7th April 2025
Private Equity Industry Struggles:
Large investors, such as pension funds and endowments, scrutinise their stakes in illiquid private equity funds due to liquidity pressures and poor performance, considering a mass sell-off at steep discounts. Second-hand private equity fund stakes may sell for less than 80% of their net asset value, a significant decline from recent levels near 100%.
Similarly, dealmaking and IPO’s have stalled, restricting dividends to investors. The "denominator effect" has worsened overexposure to unlisted assets as public market values drop.
This has given rise to comparisons to the financial stress seen during the 2008 crisis and early COVID-19 pandemic.
US Junk Bond Market Sell-Off:
Trump's new tariffs triggered the largest sell-off in US junk bonds since 2020, with spreads widening sharply as fears of economic slowdown grow.
Lower-rated companies, particularly in retail, automobile parts, and energy sectors, struggle due to weaker credit fundamentals and higher debt servicing costs.
In response, JPMorgan revised its US economic forecast, predicting a worrying 0.3% contraction in 2025 and a rise in unemployment to 5.3%.
Global Market Turmoil from Tariffs:
Trump's tariff spree on major trading partners caused “global market routs”, erasing $5 trillion from the S&P 500 and sinking Asian and European markets alike.
Safe-haven assets like US Treasuries surged as investors fled riskier markets. However, commodities like oil and copper also fell sharply.
Critics, including Bill Ackman and Stanley Druckenmiller, warned that the tariffs could lead to severe and widespread economic consequences.
News written by Iskander Shyngyssov | Published by Zhangir Zhangaskin
