As 2023 comes to an end, capital markets in the United States and Asia continue to search for direction. Still, some big names are expected to list in 2024 including the likes of Reddit, Klarna, and Shein. Streaming media is also adapting to the new normal as rival services find ways to increase revenue. Netflix is reducing their in-house movie making to 20-30 titles a year, down from 50 a year ago, while rivals HBO and Disney+ are licensing their content to other services.
High mortgage rates have also been a challenge for home buyers and sellers over the last year as inventories remained tight. A recent court case in Missouri may make transactions less expensive as high broker fees came under the spotlight. People are not only staying in their homes, but choosing to work from there as well. Businesses are struggling with return-to-office policies as employees resist the change.
See all the details below.
Pursuit News to Use is Pursuit PR’s signature news intelligence curation. We cover news related to the finance, tech, media and real estate sectors, as well as general business. For our clients, we tailor Pursuit News to advance their corporate reputation.
We welcome your feedback on topics of interest and questions regarding how News to Use is applicable to your organization. Please feel free to contact me directly for more information.
Capital Markets
United States
The U.S. IPO market had a slower 2023, but that isn’t deterring major companies from preparing for an active year ahead. Reddit is on the radar for a public listing in the first quarter of 2024, according to reports by Bloomberg regarding the company's ongoing talks with Morgan Stanley and Goldman Sachs. Some other highly anticipated listings include buy now, pay later firm Klarna, testing and certification firm UL Solutions Inc., and Smith Douglas Homes Corp.
Companies like Klavio, Birkenstock, and Instacart went headfirst into September’s open window, but then geopolitical and market events put a damper on equity prices after many hoped these listings would be a catalyst for more IPO fervor.
Asia
Another impetus for Wall Street may be several Asia-based companies that are eyeing possible U.S. listings. Shein, the fast-fashion retailer that has upended online shopping with incredibly low prices on no-brand items, has reportedly filed for an IPO that could take place next year. And Chinese electric car manufacturer Zeekr Intelligent has made public its SEC filing that showed its revenue nearly doubling while still struggling to turn a profit. The company is owned by Hong-Kong based Geely, a major Chinese automaker.
China’s equity markets are still looking for a stable bottom as shares continue to drop and investors leave the country. Continued real estate sector weakness, with a raft of major defaults, continues to weigh on markets and may now be overflowing into the shadow banking sector. These financial firms are estimated to be managing roughly $3 trillion in investor funds, mainly from middle and upper middle class investors. Zhongzhi Enterprise Group, which is heavily exposed to the real estate sector, has said it can no longer pay its bills with $65 billion in liabilities.
In addition to these mainland concerns, Hong Kong’s once robust exchange, the Hong Kong Exchanges and Clearing Limited (HKEX) has seen a significant drop in listings, recently hitting a two-decade low. To make IPOs more attractive, the HKEX launched a new digital platform to speed up settlements to two days from five and reduce stamp duties.
Streaming Media
Hollywood was rocked by writer and actor strikes that shut down productions for months. With new contracts in place, movies, television shows and reality programs are back, but that isn’t resolving some media troubles.
Bob Iger, long time CEO of Disney has returned to helm the media company through some rough waters. The entertainment conglomerate is struggling with declining viewership on its streaming service and lower attendance at Florida-based Disney World. Uncertainty over Iger’s successor and political wrangling with Florida Gov. Ron DeSantis, continue to weigh on the company as the stock tests a near decade low.
Netflix is also reacting to market changes. Rather than pursuing a volume strategy for its content, the streaming service has shifted to a “quality over quantity” approach and lowered its film production runs to 20-30, down from 50 a year ago. Still, the free-wheeling culture remains intact for culture-defining content. Streaming competitors like HBO and Disney+ have also altered their business plans to include licensing of their content on other platforms, rather than keeping them all in-house. Hits like Band of Brothers for example, are now bingeable via Netflix.
Real Estate
People in the United States are not only staying in their jobs, they’re keeping their homes as well while mortgage rates remain high. Until they drop significantly, and some bankers believe they’ll lower to around 6% by the end of 2024, the market will remain tight. Some sellers are reducing prices in response to these market conditions as previous sales are no longer a gauge to market the few homes that are for sale.
Once the market does start to heat up again, mortgage brokers may not be seeing the same large commissions of the past. A $1.8 billion Missouri court verdict found that the National Association of Realtors, the Homeservices of America and Keller Williams Realty had illegally conspired to keep commissions high. Two other firms settled out of court for $140 million. If the ruling holds, home prices might even decrease as a result of lower broker fees paid by buyers and sellers.
General Business
Businesses are also dealing with a new environment as employees resist increasingly common return-to-office mandates. In some cases, they’re threatening lawsuits. As work-from-home productivity remains high, some employees are raising legal challenges over reasonable accommodations afforded by the Americans with Disabilities Act.
Other workers are filing complaints over mental health disability discrimination, concerned with isolation issues that have risen stemming from the Covid pandemic. Working parents and older employees are also resisting a return to the office, challenging employers’s plans.
Despite the uncertainty of requiring a return to offices, workers are not leaving their jobs as much as expected. Companies are struggling with lower attrition rates that are driving up expenses and limiting movement within firms. That means higher severance costs to move out more senior employees.
And as companies continue to do well in an economy that has defied many expectations for a recession, these trends are unlikely to change any time soon. Starbucks’ recently strong quarter has been attributed, at least in part, to policies aimed at improving worker conditions, including pay.
Thank you for reading this month’s News to Use. If you think your firm would benefit from a customized version of issues relevant to your customers, let us know.