Market & Corporate Update: China Lockdown Impact, Fed's Aggressive Stance, Asian Markets Shift Amid Ukraine Conflict

Market & Corporate Update 2022.03.30 Fabio Fraccalvieri & Filippos Patsis March 30th, 2022 BSFS Committee Meeting

Market (1/3) China and Oil A dangerous strategy BRENT CRUDE On Monday authorities announced extreme lockdown measures in Shanghai, China continues to pursue a zero-COVID strategy to combat a spiraling outbreak . Shanghai just launched a two-stage lockdown that will close down bridges and tunnels, and restrict highway traffic in China's largest city. Oil WTI CRUDE Oil prices dropped on Monday as optimism about peace talks between Ukraine and Russia eased concerns about supply levels while new coronavirus lockdowns in China raised the prospect of falling energy demand. China is the world s largest oil importer. Brent crude, the global benchmark, settled 6.8% lower at $112.48 a barrel, while US marker West Texas Intermediate dropped 7% to $105.96. Oil markets have swung violently over the past week, with intraday moves of at least 5% each day as traders grappled with the latest developments from Russia and China, as well as Saudi Arabia where an oil storage facility was bombed on Friday.

Market (2/3) US Market Fed gets aggressive After comments from Jerome Powell, which said the Fed is prepared to act even more aggressively to tackle inflation, a bond selloff deepened this week. The central bank is prepared to raise interest rates by 50 basis points at the next policy meeting he said. Consumer prices took a turn for the worse in February as CPI growth rose by 7.9%, representing the largest 12-month increase since January 1982. Indexes and Treasure Yield All three major stock market averages marked their second consecutive winning week, with energy topping Friday's sector leaderboard. The sector helped the S&P 500 to a 0.5% gain on Friday and a 1.8% rise for the week, while the tech-heavy Nasdaq fell slightly on Friday but led the major indexes for the week with a 2% rally and the Dow Jones ticked up 0.3%. The stock market's rebound has come even as the war in Ukraine continues with little sign of being resolved shortly and with interest rates rising while the Federal Reserve remains on track to raise rates throughout the year. After falling for the first two months of the year, US stocks are in position to notch their first monthly gain in March. Two-year Treasury yields surged 15 basis points and the 10-year yield added 12 basis points on the week.

Market (3/3) Asian Markets Ukraine President Biden gave a forceful speech in Poland denouncing Russian President Vladimir Putin s invasion of Ukraine. For God s sake, this man cannot remain in power. Later, officials grabbed their Swiffers and cleaned up, saying that the US was not advocating for regime change in Russia or anywhere else. Top Russian military officials signaled a change in approach to the war on Friday. They spoke about the complete liberation of the Donbas region in eastern Ukraine, which means Russia could potentially be pivoting from its initial goal of taking Ukraine s biggest cities and toppling its government. Commodities & Food shortage As wheat and corn futures continue to surge, and fertilizer prices ride the commodity boom, some investors are reaping big gains. Compared with the nearly 6% YTD loss of the S&P 500, shares of the top three U.S.-listed fertilizer producers are having a great year. "With regards to food shortages, it's going to be real," President Biden declared after meeting with NATO allies in Brussels, adding that Russia and Ukraine are the breadbasket of Europe. "The price of these sanctions is not just imposed on Russia, it is imposed on an awful lot of countries as well, including European countries and the U.S.

Corporate (1/4) Elliott and Brookfield to buy TV ratings group Nielsen for $16bn Largest buyout since Russia and Ukraine conflict A private equity consortium led by Elliott Management and Brookfield Asset Management has agreed to acquire television ratings group Nielsen for $16bn, including debt, in the largest buyout since Russia invaded Ukraine. The deal will be completed with pay $28 per share in cash to Nielsen shareholders. Nielsen s private equity buyers remain confident in its core business of measuring advertising reach on cable and broadcast, despite being threatened by the rise of streaming platforms such as Netflix. Elliott is now becoming the architect of some of the private equity industry s largest buyouts. Since the deal was announced, Nielsen s stock has increased 20.8% and more than 50.3% in the past month since speculations started, and it is currently valued at 26.78$ per share.

Corporate (2/4) AIG files to float its life insurance and asset management business AIG files for IPO IPO US insurer AIG has filed for a long-expected initial public offering of its life and asset management business that could value the unit, to be called Corebridge Financial, at more than $20bn. AIG will have $410bn in assets under management, is by far the largest to publicly file for a US IPO this year. Market volatility caused by concerns about rising interest rates and the war in Ukraine led many candidates to put their plans on hold. Companies have raised just $2.4bn in US listings in 2022 in the slowest quarter since early 2016. BlackRock OCIO AIG announced plans to hand over management of up to $150bn of fixed income and private placement assets to BlackRock in an outsourced chief investment officer deal. (OCIO) Both Corebridge and the rest of AIG will use BlackRock s investment management technology, known as Aladdin.

Corporate (3/4) Tesla to Request Shareholder Approval for Stock Split Tesla stock split Tesla request shareholder approval for an increase in the number of shares to enable a stock split. (didn t specify when such a split would take place or what the ratio of shares would be) Tesla shares closed Monday at $1,091.84, up 8%. The proposal comes almost two years after Tesla enacted a 5-for-1 stock split as shares of the company reached new heights. Stock split trend News come after Amazon.com Inc. this month said it would split its stock 20-for-1. Google parent Alphabet Inc. said on Feb. 1 that it would enact a 20-for-1 stock split. Stock splits change the stock price, not the total value of an investor s holding, although they have a history of generating a short-term rally in a company s stock price.

Corporate (4/4) Further News Goldman Sachs Goldman Sachs is buying NextCapital, a robo-adviser that specialises in workplace pensions, as part of chief executive David Solomon s push into businesses with steadier income streams including asset and wealth management. Goldman declined to disclose the price of the acquisition but said it would be among its five largest asset management deals. FedEx FedEx Corp. founder Fred Smith is stepping down as chief executive of the company he started more than 50 years ago. Mr. Smith, 77 years old, is handing the CEO role to President and Chief Operating Officer Raj Subramaniam. FedEx stock price is up by FDX +4.21% since the announcement.