Market sentiment rebound

Last week, we wrote that equity markets would need to see an improvement in global economic growth if they were to move higher. So, it was typical commentator’s curse that this week saw a rise in equities all over the world, despite no clear improvement in the underlying economic data. Even though we have not seen improvement yet, however, the rally suggests that capital markets see light at the end of the tunnel.

Capital market activity rebound

As usual, political turmoil and central bank action grabbed the financial news headlines this week. But underneath these big macro themes however, there were some eye-catching business stories. It has been a busy week for company news, so we thought we should take a look at the standout stories from the business world.

Private Equity – the next asset bubble?

Private equity (PE) has been a particularly popular asset class for investors over the last few years. Over the past year alone, almost $500bn has flowed into private equity funds – who invest in companies not directly listed on a public exchange (or buy out those that are). That equals the gross inflows into public equity over the same period. And it is despite the assets under management (AUM) in private equity being only 6% of the total market capitalisation for public equity.

Corporates getting in while the window is open

It has been a busy week in the corporate world. While global growth remains lethargic, central banks have once again loosened the taps and provided the financial system with ample liquidity. Now, companies seem to be rushing to take advantage of this easy access to credit – due to fears that it may not last for long. This has prompted some big moves – from record-breaking corporate bond issuance to a rush of IPOs, to headline-grabbing acquisitions. Last week, $72bn worth of investment grade debt was issued, nearly equal to the entire issuance in August. Below, we take a look at some of the stories that stood out.

 

Read the full commentary here