Commercial Awareness Discussion Thread

[Jaysen]

Pretty shocking (but possibly unsurprising) news today that Trump is to sign an executive order targeting social media companies (BBC). Yesterday he threatened to strongly regulate or shut down social media platforms after Twitter added a fact-check link on some of his tweets.

Those of you who joined us last month on our Virtual Training Programme will know the regulation of Big Tech is a huge area at the moment! One area Trump could focus on is Section 230 of the Communications Decency Act, which gives some of these firms immunity from liability for content created by their users.

 

[Daniel Boden]

Pretty shocking (but possibly unsurprising) news today that Trump is to sign an executive order targeting social media companies (BBC). Yesterday he threatened to strongly regulate or shut down social media platforms after Twitter added a fact-check link on some of his tweets.

Those of you who joined us last month on our Virtual Training Programme will know the regulation of Big Tech is a huge area at the moment! One area Trump could focus on is Section 230 of the Communications Decency Act, which gives some of these firms immunity from liability for content created by their users.

His level of hypocrisy continues to amaze me... isn't there something called the First Amendment over there??

 

[S87]

His level of hypocrisy continues to amaze me... isn't there something called the First Amendment over there??

He is claiming that he wants to avoid what happened during the last elections. Social media platforms are allegedly blocking "Republican" pages. I want to laugh but I am worried because, personally, this is censorship..and I am not a fan of Facebook/twitter and so on

 

[Daniel Boden]

Further to my PE post yesterday, there's another interesting article in Private Equity International talking about predictions for the road forward in private equity over the next 10 years.

In summary, the main goals will be:

• Finding new ways to deal with disruption e.g. accelerating the trend towards digitisation
• Embracing the chance for change e.g. increased diversity to offer a wider range of perspectives can only help decision-making
• Doubling down on societal considerations e.g. new focus on PE firms becoming impact investors

See the article in full here: https://www.privateequityinternational.com/future-of-private-equity-the-road-forward/?utm_source=sailthru&utm_medium=email&utm_campaign=pei daily eur bronze 2020-05-28&utm_term=pei_daily_eur_bronze

 

[S87]

Further to the above discussion regarding furthering US-China tensions, the US has just announced that it will no longer consider Hong Kong autonomous from China in a big change in policy. Somehow I don't see this ending well...

What impact do you think this could have? @Alice G @Jaysen @Raam @Konstantinos

Personally, I have a suspicion the markets won't react too kindly to this news...

Here's the link to the article in the FT: https://www.ft.com/content/3ae02552...egmentId=3d08be62-315f-7330-5bbd-af33dc531acb

I think that this would seriously undermine Hong Kong trade hub status. Basically, the US claims that China is modelling Hong Kong after itself. This means that, by considering Hong Kong as part of China, the US can treat HK the same as China for trade and other purposes, so additional wider sanctions. However, you need to be careful when you think that this is going to hurt HK only. In fact, China uses HK as more western trade hub because of the strict Chinese laws.So USA's decision aims to close "de facto" a key market for the Chinese economy. Mike Pompeo's move kicks China right where it hurts the most..its economic power i.e. money.

Sad times guys for all of us

 

[Daniel Boden]

I think that this would seriously undermine Hong Kong trade hub status. Basically, the US claims that China is modelling Hong Kong after itself. This means that, by considering Hong Kong as part of China, the US can treat HK the same as China for trade and other purposes, so additional wider sanctions. However, you need to be careful when you think that this is going to hurt HK only. In fact, China uses HK as more western trade hub because of the strict Chinese laws. So USA's decision aims to close "de facto" a key market for the Chinese economy. Mike Pompeo's move kicks China right where it hurts the most..its economic power i.e. money.

Sad times guys for all of us

Yeah I agree with you here, given that the USA has basically put tariffs on pretty much everything else regarding China, this could almost be the final nail in the coffin as it were due to the reliance that China has on HK as you mention. The FT news briefing podcast discusses these points in a really interesting way so I'd recommend giving that a listen if people haven't already. Equally though, I think this could really harm HK directly as many professionals, expats and perhaps even businesses would consider leaving HK due to these potentially tougher sanctions/conditions.

 

[Jaysen]

Pretty shocking (but possibly unsurprising) news today that Trump is to sign an executive order targeting social media companies (BBC). Yesterday he threatened to strongly regulate or shut down social media platforms after Twitter added a fact-check link on some of his tweets.

Those of you who joined us last month on our Virtual Training Programme will know the regulation of Big Tech is a huge area at the moment! One area Trump could focus on is Section 230 of the Communications Decency Act, which gives some of these firms immunity from liability for content created by their users.

Twitter seems to have doubled down, hiding a tweet by Donald Trump for 'glorifying violence' (BBC).

It's going to be very interesting to watch how this plays out!

 

[S87]

Hello guys,

Twitter seems to have doubled down, hiding a tweet by Donald Trump for 'glorifying violence' (BBC).

It's going to be very interesting to watch how this plays out!

I find this very amusing..sorry

 

[Romiras]

It'll be amusing until it isn't.

 

[Daniel Boden]

Afternoon all, just to continue the trend on private equity, yesterday Ardian (paris-based PE firm) announced it has raised the third-biggest PE fund ever, $19bn, and the largest-ever fund dedicated to the secondaries market. This clearly reflects the earlier trend I spoke of whereby the secondaries market is going to be a very active market moving forwards over the next couple of years.

Just to recap for those who may not be aware, private equity secondaries market refers to the buying and selling of a pre-existing investor commitment to a fund. Since there is so much 'dry powder' in the market and not a huge amount of viable investments, this secondaries market is becoming increasingly popular with GPs (Fund Managers).

https://www.privateequityinternatio...ird-biggest-pe-programme-ever-with-19bn-haul/
https://www.penews.com/articles/ardian-raises-19bn-for-private-equity-secondary-haul-20200602

 

[Daniel Boden]

As well as the above, there's a very interesting article in the FT today about Public Equity whereby the author argues that governments should actively encourage people to invest in company stocks rather than debt, which has been heavily incentivised due to favourable tax treatments over the years, in order to help companies recover from the impact of COVID-19.

The article, as ever, is linked here:
https://www.ft.com/content/1a9dddc1...egmentId=b0d7e653-3467-12ab-c0f0-77e4424cdb4c

 

[Daniel Boden]

Turning to the US, there is a tremendous amount of investor optimism in the US, with markets already nearly back to their previous highs earlier in the year. This is because, 'Market sentiment is tied up with long-term expectations for growth and, in spite of skyrocketing unemployment and intense pressure facing small businesses, investors are intent on getting ahead of an expected new business cycle'.

Here is the article in question:
https://www.ft.com/content/f2bce01e...egmentId=b0d7e653-3467-12ab-c0f0-77e4424cdb4c

Do you have similar market optimism? Or do you feel that Wall Street is naive in having such an optimistic opinion?

 

[Daniel Boden]

To those who are interested, here is the link to Finance Unlocked with a free 6 month trial for students.

https://financeunlocked.com/disruption-support/

 

[S87]

I love it and your articles on PE are really helping me.

Can I request a couple of clarifications on this matter?
1) As you

As well as the above, there's a very interesting article in the FT today about Public Equity whereby the author argues that governments should actively encourage people to invest in company stocks rather than debt, which has been heavily incentivised due to favourable tax treatments over the years, in order to help companies recover from the impact of COVID-19.

The article, as ever, is linked here:
https://www.ft.com/content/1a9dddc1...egmentId=b0d7e653-3467-12ab-c0f0-77e4424cdb4c

I am conflicted about this when the market is so uncertain. Yes the stock market is experiencing positive trends but during these uncertain times I would prefer investing in bonds.

 

[S87]

Afternoon all, just to continue the trend on private equity, yesterday Ardian (paris-based PE firm) announced it has raised the third-biggest PE fund ever, $19bn, and the largest-ever fund dedicated to the secondaries market. This clearly reflects the earlier trend I spoke of whereby the secondaries market is going to be a very active market moving forwards over the next couple of years.

Just to recap for those who may not be aware, private equity secondaries market refers to the buying and selling of a pre-existing investor commitment to a fund. Since there is so much 'dry powder' in the market and not a huge amount of viable investments, this secondaries market is becoming increasingly popular with GPs (Fund Managers).

https://www.privateequityinternatio...ird-biggest-pe-programme-ever-with-19bn-haul/
https://www.penews.com/articles/ardian-raises-19bn-for-private-equity-secondary-haul-20200602

Daniel do you mind asking if selling on the secondary market represents in somehow a substitute of the investor's capital gain?

 

[S87]

Guys,

HSBC has just publicly supported, on weChat, China's national security law for hong Kong.

 

[Daniel Boden]

Daniel do you mind asking if selling on the secondary market represents in somehow a substitute of the investor's capital gain?

That is a good question and I am not sure on the answer I'm afraid. I'll do some research and let you know. @Raam or @Jaysen do you have any idea?

 

[Daniel Boden]

Daniel do you mind asking if selling on the secondary market represents in somehow a substitute of the investor's capital gain?

So, from what I have found, I think it makes sense to say that the capital gain would have already been realised by the original institutional investor and so the secondary buyer wouldn't realise the capital gain if I understand your question correctly? Perhaps you could rephrase to make sure I know what you're trying to say?

The below website should be quite useful in explaining why investors sell on the secondary market but I'm afraid I can't find much more information on this.

https://blog.palico.com/why-do-private-equity-investors-sell-on-the-secondary-market

 

[S87]

So, from what I have found, I think it makes sense to say that the capital gain would have already been realised by the original institutional investor and so the secondary buyer wouldn't realise the capital gain if I understand your question correctly? Perhaps you could rephrase to make sure I know what you're trying to say?

The below website should be quite useful in explaining why investors sell on the secondary market but I'm afraid I can't find much more information on this.

https://blog.palico.com/why-do-private-equity-investors-sell-on-the-secondary-market

Exactly this. Thank you for the article

 

[Daniel Boden]

Exactly this. Thank you for the article

No worries at all! Glad it helped but to be honest I would be completely amazed if you ever got examined on secondary buyouts to that level of detail in an interview