Today is Tuesday, August 02, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we examine the M&A outlook across sectors. After a sharp decline in transaction volume and value in the first half of 2022, North American dealmaking activity is expected to remain weak for the rest of the year amid slowing economic growth, rising interest rates and increased regulatory scrutiny. In technology, cybersecurity M&A continued at a robust pace in the second quarter, but analysts see early signs of increasing caution among buyers. In the Asia-Pacific financial sector, pending deals may collapse due to market uncertainties.
The Federal Reserve's efforts to tame inflation by tightening monetary policy at the quickest pace in nearly 30 years will drive community bank margins higher over the long term. However, the speed of rate increases will cause deposits to reprice more quickly than loans, preventing margins from expanding in 2023. Community banks also will feel some earnings pressure in 2022 and 2023 as institutions record higher credit costs and weaker noninterest income.
In Europe's anticipated green hydrogen boom, technology-makers are planning to rapidly expand their domestic manufacturing footprints. But before they can unleash their ambitious growth plans, industry players must overcome obstacles across regulation, financing, demand stimulation and the supply chain.
- In Focus: M&A Outlook
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Slowing economy weighs on M&A after activity dried up in H1
After a breakneck 2021, the pace of mergers and acquisitions in North America has slowed as rising interest rates and a slowing economy reduce the appetite for expansion.
—Read the full article from S&P Global Market Intelligence
Cybersecurity M&A still hot in Q2, but economic uncertainties weigh on outlook
Cybersecurity acquirers valued their targets at 7.3x trailing 12-month revenue on average in the second quarter of this year, up from 5.5x in the same period of 2021. Still, the sector is not immune from broader economic concerns.
—Read the full article from S&P Global Market Intelligence
APAC finance sector M&A to slow further as buyers grow cautious of large bets
Finance sector M&A deals in the quarter ended June 30 fell year over year to 154 from 165, dragged by a slowdown in activity in the banking and nonbanking financial institution sectors, S&P Global Market Intelligence data show.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Big US banks post strong Q2 growth despite recession fears
The largest banks expressed confidence in the health of their customers, and big credit reserve builds have not materialized.
—Read the full article from S&P Global Market Intelligence
Capital offerings among LatAm banks plunge to record lows in Q2
Mexico's Banco Actinver issued $125.96 million in nonconvertible debt, while Jamaica's Dolla Financial Services undertook an IPO for $3.27 million.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Institutions shed $200 billion as markets turn bearish
Institutional investors continue to pull billions from U.S. equity markets while retail investors have stayed net buyers.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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European real estate capital offering activity plunges nearly 90% YOY in Q2
Interest rate hikes weighed on public and private real estate markets, according to Deutsche Bank AG Research Division analyst Thomas Rothaeusler.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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Private equity's share of terminated M&A deals climbs
Private equity or venture capital accounted for 15% of all terminated M&A deals during the second quarter, the highest rate in at least six quarters.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Netflix's ad business a long-term play, analysts say
The slow pace of the product's planned rollout underscores the challenge of the task, even for a streaming leader, analysts said.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Metal price rout spurs cost-cutting talk in mining sector
As metal prices pull back, miners have been put on the defensive. Deep cuts have not been announced, but mining executives have started to talk about deferring spending and cutting costs if needed.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Green hydrogen tech-makers ready to unleash wave of European gigafactories
"Europe has the unique chance to become the technology, design and production hub for hydrogen equipment," according to one electrolyzer manufacturer, but first it must overcome key obstacles spanning regulation, financing and demand stimulation.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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Supply chains are European telcos' biggest climate headache
Europe's telecom sector is a leader on climate action, reducing most of its direct carbon emissions. Cleaning up indirect emissions from suppliers and customers, however, remains a challenge.
—Read the full article from S&P Global Market Intelligence
Investor scrutiny intensifies as more banks link executive pay to climate goals
Environmental, social and governance targets are making their way into bank pay policies, and the trend is likely to gain momentum in the wake of new regulatory guidance. Investors, meanwhile, are raising their expectations.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Oil, gas deal tracker: $4.8B purchase in June drives increase in M&A value YOY
High valuations a hurdle for potential Suddenlink sale
$700M BlackRock deal builds momentum for renewable natural gas
Franco-Nevada's $250M gold stream tops metals, mining M&A in week ended July 22
Wisconsin-based Bank First Corp. to acquire Hometown Bancorp in $124M deal
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Written and compiled by Louis Bacani