle Transition Roadmap

    India envisions electric vehicles (EVs) dominating its future roads. Driven by a shift in global climate policies, consumer preference for environment-friendly transport options, and an expanding charging infrastructure network, the EV sector has grown from ~0.5% in CY2018 to ~6.3% by the end of CY2023. The government is targeting 30% EV penetration by CY2030, with volumes set to cross annual sales of 10 mn units. The growth is contributed by the E4W segment with ~2% adoption (CY2023) and the E2W segment with ~5% adoption (CY2023). Traditional gasoline-powered car manufacturers are working on pivoting their models to electric and hybrid cars, with plans to launch more electric variants. The government has introduced various targets and initiatives for the EV industry to accelerate the pace of adoption.

  • US Regional Banks’ Crisis is Far From Over

    US regional banks continue to grapple with the same underlying problems that triggered the crisis, i.e., valuation losses on fixed-income investments, increased cost of deposits, and high levels of uninsured deposits. Increased deposit outflows tightened the liquidity of the banks, making them more reliant on borrowings from the Federal Home Loan Banks and Bank Term Funding Program facility. Moreover, regional banks have high lending exposure to commercial real estate, making them vulnerable to significant headwinds faced by the sector.

  • Hearing Aid Market: Valuations are Poised for a Rebound

    Hearing loss is a major health concern globally, with over 1.5 billion people experiencing some degree of hearing impairment at the end of 2022 according to Amplifon. Among them, an estimated 430 million individuals require rehabilitation, and this figure is projected to reach 700 million by 2050 due to factors such as increased life expectancy and high noise exposure. Untreated hearing loss poses substantial health risks contributing to cognitive decline, depression and falls. This issue carries a staggering global annual cost of approximately 1 trillion US dollars, including health sector spending, lost productivity and associated social costs. Despite these implications, the adoption rate of hearing aids remains low, standing at around 37% in high-income countries and between 5% and 10% in emerging economies. 

    The post-lockdown period in 2021 witnessed a surge in ENT clinic visits, coinciding with a recovery in surgical rates and increased demand for hearing implants. The adoption of smart hearing aids has increased considerably, propelled by factors like rising noise-induced hearing loss, heightened awareness and targeted marketing programmes. The integration of digital technology is dynamically shaping the hearing aid market by responding to demographic shifts and technological advancements, and launching innovative products combining cochlear implants and hearing aid technologies. These developments, coupled with attractive valuations, present profitable opportunities for industry participants.


  • Global Fertilizer Industry: Emerging Stronger Post-Plunge

    The global fertilizer industry witnessed significant challenges during 2022 due to the high natural gas prices. The key raw material got costlier because of supply chain bottlenecks arising from the Russia–Ukraine conflict. The worldwide farmers’ affordability took a hit despite an increase in crop prices and hence the fertilizers’ demand suffered. The industry is on a path to recovery as the natural gas prices pull back from their peak and the long-term drivers such as population and economic growth remain resilient.





  • India's EMS Sector in Full Momentum

    COVID-19 pandemic and higher China dependency led to supply chain disruptions in electronic components and finished goods. Consequently, the global electronic manufacturing giants reduced dependency on China by shifting their manufacturing bases to countries such as India, Vietnam, Indonesia, which have better unit economics. We believe India will benefit from this electronics manufacturing (EMS) wave, given its: i) digitized economy driving domestic demand; ii) 1.8–6x cost effective and skilled labor vs Vietnam and China; iii) high import bill (53% of total electronics market) leading to import substitution; iv) China+1 strategy; and v) robust government initiatives to push local manufacturing.  The EMS wave kick-started in India following government announcements to push local manufacturing in FY20. As a result, the electronics import/export ratio reduced sharply from 8.3x in FY18 to 3.2x in FY23. This has resulted in a 2–5x increase in book-to-bill ratio of major India-based EMS companies, along with a rise in the entry of global manufacturing giants; Foxconn and Pegatron have announced plans to double operations in India over the next couple of years. 

    We believe that India is ready to be the next EMS hub. India’s EMS market of $20bn (2.3% of global market) is poised to expand at 32% CAGR over CY21–26E and outpace global/USA/China/Europe markets. Kaynes, Syrma, Avalon and Dixon, which are some of the leading listed EMS players in India, are likely to benefit from this EMS wave.




  • Revolutionizing Energy Storage: The Untapped Potential of Sodium and Zinc

    There has been a global shift in recent times to clean technology as advancements in electric vehicles (EVs), as well as solar and wind energy, gain momentum. However, there are several limitations in the existing energy-storage mechanism. Lithium-ion batteries are primarily used for energy storage, but lithium is scarcely available and highly expensive. Additionally, such batteries are relatively unsafe, and there have been several reports of batteries overheating and bursting. Sodium and zinc batteries are good alternatives to overcome these issues. Both metals are more widely available than lithium and cost less. However, their lower density means that sodium and zinc batteries would be larger and heavier. Therefore, such batteries could be used in applications where stationary energy is possible or in EVs, with limited mobility. Startups and well-established firms are making significant investments in the development of sodium and zinc batteries and are likely to reap strong returns.





  • Exploring the Rise and Impact of US RIA

    There has been a global shift in recent times to clean technology as advancements in electric vehicles (EVs), as well as solar and wind energy, gain momentum. However, there are several limitations in the existing energy-storage mechanism. Lithium-ion batteries are primarily used for energy storage, but lithium is scarcely available and highly expensive. Additionally, such batteries are relatively unsafe, and there have been several reports of batteries overheating and bursting. Sodium and zinc batteries are good alternatives to overcome these issues. Both metals are more widely available than lithium and cost less. However, their lower density means that sodium and zinc batteries would be larger and heavier. Therefore, such batteries could be used in applications where stationary energy is possible or in EVs, with limited mobility. Startups and well-established firms are making significant investments in the development of sodium and zinc batteries and are likely to reap strong returns.

    In the ever-evolving landscape of personal finance, individuals seek not only financial stability but also strategic guidance to optimize their investments. This is where Registered Investment Advisors (RIAs) emerge as key players in the financial ecosystem. RIAs, regulated by the Securities and Exchange Commission (SEC) or state authorities, offer personalized financial advice and comprehensive wealth management services, putting the client's interests at the forefront. In the dynamic landscape of financial advisory services, the United States takes center stage as the epicenter of Registered Investment Advisors (RIAs). With over 96% of RIA firms based in the U.S., their influence extends globally, managing an impressive 90% of the world's managed assets. In 2022,  the sector, consisting of 15,114 advisers overseeing $114.1 trillion for 61.9 million clients, experienced a growth of 2.1%. Despite challenges from an unstable global economy causing a decline in assets under management for the first time since 2008, Registered Investment Advisors (RIAs) persevered and maintained their success. The RIA industry is witnessing transformative trends, characterized by a robust merger and acquisition market, the emergence of new industry players, advancements in AdvisorTech, and evolving client expectations.





  • Saudi Banking Sector: Unlocking Vision 2030 Opportunities

    Saudi Arabia's economic prospects remain robust, driven by the non-oil sector in alignment with the Vision 2030 initiatives. The Saudi banking sector is expected to play a pivotal role in achieving the Vision 2030 objectives. This sector displays resilience, characterized by a healthy outlook supported by factors such as a promising pipeline for future loan growth, substantial liquidity, sound asset quality, and strong capitalization. Saudi banks are well-positioned to weather upcoming interest rate volatilities when the US Fed starts cutting interest rates. We believe that during this significant monetary policy shift, the top three banks in KSA are ready to capitalize on their dominant market share in loans and deposits for future opportunities. Among these, SNB is poised to reap significant benefits, given its leading market position in loans and deposits, a well-balanced loan mix, and a robust domestic franchise.

  • Rising Resource Nationalism in Metals Critical for EV Batteries

    The commodities markets, renowned for their inherent volatility, are poised for a substantial surge in demand for battery metals. This is primarily due to the exponential growth of electric vehicles and the need for energy storage solutions to enable a greater share of intermittent renewable energy sources in the energy matrix. The pivotal battery minerals encompass lithium, nickel, cobalt, graphite, manganese, vanadium, and copper. Presently, the anticipated scarcity of lithium, nickel, and cobalt emerges as the most pressing concern in the landscape of new supply. The demand for nickel is expected to rise 44% globally by 2030 compared to 2022, while the growth of lithium-ion batteries is anticipated to accelerate at a 30% annual compound rate and the production of cobalt is projected to rise by 13% yearly over the following five years. Heightened concerns about energy and resource security, coupled with supply-chain resilience, have been exacerbated by extreme weather events and elevated inflation in numerous countries. Consequently, nations reliant on these minerals for the energy transition are taking proactive measures to secure their supply. Concurrently, there is a resurgence of resource nationalism, with key producing nations strategically positioning themselves to garner a greater share of value from their mineral reserves.


  • How Conflicts and the Pandemic Reshaped Investment Strategies

    Between 2020 and 2023, the world grappled with a global pandemic and various conflicts, resulting in notable movements in major asset classes. The pandemic led to widespread lockdown, disrupting economic activity and precipitating a significant decline in major equity indices, which lost more than a third of their value within weeks. Extensive fiscal support fueled inflationary pressure, which has yet to reach central bank targets in major developed countries. In March 2022, the outbreak of the Russia-Ukraine war sent shockwaves across the markets, leading to food and energy shortages and pushing their prices upward. A global slowdown started as central banks across most of the world started increasing rates, signaling an end to the era of cheaply available money. However, by the end of 2023, asset classes had largely recovered from the impact of the pandemic and conflicts, and the markets were optimistic of future rate cuts.

  • High Yield - Europe Spotlight

    The European HY market rebounded in 2023, with benchmark HY index generating YTD 6.1% returns. Amid rising interest rates, HY bond returns outperformed IG returns due to attractive yields in the short term. The European HY issuance grew 15% YoY with total issuance climbing to EUR 31 bn during YTD Aug 2023. However, the Eurozone market will continue to face periods of elevated stress and volatility over the near-to-intermediate term due to prohibitive rates policy by global central banks. Europe fell into technical recession early this year amid the shock of high food and energy prices. Moreover, 10-year-to-2-year spread, a technical indicator, has also been inverted since Nov 2022. As per Fitch, the last 12-month default rate for Eurozone High Yield stood at 1.6% in 1H 2023 and is expected to rise to 2.5% by end-2023 and 4.0% by end-2024. That said, HY companies with stronger liquidity and cash flow generation are well positioned to survive the economic uncertainty.

  • Europe & North America MedTech strengthens in 1H23

    In a notable development, most MedTech companies in Europe and the US topped consensus estimates in 1H23 earnings, largely on a rewind in procedure volume and efficient execution of cost-saving strategy. Patient count surged in hospitals as people opted for non-urgent surgical treatment after delaying care during the pandemic, thereby accelerating demand for medical devices. This trend bodes well for MedTech giants Stryker, Zimmer Biomet, and Philips. Moreover, the decrease in supply chain constraints eased pressure on margins. Contrarily, extra retention charges of nursing staff pressured Fresenius Medical Care and Fresenius SE. Further, companies such as Philips, Stryker, and Baxter have lifted their 2023 guidance on improved surgery volumes. Conversely, on continuation of a softer environment for biopharma services, Danaher, and its peer ThermoFisher have narrowed their this year estimates. 

  • ESG Investing

    ESG remains a fast-evolving topic. With more than a decade under the spotlight, investors and customers are now demanding clear commitments from corporations on ESG plans. The private equity space, in particular, is focused on ESG as a theme, given the changing investment landscape on long-term investments, risk management and disclosures. This is driving demand for ESG-focused investments and has resulted in greater access to capital. Recent surveys show that the COVID-19 outbreak has further boosted the interest in ESG, with a range of ESG funds somewhat outperforming country or regional indices.

  • Big Four US Banks - Who Has Better Deposit Beta and NIM?

    The Fed delivered its first rate hike since 2018 in March 2022 against the backdrop of high inflation and rising house prices led by quantitative easing during the coronavirus pandemic and soaring energy prices. However, the magnitude of current rate hikes is much higher compared to the previous rate hike cycle of 2016-18 where rate hikes were smaller and evenly spread across multiple quarters. In the report we a) decode the Net Interest Margin of US Big 4 Banks by analyzing deposit beta, and composition of interest-earning assets, b) answer whether strong deposit beta can lead to better NIM, and c) interpret the likely trend of deposit beta and NIM to determine which bank would benefit the most in the current rate hike cycle. 

  • Semiconductor Supply Chain Analysis

    Heavy dependence on Asia for semiconductor manufacturing has put undue stress on the whole supply chain in recent years. Demand–supply imbalance across the world has led to chip shortages, compelling various governments and corporates to take immediate steps to address the supply shocks. While policy makers are focusing on promoting localization, various semiconductor companies are ramping up investments to expand capacity. Notwithstanding the heightened efforts on the policy as well as investment front, supply constraints are expected to prevail in the near term.

  • Changing Energy Dynamics Amid Russia-Ukraine Conflict

    In line with the Paris Agreement, countries across the globe have implemented net-zero emission (NZE) initiatives to decarbonize electricity generation by 2050. However, the conflict between Russia and Ukraine has put pressure on countries to reuse various energy sources to meet the energy requirement. In this scenario, the green power transition hinges on surge in usage of coal and acceptance of nuclear as the future source for energy generation. Moreover, solar energy is anticipated to benefit significantly from the Russia–Ukraine war as several developed nations have increased solar installations by quickly approving these projects. However, we see an immediate risk related to the installation of solar modules due to increase in photovoltaic prices and imposition of tariffs.

  • Impact of Russia–Ukraine War on Global Commodity Markets

    The Russia-Ukraine conflict has had rapid and extensive effects on global commodity markets. Both nations stand amongst the world's largest commodity exporters, with global influence over critical commodities such as natural gas, oil, metals, wheat, etc. Whereas Russia is a key supplier of oil, natural gas, coal, aluminum and wheat, Ukraine is a key exporter of wheat and oilseeds

    The ongoing conflict and unprecedented sanctions towards Russia have resulted in record-high inflation levels across developed and developing regions, disrupted supply chain, and severely impacted global economic recovery from the COVID-19 pandemic. Notably, prices of many essential and industrial commodities have been skyrocketing since February 2022, surpassing the peak in 2008 during the global financial crisis.

    With expectations of these geopolitical tensions to continue, energy and food prices are forecasted to stay elevated in short to medium term period. This is evident as global growth forecasts have been cut and economic indicators suggest a drop in activity as nations grapple with tightening markets.

  • GCC - Equity Market Quarterly Fact Book

    In 2Q22, all the GCC benchmarks ended lower, largely reflecting the trend in the global markets, which are facing negative bias due to inflation and recession concerns. 

    The MSCI GCC index, which captures the performance of indices across the region, fell 14.2% Q-o-Q. The KSA and Qatar equity indices decreased the most among the GCC markets, declining 12.0% and 9.9%, respectively.

  • Metaverse – Mapping Investment Opportunities

    The COVID-19 pandemic has led to a rise in consumers’ expectations and need for more fulfilling and immersive communication methods. Numerous consumers are seeking ways to adopt the metaverse. Metaverse is considered the next generation of the Internet, ready to penetrate every sphere of human activity. Tech companies worldwide are gearing up to adopt the new technology by including it in their core business activities. Metaverse-specific investments have risen in the past few years. Several tech companies are looking to gain the first-mover advantage through large-scale acquisitions in this space. Metaverse-related ETFs have hit the market over the last 12 months, and many are in the pipeline. Globally, investors have been very bullish about the theme, and prominent institutional investors consider it a game changer. The metaverse also opens doors to key investment areas such as hardware, infrastructure, virtual platforms, payments, content, and assets

  • High Yield – US Spotlight

    Rising Inflation, supply-chain disruptions, and tightening financial conditions have created a negative sentiment amongst the investors. In Year-To-Date 2022, the US High Yield funds witnessed net outflows of $33.8 billion. Year-To-Date July 2022 returns of major asset classes, including HY, were significantly negative. Equities and Emerging Markets have underperformed, compared to debt and developed markets, respectively, while oil markets are a clear winner. On the risk front, spreads have widened highlighting the rising credit risk. The spreads of CCC & lower rated bonds are trending over 1,200 bps. As cost of borrowing increases, corporates have struggled to refinance and/or issue new debt resulting in a substantial decline in high yield issuances in YTD 2022. Furthermore, Federal Reserves’ aggressive stance to hike rates and abate inflation, could have negative implications on growth. The most widely tracked 10Y-2Y US Treasury spread has entered negative territory in July as fears of recessions grip the market. High financing costs and weak cash flows could lead to increased number of companies filing for relief under Chapter 11 bankruptcy protection. The high-risk scenario, however, represents high return opportunities. Investors might stay away from riskier CCC & lower rated bonds and diligently look towards BB / B rated bond for higher yields.

  • High Yield - Europe Spotlight

    European HY bond market returns declined in YTD 2022, owing to heightened geopolitical tensions and rising interest rate risks. Issuers largely stayed on the sidelines in 2022 due to higher refinancing costs. Despite recession fears, the 10-year–2-year European spread steepened in 2022, in contrast to the US curve inversion. That said, the Eurozone recession is likely to stem from energy supply concerns owing to the Russia-Ukraine crisis and not from ECB tightening its monetary policy. Notably, S&P expects the European high yield corporate default rate to rise to 3.0% by March 2023 from 0.7% as of March 2022. 

  • EV Trends in India

    With increasing global awareness and targets to reduce carbon emissions, the government has been supporting the adoption of electric modes of transport in India. Several state-wide measures have been initiated to ensure faster transfer to environment-friendly mobility solutions. The Indian government has also introduced incentivized policies for EV original equipment manufacturers (OEMs) to cut down the costs of manufacturing and in turn, help lower the cost of ownership for consumers. However, lack of appropriate infrastructure and higher dependency on imports pose a challenge for the fast-growing EV market in India.

  • Extension Risk for US Bank Preferred Securities

    Fed’s 300 basis point rate hike this year has sent shock waves across the global stock and bond markets. Wall Street banks recently warned of revenue contraction amid the weakening market environment. However, US banks’ balance sheets remain strong, which could be attributed to higher capitalization following the global financial crisis (2007–08). In the backdrop of sticky inflation and expectations of “higher for longer” interest rates, we see extension risk rising for preferred securities issued by US banks. This report focuses on the factors driving extension risk and highlights the preferreds that are most at risk.


  • Q2 2023 Global Macro Report

    Q2 posted a slowdown in global economic growth along with strong returns in risk assets. The IMF expects global growth to be lower in 2023 than 2022 for most advanced countries. It also expects headline inflation to decline owing to the aggressive monetary policies of major central banks, but core inflation may decline slowly. Chinese economic recovery seemed to have run out of steam after the initial reopening thrust, as shown by the decline in inflation, retail sales and PMI numbers.

    Regarding asset class returns, equities rallied during Q2 due to strong corporate earnings in Q1, slowing inflation, a resilient US economy, and the AI theme. China’s sluggish recovery led emerging market equities to underperform developed market equities. Bonds gave a mixed performance with most yields increasing to price-in high rate expectations as central banks continued their hawkish policies. High yield bonds performed well despite their historically low yields. The US Dollar strengthened while gold price declined as the US Federal Reserve increased rates. Oil prices fell as expectations of a global economic slowdown loomed over investors.

  • Islamic Finance

    The global Islamic finance industry is worth over USD2 trillion and is projected to grow to ~USD5 trillion by 2025. However, the global economy has been severely impacted by the pandemic, volatility in oil prices, and uncertain macroeconomic environment (Russia-Ukraine war, possibility of another recession). Thus, the Islamic finance industry's development and expansion will be challenging over the next few years. Most of the sustainability efforts are led by governments globally. However, environmental preservation and social development targets are shared responsibilities of public and private sectors. Accordingly, the scope of Islamic finance is not limited to raising debt. Islamic finance now contributes to building a greener planet via funding sustainable businesses, which will benefit from perks such as lower interest rates compared with those for conventional debt.


  • Impact of China–Taiwan Geopolitical Risks on Semiconductor Sector

    Geopolitical risks on the global semiconductor industry increased after a recent visit by US diplomats to Taiwan, which triggered stark political opposition and military responses by China. In this report, we discuss the possible impact on the global supply chain of semiconductors if the geopolitical tensions between China and Taiwan increase. We focus on (a) the global importance of the semiconductor industry of Taiwan, as the region is home to the world’s largest foundry operations; (b) possible risks from the disruptions of the world’s leading and Taiwan’s largest semiconductor foundry company – TSMC; and (c) potential winners and losers from the disruption of TSMC’s operations. 


  • GCC - Equity Market Quarterly Fact Book

    Most GCC equity markets recorded gains in Q3 2022, with the Oman market outpacing other GCC markets, while Qatar, UAE, and Bahrain benchmarks also ending in the green. KSA and Kuwait were notable losers, while the MSCI GCC index, which represents the performance of indices across the region, ended in the red primarily driven by receding oil prices on fears of global recession.


  • Greenflation

    The race to achieve net zero emissions is the recent global trend to promote carbon neutrality. Greenflation is one of the consequences of the popular phenomenon of going green. The price of materials and minerals, among others, utilized in the development of renewable technologies has climbed sharply as countries are transitioning their industries to ozone-friendly and sustainable methods. Unlike previous transitions where the world shifted from biomass to fossil fuel, the current changeover to green energy is unparalleled, urgent, and inflationary. The report highlights the causes and consequences of greenflation as well as associated challenges faced in the near term. It also illustrates how greenflation can negatively impact the bond portfolios of the developed nations.


  • Global M&A - Q3 2022

    In the third quarter, dealmakers’ appetite for M&A fell even further. The number of global M&A transactions declined for the third consecutive quarter in Q3 2022, as the rising interest rates, continued inflation, and impending recession posed challenges for dealmakers. The total deal value was US$ 573 billion in Q3 2022, a 42% decrease from the previous quarter’s total of US$ 981 billion. 

    Despite the general slowdown in the M&A market, investors increased stakes in various areas, including technology, real estate, industrials, and healthcare. The amount of M&A activity this year has been considerably less than anticipated. Inflation, global unrest, and rising interest rates are some factors that slowed M&A activity this year. However, these factors may present opportunities for dealmakers in 2023, including distressed M&A and ESG opportunities, with the energy and technology sectors expected to dominate in the near future.


  • SVB Crisis: Snowballing Down the Valley

    California-based Silicon Valley Bank (SVB), which specifically catered to startups, went bankrupt after it reported huge losses on investments. The bank received an influx of deposits in 2021 due to strong private fundraising and easy funding available to startups. SVB parked these deposits in government bonds and long-dated mortgage-backed securities, which are deemed risk-free. However, with the Fed aggressively increasing interest rates to tame inflation, the bank incurred huge mark-to-market losses on these securities, leading to a liquidity crunch at the bank when its clients started withdrawing money. This crisis challenges the risk-free status ascribed to these bonds and the level of regulatory oversight for small banks. On the other hand, large US banks are relatively safer due to their diversified business model, strong risk management practices, and stringent regulatory requirements related to liquidity and capital.


  • Revenue Swing Analysis of S&P 500 Companies

    S&P 500 companies generated $4 Trillion revenues in 4Q22 – a -11% revenue growth swing in 4Q22 dragged down by Technology, Basic Materials and Energy sectors.

  • M&A in Artificial Intelligence | Q1 2023

    Artificial intelligence has been a buzzing term for quite some time now. The sentiment continued as we entered the first quarter of 2023, with the M&A market recording strong activity in AI. Although the number of AI technology deals slid from 200 in Q1 2022 to 186 in Q1 2023, the total deal value in Q1 2023 was US$12.7 billion compared with US$4.6 billion in Q1 2022. AI funding fell 43% QoQ to US$5.4 billion in 2023, the lowest quarterly total since Q1 2018. Meanwhile, deals slid for the fourth quarter in a row to 554, the lowest tally since Q4 2017. AI unicorn births remained stagnant at five compared with that in the previous quarter. However, AI advancements are expected to benefit investors across a diverse range of technical and creative fields. Several technology companies have developed AI-powered chatbots and increased collaborations and partnerships to integrate and bolster AI capabilities. Going forward, tech giants are expected to actively undertake M&A activities in the AI space.

  • Manufacturing on the Move: Reshoring Trends in Mexico and Vietnam

    In a world shaped by the seismic shifts of the COVID-19 pandemic, the Ukraine-Russia conflict, and the Red Sea crisis, a new narrative of resilience and adaptation is unfolding. Major companies are navigating through turbulent waters as supply chain disruptions cast a spotlight on the imperative of diversification. The World Container Index echoes this tumultuous journey, soaring to US$3,659 amidst the Red Sea crisis, symbolizing the challenges and opportunities in global trade. In a surprising turn of events, Mexico has emerged as a formidable contender, outpacing China as the leading importer to the US in 2023. This shift reflects a paradigm where unfavorable sentiments towards Chinese trade practices have paved the way for Mexico's ascent. With significantly lower average wages and strategic advantages stemming from the USMCA trade agreement and proximity to the United States, Mexico stands tall as a beacon of opportunity in the trade landscape. Meanwhile, Vietnam's ascent in labor productivity adds a new dimension to the global manufacturing stage, drawing attention and admiration from investors worldwide. As the allure of countries like India, Indonesia, and Thailand grows stronger, fueled by their proximity to China, competitive labor costs, and demographic advantages, a new era of exploration and innovation beckons. These nations stand at the crossroads of possibility, offering a canvas for companies to paint their supply chain futures with hues of diversity and resilience.