What I've read in the last few days 06/01/25

Swisscom Cuts Earnings Guidance on Early Closing of Vodafone Italia Deal (Wall Street Journal) - link here

So, part of what I've been studying is the impact of mergers / acquisitions on the balance sheet and liquidity, so have been kind of following the Swisscom / Vodafone situation. Key takeaways were that Swisscom has revised its 2024 earnings guidance after completing an €8 billion merger of its Italian subsidiary Fastweb with Vodafone Italia on 31 December.

The deal, finalised earlier than expected, will bring annual synergies of €600 million but adds €200 million in integration costs. Swisscom now projects EBITDA of CHF 4.3-4.4 billion, down from CHF 4.5-4.6 billion. Revenue, capital expenditure, and dividend forecasts remain unchanged. The merger, approved by Italian regulators, enhances Swisscom's presence in Italy while enabling Vodafone to exit the market, reshaping the telecommunications landscape. Free cash flow remains unaffected.

Why 2025 Could Be a Great Year for Big Banks (Wall Street Journal) - link here

I work in a banking tram, so am interested in how they're going to do and perform. After years of mixed performance, global banks may thrive in 2025. Interest rates are expected to remain "less high for longer," benefiting net interest margins and diversifying revenue streams. All major divisions, except FICC trading, are forecast to grow, with advisory services gaining momentum as private equity exits rise. Despite potential challenges like weak European growth and commercial real estate risks, default rates remain low. Regulatory easing could provide additional tailwinds, positioning banks like Goldman Sachs for success. Overall, 2025 might be the year banks operate at full strength.

China’s yuan is nowhere close to displacing the greenback (the Economist) - link here

I've gotten interested in currency, over the last few months, so understanding why the yuan won't overtake the dollar was interest. Key takeaway? After Bretton Woods collapsed in 1973, predictions of the US dollar’s decline proved wrong. Despite America’s reduced global economic share (27% in 1973 to 16% today), the dollar remains dominant in trade, investment, and reserves, granting the US credit access and sanction power.

While its share in central bank reserves has fallen from 73% in 2001 to 56%, rivals like the euro lack sufficient safe assets, and China’s yuan faces trust and liquidity issues. The dollar’s dominance provides Americans with cheap borrowing and foreigners with a safe asset. Its erosion would destabilise the global financial system.

IPOs Gained Momentum in 2024. Next Year Could Be Even Bigger. (Investopedia) - link here

Companies raising capital on the public market is something I'm looking at in my course, so thought looking at the rate of IPOs would be interesting. In 2024 companies raised over $41 billion in IPOs, surpassing 2022 and 2023 but below 2021’s $316.6 billion peak. Lineage’s $5.1 billion IPO was the largest of 2024. The IPO market froze after 2021 due to disappointing SPAC performances, high interest rates, and inflation concerns there is optimism grows as the Federal Reserve cuts rates and deregulation under President-elect Trump boosts business. Key IPOs, including Klarna and Cerebras Systems, may lead the way.