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Message: <blockquote data-quote="Jaysen" data-source="post: 13024" data-attributes="member: 1">Hi everyone,Welcome to the next commercial news update.Happy reading!Commercial News Update – Wednesday, 28 August 2019Topics covered this week:<ol> <li data-xf-list-type="ol">Record Foreign Investment in British Tech Start-Ups (by [USER=1562]@ELA[/USER])</li> <li data-xf-list-type="ol">Denmark’s Jyske Bank Announces Negative Interest Rates (by [USER=1550]@Sairah[/USER])</li> <li data-xf-list-type="ol">US Toy Company Hasbro buys Entertainment One (by [USER=2115]@LJ[/USER])</li> <li data-xf-list-type="ol">What’s going on with the US-China trade war? (by [USER=1]@Jaysen[/USER])</li> </ol>1. Record Foreign Investment in British Tech Start-Ups (by [USER=1562]@ELA[/USER])The StoryRecent research from the government’s Digital Economy Council indicates that UK tech companies have secured a record £5.5bn in foreign investment in the first seven months of this year, with US and Asian firms having invested the most. This is 50% more than in the same period last year.The figure comes while overall foreign investment in the UK has fallen since the Brexit referendum and hit a six-year low last June, according to the Department for International Trade.Impact on Businesses and Law FirmsThe weaker pound has likely contributed to this figure, as it makes UK companies more affordable for overseas investors whose buying power is boosted by their stronger currencies.  Moreover, the UK has a long-standing reputation for innovation, and an investment in UK tech firms arguably enables Asian investors to hedge against the trade war with the US.Overall, this should mean increased activity for law firms’ corporate departments and, since US and Asian investors have together invested £3.02bn of the total £5.5bn, global law firms with an established relationship with US and Asian clients should be ideally positioned. However, lawyers must watch the UK’s plan, first proposed in October 2017, to expand its foreign investment screening regime and give the government more scope for intervention in transactions. More interventionist merger control policies would increase execution risks and make transactions involving foreign investment more costly for clients.Finally, concerns remain about the impact Brexit will have on the UK high-tech industry, not least because one in five tech workers in London is from the EU. Lawyers currently drafting contracts for foreign investors and UK companies must therefore consider the extent to which any proposed target companies are exposed to political and economic upheavals, and draft clauses to mitigate risks for both parties.2. Denmark’s Jyske Bank Announces Negative Interest Rates ([USER=1550]@Sairah[/USER])The StoryLast Tuesday, Jyske Bank, Denmark’s third-largest lender announced that it will start charging affluent customers for deposits instead of paying interest. This comes less than two weeks after launching the world’s first negative interest-rate mortgage, with the rate of 0.5%. According to the Financial Times, customers with deposits of more than 7.5 million Danish krone (£900,000) will receive a negative interest rate of 0.6% a year to store their money, equating to a loss of £5,350.This unconventional decision taken by Jyske Bank is the latest in a series of moves undertaken from Denmark’s central banks to revive demand and boost consumption. Currently, the bank is facing an increase in deposit surplus from personal clients, resulting in large expenses. It’s also worth noting that Denmark’s central bank has set negative interest rates since 2012, which is in fact longer than any other country.Impact on Businesses and Law Firms:Despite the recent move from Jyske Bank, other lenders have been wary of imposing negative rates on other retail customers because it could lead to cash hoarding. Having said that, Jyske Bank’s purpose for both lending, as well as deposits, is to directly encourage consumers to spend rather than save.However, Jyske’s decision has led to some disbelief on the part of consumers. This has led to the Danish Financial Supervisory Authority to move in and monitor whether banks are providing ‘bad’ advice by pushing its customers into investment products with excessive fees in an attempt to avoid negative rates.Corporate lawyers specialising in global investment funds may be needed to advise Jyske’s customers on a range of investment funds associated with receiving capital from Jyske Bank, such as from private equity funds, strategy funds, hedge funds and fund structured products. Clients may also receive advice on fund structuring and investment reviews.3. US Toy Company Hasbro buys Entertainment One (by [USER=2115]@LJ[/USER])The Story Entertainment One is the latest UK-listed firm (although based in Canada) to be bought by a foreign investor. The US toy giant Hasbro purchased Entertainment One in a £3.3bn deal. Entertainment One owns some of the most popular children’s brands such as Peppa Pig and PJ Masks.Hasbro is hoping to use this acquisition to diversify to more entertainment and pre-school offerings, compared to current profit drivers like Monopoly and Nerf guns. It’s a move reflecting the current trends of children’s entertainment becoming increasingly technology based.Impact on Businesses and Law FirmsThis transaction is another example of foreign investors jumping on the current low pound due to Brexit uncertainties. Indeed, the Guardian claimed that this deal was at a real “bargain price”. Only recently we saw Greene King, Cobham and Just Eat be acquired by international buyers.While these transactions are of course founded on the political uncertainty that Britain is facing, it is interesting to note that it further underlines the long-term optimism that these investors have in the prospects of British companies.This acquisition is also particularly interesting in the context of the increasingly tense streaming war between Netflix, Amazon, Apple and Disney. These four are constantly trying to establish their own exclusive content to differentiate themselves between each other. Therefore, Hasbro can be confident that there may be a future buyer for its new IP, as perhaps Apple or Amazon tries to catch-up with the original content that Netflix and Disney are currently boasting.IP lawyers will have been on hand to establish the value of this property and the limitations of its use. Likewise, M&A lawyers will be being used centrally, while deploying the more specific expertise from departments like employment, real estate and tax.4. What’s going on with the US-China trade war? (by [USER=1]@Jaysen[/USER])The StoryThe long weekend was full of twists and turns.On Friday, China announced retaliatory tariffs on $75bn worth of US goods. Donald Trump fired back, raising tariffs on existing and planned Chinese imports. He also tweeted that he was ordering US companies to ‘immediately start looking for an alternative to China’. Stocks plummeted.However, by Monday, talks were back on track with Donald Trump predicting an upcoming trade deal. Global stocks climbed back up.Impact on Businesses and Law FirmsUS businesses that manufacture within China need to make a decision. Stay in China and face tariffs when importing Chinese goods back home, as well as the cost of retaliatory tariffs if they export goods to China. Plus, face the increasing risk of both states using non-tariff measures. Should tensions escalate, the Chinese government could hurt US businesses operating in the country through customs delays or increasing regulations. Trump’s tweet suggests he might also seek a way to direct US companies to leave China under the guise of national security.So, why not leave China? Well, many companies are exploring destinations such as Vietnam, Indonesia and Malaysia. Earlier this year, a Baker McKenzie poll found that 82% of the 600 global companies surveyed were considering supply chain changes in response to the trade war. However, shifting production facilities is very expensive and means losing access to China’s well-developed network of supply chains. Moving might lead to slower, costlier and less efficient production.Testing and certifying suppliers, closing and opening production facilities, evaluating the impact of tariffs on a business – that all means demand for trade, regulatory and restructuring lawyers. Law firms may expand their capability through promotions and lateral hires to make the most of this opportunity (as Reed Smith did recently with the hire of Dora Wang). If companies are looking to evaluate suppliers in multiple jurisdictions, it’s the global law firms that stand to benefit, especially those with a strong presence in Southeast Asia.</blockquote>

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