Finance

It’s time for responsible finance to be required for all investment professionals

The evolution of sustainability-focused investment practices has proceeded much more rapidly since the financial crisis upended financial markets and exposed the cost of unethical and socially detrimental business practices. During this period, research into the financial impacts of sustainability-focus finance has shifted dramatically in relation to the effect of incorporating extra-financial factors. Prior to the crisis, much of the research focused on identifying whether there was a cost to using extra-financial factors whereas since the crisis there is a growing recognition—and empirical evidence to support—the idea that instead of harming performance, responsible finance can enhance it.

One such research, conducted by Arabesque Partners and the University of Oxford in 2014, looked at 190 empirical research studies. 90% of the studies found that “sound sustainability standards lower the cost of capital” and 88% found that solid environmental, social and governance (ESG) practices translated into “better operational performance of firms”. This better operational performance also leads to better stock performance, suggesting that not only does ESG have benefits for firm performance, it is recognized in market valuations as well.

An analysis from Calvert also released last year looks into the effectiveness of incorporating non-financial factors related to environmental, social and governance (ESG) and found that not only do better-rated companies on ESG metrics have better stock performance, the best performing stocks are for a basket of companies whose ESG metrics have improved the most. During 2004 to 2014 they analyzed a hybrid portfolio including both ESG and traditional equities to compare the most improved from those with the greatest decline and found that the performance gap reached nearly 5%. (more…)

‘On the road to a business loan, a CPA can be a banker’s best friend,’ by Bradford L. Hall, CPA

 

 

For a one-minute audio intro to the commentary, click here.

Bradford L. Hall

 

 

WestlawNext users: Click here to read the full article on WestlawNext.

Halal certification is fast-growing hard currency for trade in halal products

Trade is important. Just look at the attention paid to the depreciation of global currencies. The falling Ringgit, the depreciating Chinese renminbi and the newly free-floating Kazakh Tenge. The fight for competitive advantage in trade is impacted significantly by the value of the currency in countries where goods are produced and where they are consumed.

For trade in halal products, there is another unit of currency—the halal certification—which also affects the value of a halal product differently in the country where it was produced (and certified) and where it will ultimately be consumed. The value of the certification for the producer determines how wide the market is for their product. For example, Malaysia, whose halal certification is widely recognized and whose halal exports reached RM 10.8bn ($2.6 billion) in the first quarter of 2015, the halal industry is well connected globally within the Islamic economy for food, cosmetics and pharmaceuticals. 

The success of Malaysia in capitalizing on the Islamic economy for economic growth has led other countries to seek similar opportunity. Pakistan, which has a small but growing meat export industry, hopes the recently launched Pakistan Halal Authority will improve the ability of meat exporters to be the source of food imports into the Gulf Cooperation Council countries which are geographically close but where much of the meat comes from the far more distant Brazil.  (more…)

Weekly Investment Banking Scorecard

IB scorecard

Highlights:

Summer Slowdown: Pace of Weekly M&A Falls Below $20b for First Time since January 2012

  • Announced worldwide M&A activity tumbled to just over $14 billion so far this week, marking the first weekly period to log under $20 billion in deals since January 2012. Liberty Interactive’s $2.1 billion bid for online retailer Zulily topped the list of weekly deals, a week that was without a deal greater than $5 billion for the first time in 15 weeks. With the addition of the Zulily deal, retail deal making totals $153.6 billion, more than double year-to-date 2014 levels, while financial M&A, bolstered by BB&T Corp’s $1.8 billion bid for National Penn Bancshares, reached $246.6 billion, a 10% increase compared to a year ago and the strongest period for deal making in the sector since 2009.

Cross-Border Deal Making Tops $1 Trillion for First Time Since 2007

  • Pentair PLC’s $1.8 billion bid for US-based Erico Global pushed the level of cross-border mergers and acquisitions to $1.0 trillion, a 29% increase compared to a year- ago and the first year-to-date period to see over $1 trillion in crossborder deal making since 2007. The United States and United Kingdom account for a combined 46% of crossborder targets while, the United States, Netherlands and Canada account for 41% of global cross-border acquirors. Cross-border pharmaceutical M&A accounts for 13% of the global tally so far this year, followed by Oil & Gas with 10% and Chemicals with 8%.

For more info, download the full Investment Banking Scorecard.

Follow @dealintel on Twitter and register here.

Thomson Reuters Deals Intelligence delivers IB content including quarterly reviews showing trends in M&A and Capital Markets.

Weekly Investment Banking Scorecard

IB scorecard

Fast facts:

  • US M&A activity totals $1.4 trillion, up 62% compared to YTD 2014 levels
  • Asia Pacific ECM activity totals $195.6 billion, up 57% compared to a year ago
  • Europe DCM hits $1.2 trillion this year, down 23% compared to last year
  • Materials M&A hits $259.8 billion this year, up 72% compared to year-ago levels
  • Media & Entertainment ECM totals $19.8 billion for YTD 2015, down 15% from 2014
  • Financials DCM down 10% compared to 2014 with $1.7 trillion raised this year

For more info, download the full Investment Banking Scorecard.

Follow @dealintel on Twitter and register here.

Thomson Reuters Deals Intelligence delivers IB content including quarterly reviews showing trends in M&A and Capital Markets.

Care is king: Affordable Care Act subsidies upheld

By Logan Mortenson, Compliance Attorney — Healthcare Team, Finance & Risk Department

A key decision by the U.S. Supreme Court means that 6.4 million people in states without exchanges will continue to be eligible for health insurance subsidies under the Affordable Care Act (ACA).

On June 25, 2015, the U.S. Supreme Court voted 6-3 in the case of King v. Burwell in favor of upholding ACA tax subsidies. One of the central reforms of the ACA was to provide tax subsidies to individuals purchasing health insurance in states with federally-established exchanges. Without these subsidies, many individuals would have been unable to afford insurance to comply with the ACA’s individual mandate.

A fair understanding

ACA language regarding subsidies and the Internal Revenue Service’s (IRS) interpretation of that language were in dispute in this case. The ACA authorized the federal government to subsidize individuals in exchanges “established by the state.” Section 36B of the IRS Code implemented this requirement, but interpreted the language as applying to insurance purchased on either state or federal exchanges. The IRS interpretation created ambiguity and led to the challenge that weaved its way through the federal appellate system.1 (more…)

‘Legal expense cost containment: Applying legal process outsourcing to financial services,’ by Deirdre Oren Byrne

 

 

For a one-minute audio intro to the commentary, click here.

WestlawNext users: Click here to read the full article on WestlawNext.

Deirdre Oren Byrne

Deirdre Oren Byrne

US Crop Tour 2015

How much damage has been done in the eastern Corn Belt due to excessive rain? How good are conditions in the western Midwest? Can the west beat the east allowing national yield to reach trend? The Lanworth Team at Thomson Reuters, along with Reuters news reporters will be hitting the ground to seek answers to these questions and determine whether the reality in the fields match current market expectations.

Get ahead of the market and access the latest data and key findings from our analyst and editorial teams.

Weekly Investment Banking Scorecard

IB scorecard

Fast facts:

  • Europe M&A activity totals $615.4 billion, up 11% compared to YTD 2014 levels
  • United Kingdom ECM activity totals $162.1 billion, down 19% compared to a year ago
  • US Investment Grade Debt hits $697.6 billion this year, up 43% compared to last year
  • Financials M&A hits $230.9 billion this year, up 6% compared to yearago levels
  • Energy & Power ECM totals $62.5 billion for YTD 2015, down 22% from 2014
  • Industrials DCM down 20% compared to 2014 with $151.5 billion raised this year

For more info, download the full Investment Banking Scorecard.

Follow @dealintel on Twitter and register here.

Thomson Reuters Deals Intelligence delivers IB content including quarterly reviews showing trends in M&A and Capital Markets.

Exchange Magazine: The Art of Data

exchange magazine

In the latest issue of Thomson Reuters Exchange, we’re celebrating data, the core of our business and the lifeblood of the industry. While our focus is typically on the science of data – collecting, curating, cleaning, managing and disseminating data – we know there is also an art to making data useful, powerful and insightful. Enjoy our featured articles below or download Exchange for free on your iPhone®, iPad® or Android™ tablet device.

Data journalism

Telling Bigger Picture Stories with Big Data

Maurice Tamman, head of Reuters data and computational journalism team, explains how the journalism profession is changing as data proliferates and computing power increases. (more…)