Raphael Stevens

In 2023, the total deal value for the Asia Pacific region declined more than 23% to $147 billion from a year earlier, Bain & Company said in its report.
Japan though, was an outlier with deal value surging 183% in 2023 from a year earlier, making it the largest private equity market in Asia Pacific for the first time, according to the report.
Exits plunged 26% to $101 billion in 2023 from a year earlier — 40% of these exits were via initial public offerings, Bain said.

An editorial picture of the Japan flag set against an economic trend graph and images associated with the stock market, finance and digital technology.
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The total value of private equity deals in Asia Pacific last year fell to its lowest since 2014 as fundraising dropped to a 10-year low amid slowing growth, high interest rates and volatile public markets, according to management consultancy Bain & Company.
Japan though, was an outlier, with deal value jumping 183% in 2023 from a year earlier, making it the largest private equity market in Asia Pacific for the first time, according to Bain’s 2024 Asia-Pacific Private Equity Report released Monday.

Japan is an attractive investment due to its deep pool of target companies with “significant pool for performance improvements” and corporate governance reform pressure on Japan Inc to dispose of non-core assets, Bain said.
Overall, deal value in the Asia-Pacific region declined more than 23% to $147 billion from a year earlier. This is also 35% below the 2018-2022 average value — a pace of decline that’s consistent with the global slowdown — and nearly 60% lower than the $359 billion peak in 2021, Bain said.
Exits plunged 26% to $101 billion in 2023 from a year ago — of which 40% were via initial public offerings. Greater China accounted for 89% of the IPO exit value in Asia Pacific, with a vast majority listing in Shanghai and Shenzhen. Excluding Greater China IPOs, the total Asia-Pacific exit value was $65 billion.

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“The outlook for exits in 2024 remains uncertain, but successful funds are not waiting for markets to bounce back. They are paving the way for sales that meet their target returns by using strategy reviews to highlight the potential value of deals to buyers,” Lachlan McMurdo, co-author of the firm’s annual report said in a statement.
“This approach can reduce the inventory of aging assets and return cash to limited partners through 2024, even if the overall exit market remains depressed,” he added.

Bain said many leading private equity funds have turned to exploring alternative asset classes, such as infrastructure operations with medium to high returns including renewable energy storage and data centers and airports.
Here are some highlights of the report:

Buyouts constituted 48% of total deal value in Asia Pacific last year, exceeding the value of ‘growth deals’ — involving companies that expand fast and often disrupt industries — for the first time since 2017.
Despite a declining pool of investors, Bain said private equity returns are still more attractive than those from the public markets on a five-, 10 and 20-year horizon.

The timing of a recovery still remains unclear, Bain said, even though there were signs of some improvements toward the end of last year. When the recovery does take effect, disruptive technologies such a generative artificial intelligence are among new areas that hold “great promise,” Bain added.
Japan, India and Southeast Asia, are among the Asia-Pacific markets being viewed favorably for private equity investment opportunities in the next 12 months, Bain said, citing Preqin’s 2023 investor survey. More

Every week, a new high. Little wonder a sense of unease is settling over markets. Some 40% of global fund managers think that artificial-intelligence (AI) stocks—a crucial driver of the rally—are already in a bubble, according to Bank of America’s latest monthly survey. Even Wall Street’s most starry-eyed pundits reckon America’s S&P 500 index of leading shares can eke out only minor gains in the remaining nine months of the year. For some, such nervousness portends a crash. But for everyone, it prompts a question: with stock prices having already risen so much, are there any left that offer good value?“Value” stocks are deeply unfashionable, and with good reason. They are defined as shares with prices that are low compared with their underlying assets or earnings (as opposed to “growth” stocks with prices that are high on these measures, yet which promise rapidly rising profits). If that sounds appealing, the returns of recent years have not been. Over the past decade value stocks have lagged behind the broader market and been left in the dust by their growth counterparts (see chart 1). In 2022, as interest rates rose and the prices of speculative assets took a savage beating, the pendulum briefly seemed to be swinging back. But only briefly: the current bull market has once again seen value stocks trounced by the rest.Chart: The EconomistThis losing streak has led many to declare value investing dead. Critics say it struggles to account for the intangible assets and research spending that underpin many of today’s most successful firms. Investing tools make it easy to filter companies based on price-to-value ratios, meaning that potential returns from this approach will probably be arbitraged away fast. The firms left looking cheap, in other words, are cheap for a reason.None of this, though, stops anyone from worrying that the valuations of the stocks leading today’s bull run have become too high to offer stellar future returns. A widely watched metric for this is the cyclically adjusted price-to-earnings (CAPE) ratio devised by Robert Shiller of Yale University, which divides prices by the past decade’s-worth of inflation-adjusted earnings. For America’s S&P 500 index, the CAPE has been higher than it is today only twice: at the peak of the dotcom bubble, and just before the crash of 2022. Even if a crash does not follow, a high CAPE ratio has historically proved to be a strong indicator that poor or even negative long-run real returns lie ahead. You hardly need to be a card-carrying value investor to take this as a cue to look elsewhere.For Victor Haghani of Elm Partners, a fund-management outfit, the response is obvious: look beyond America. In the wider world, valuations are lower (see chart 2). Mr Haghani calculates that, although American stocks attract a much higher aggregate price-to-earnings multiple than those elsewhere, around 40% of their underlying earnings come from overseas. In the rest of the world, some 20% of total earnings derive from America. Put another way, there is a strong degree of crossover in where the profits of the two groups of companies are actually made.Chart: The EconomistDespite this, the values the market assigns to earnings derived from America and elsewhere are wildly different. Mr Haghani’s number-crunching suggests that, to get from earnings to share prices (for both American and non-American stocks), investors are scaling up those coming from America by a factor of more than 40. For earnings coming from the rest of the world the equivalent scaling factor is just ten.This disparity seems to make little sense. It is one thing to suggest that American firms deserve a higher valuation because there is something exceptional about their growth potential. But why should earnings originating from America boost a share’s price so much more than those from elsewhere?Perhaps the stockmarkets of countries outside America (or, equivalently, the earnings coming from these countries) are simply underpriced in relative terms. This is just the sort of mispricing that markets may eventually correct by raising the valuations assigned for non-American firms, lowering those of American firms, or both. What is more, whereas value investing often involves taking concentrated bets on individual companies or sectors, betting on this repricing allows the risk to be spread across most of the world.In fact, even the argument that companies outside America merit their current low valuations because they lack dynamism is threadbare. It is frequently couched in terms of the sectoral composition of each market: America’s is brimming with the disruptive tech firms of tomorrow, while Europe’s, for example, is stuffed with stodgy banks and industrial outfits.But Hugh Gimber of JPMorgan Asset Management pours cold water on the idea that this explains the lower valuations of European firms. His team has split the continent’s companies by sector, analysed the historical multiples by which their earnings have been scaled up to generate their share prices, then compared these with the equivalent multiples for American firms. In most sectors, the European companies’ stocks have suffered from long-run average discounts. Today, though, these discounts are present in every sector—and are much deeper than their long-run averages (see chart 3). Rather than failing to operate in cutting-edge industries, such firms might simply be underpriced.Chart: The EconomistIt is not just in Europe that such potential value trades abound. Mr Gimber points to a range of emerging-market countries that are well placed to profit from global trends, and where valuations are nowhere near as eye-watering as those in America. Examples range from Mexico and Vietnam—benefiting from the “friendshoring” of Western supply chains—to other countries riding the AI wave, such as South Korea and Taiwan.Jens Foehrenbach of Man Group, an asset manager, notes that the Tokyo Stock Exchange has set an explicit target for firms to take actions that will raise their shares’ price-to-book ratios (the firm’s market value divided by its net assets) above 1. Some 42% of the constituents of Japan’s Topix index are yet to reach this, suggesting an obvious bet for those who think they will eventually.A unifying feature of all such markets is that—like any value investment—betting on them involves a leap of faith. The longer America’s stockmarket outperforms the rest, the more it seems like the natural way of things. Maybe companies listed elsewhere look cheaper because they are simply worse. But there are signs that the pricing differentials have grown too large for professional investors to continue tolerating. In March global fund managers told Bank of America’s survey that, month-on-month, they had rotated more of their equity allocations into European and emerging-market stocks than they had done for years. Any that are underpriced might not remain so for long. ■ More

A major exchange-traded fund provider is going deep on two popular plays: megacap tech and weight loss drug stocks.
In health care, Roundhill Investments is getting ready to launch a fund that focuses on the companies behind GLP-1 drugs. Dave Mazza, the firm’s chief strategy officer, expects to have more information on the fund’s debut in May.

“It’s going to be important to kind of keep an eye on this space,” Mazza told CNBC’s “ETF Edge” this week. “We’re going to see some rapid advancements in drugs. We’re already seeing rapid advancements of those leaders launching new drugs and new opportunities in the market.”
This wouldn’t be Roundhill’s first new product this year. The firm launched leveraged and inverse exchange-traded funds three weeks ago that track widely held tech stocks. They are the Roundhill Daily 2X Long Magnificent Seven ETF (MAGX) and the Roundhill Daily Inverse Magnificent Seven ETF (MAGQ).
MAGX is designed to profit from “Magnificent Seven” gains, which comprises Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Meanwhile, MAGQ gives investors a way to bet negatively on the group.
“These are tools that can be used for traders who have short-term views on the Magnificent Seven — both positive and negative to express that view,” said Mazza. “If you’re bullish, maybe look to that two-times amplified exposure with MAGX. Or, if you want to hedge your position or take an outright bearish view on a short-term basis, there’s MAGQ.”
Both funds reset their performances each day. So, they’re considered risky choices for investors, according to Mazza.

“You need to be able to view your positions on a daily basis. You can hold it for more than a day, but you need to be able to reassess: ‘Is this the right trade for me to be in?'” Mazza said. “They’re not intended to be held for longer time periods.”

‘You’re going to strike out a lot’

VettaFi’s Todd Rosenbluth cautions leveraged and inverse ETFs may not be suitable for every investor due to volatility.
“You really need to go in with your eyes open and understand that every day these could perform really well or really poorly,” the firm’s head of research said. “I like to think of leveraged and inverse ETFs as in playing baseball swinging for the fences. You’re going to hit a couple of home runs. You’re going to strike out a lot.”
Since their debuts on Feb. 29, the Roundhill Daily 2X Long Magnificent Seven ETF is up almost 7%, while the firm’s Daily Inverse Magnificent Seven ETF is down nearly 4%.
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Women and Wealth Events
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The rate of divorce among Americans age 50 and older has doubled since the 1990s. It has tripled for adults over 65 years old.
So-called “gray divorce” puts women at high financial risk.
There are steps women can take now to protect themselves.

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Breaking up in old age can be costly, especially for women.
The rate of “gray divorce” — a term that describes divorce at age 50 and older — doubled from 1990 to 2019, according to a 2022 study published in The Journals of Gerontology. It tripled for adults over age 65.

In 1970, about 8% of Americans who divorced were age 50 and older. By 2019, that share had jumped to an “astounding” 36%, the study found.
About 1 in 10 people — 9% — who divorced in 2019 were at least 65 years old.
Meanwhile, rates of divorce have declined among younger adults, according to Susan Brown and I-Fen Lin, sociology professors at Bowling Green State University who authored the analysis.

The ‘chronic economic strain’ of gray divorce

In heterosexual relationships, gray divorce typically “has more negative implications for women than for men,” said Kamila Elliott, a certified financial planner and co-founder of Collective Wealth Partners, based in Atlanta.
Studies suggest women’s household income generally drops between 23% and 40% in the year after a divorce.

The economic effects are “less severe” for men, with some studies showing their income may even rise after a breakup, according to Laura Tach and Alicia Eads, sociology professors at Cornell University and the University of Toronto, respectively. The duo have co-authored several papers on the topic.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Those financial disparities seem to be more muted for younger generations of women due to a greater likelihood of them working relative to older cohorts, experts said. Many older adults who divorce today adhered to the traditional notion of a man as a household’s sole breadwinner, they said.
“We’re seeing women in divorce today who are of the generation where they just didn’t work their entire life,” said Natalie Colley, a CFP based in New York and senior lead advisor at Francis Financial.
Women also tend to earn lower incomes than men due to a persistent wage gap; they tend to have less savings, and near-retirees who are divorcing don’t have much time to make up the difference. Divorced women can claim a Social Security benefit based on their own earnings or a former spouse’s earnings history, but the latter option is generally worth only up to half of an ex’s benefit.

Remarrying or cohabitating generally helps bolster one’s finances via pooling of resources. But women who undergo gray divorce are less likely to do so than men: Only 22% of women re-partnered in the decade after gray divorce versus 37% of men, putting them at “sustained economic disadvantage into old age,” according to a separate paper by Brown and Lin.
Altogether, women’s standard of living declined by 45% following a gray divorce, while the drop for men was less severe, at 21%, Brown and Lin wrote.
These negative economic outcomes persisted over time, “indicating that gray divorce operates as a chronic economic strain,” they said.
Poverty levels among women old enough to qualify for Social Security retirement benefits are almost twice as high for women who divorced after age 50 as those who divorced before age 50, Brown and Lin found; the same isn’t true for men.

How women can protect themselves financially

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Here are some steps women can take to protect against the financial pitfalls of a potential future divorce, according to financial advisors.
Get active in your household finances. “Women should take a very active role in their household finances,” said Elliott, a member of CNBC’s Advisor Council.
Women shouldn’t get to a point where they’re unaware of their household’s spending, savings, and mortgage payments and interest rates, for example, she said. Such information could come as a surprise upon divorce, and women may learn they’re not financially well-protected.
Additionally, being unengaged from financial decision-making may mean they’re ill-equipped to handle their own finances if they become single, Colley said.
“I can’t tell you how many times I’ve met couples where the woman had no idea what the husband was doing financially,” Elliott said.
Have access to your own money. Many couples commingle their financial accounts. Many women may also be authorized users of credit cards instead of primary owners, Elliott said.
But women should ensure they have access to their own funds so their spouse can’t shut off the financial spigot if a relationship sours, Elliott said.

Additionally, women should consider investing or saving in their own retirement account, she added.
Retirement savers generally need earned income to open and contribute to an individual retirement account; however, women who don’t work can open a “spousal IRA” based on their spouse’s income. (You must be married and file a joint tax return to open one.)
Be strategic about claiming Social Security. Social Security is an important source of guaranteed income in retirement, especially for women.
The sequence of claiming benefits can be important for married couples and can help women hedge against divorce (or widowhood) later, Colley said.
For example, let’s say a husband is eligible for a larger Social Security benefit relative to his female spouse. He can defer claiming benefits to age 70, thereby maximizing his lifetime monthly benefit.
That increases the monthly benefit his wife could receive upon divorce or widowhood, and helps maximize a woman’s cash flow in such circumstances, Colley said.
Save some alimony. If a woman receives alimony after a divorce, she should aim to save some of it, instead of spending it all, Elliott said. That’s because alimony generally only lasts for a certain period — and women must make it last, she said.

I can’t tell you how many times I’ve met couples where the woman had no idea what the husband was doing financially.

Kamila Elliott
certified financial planner and co-founder of Collective Wealth Partners

“Just because you get alimony, it’s not business as usual” relative to spending levels, she said. “You probably need to reassess your lifestyle.”
Consider a prenuptial or postnuptial agreement. Couples can also consider a prenuptial agreement or postnuptial agreement that contains provisions to protect a woman financially if she leaves the workforce to care for their children, for example, Colley said.
Doing so generally permanently dents the caregiver’s earning power, and a legal agreement can help insulate against that financial risk, she added. For example, perhaps it stipulates the woman gets a guaranteed stream of income for a certain number of years if the marriage dissolves, Colley said. She recommends working with an attorney who specializes in such legal documents. More

Sovereign wealth funds and other investors are jostling to buy into an Anthropic stake worth more than $1 billion.
The AI startup has ruled out taking any Saudi money over national security concerns, sources say, despite the kingdom’s ambitions to get in on the AI boom.
Existing Anthropic stakeholders, including Amazon and Google, are not expected to increase their holdings in this round.

Deep-pocketed, sovereign wealth funds are among the investors clamoring to get a stake in Anthropic, the red-hot artificial intelligence startup that’s taking on OpenAI. One country that’s being left out: Saudi Arabia.
As bankers line up a group of potential new Anthropic backers, the company has ruled out taking money from the Saudis, according to people familiar with the matter. Anthropic executives cited national security, one of the sources told CNBC. 

The stake in Anthropic is for sale because it belongs to FTX, the failed cryptocurrency exchange started by Sam Bankman-Fried, and is being unloaded as part of the company’s bankruptcy proceedings. FTX bought the shares three years ago for $500 million. The 8% stake is now worth more than $1 billion due to the recent boom in AI.
Proceeds from the sale will be used to repay FTX customers. The transaction is ongoing and is on track to wrap up in the next couple weeks, said people with knowledge of the talks who asked not to be named because the negotiations are private.
The class B shares, which don’t come with voting rights, are being sold at Anthropic’s last valuation of $18.4 billion, sources said. Anthropic has raised roughly $7 billion in the last few years from tech giants like Amazon, Alphabet and Salesforce. Its large language model competes with OpenAI’s ChatGPT. 
Anthropic founders Dario and Daniela Amodei have the right to challenge any potential investors, according to the sources. However, they are not involved in the current fundraising process, or in the discussions with potential investors in FTX’s stake. The founders were introduced to Bankman-Fried through “effective altruism,” a philosophy that involves making as much money as possible to give it all away.

Saudi Crown Prince and Prime Minister Mohammed bin Salman meets U.S. Secretary of State Antony Blinken (not pictured), in Jeddah, Saudi Arabia March 20, 2024. 
Evelyn Hockstein | Reuters

While Anthropic’s founders told bankers they wouldn’t accept Saudi money, they don’t plan to challenge funding from other sovereign wealth funds, including United Arab Emirates fund Mubadala. The UAE-based firm is actively looking at investing, according to one of the sources.

The potential buyers of FTX’s shares comprise a syndicate of new investors for Anthropic, a source said, meaning Amazon and Alphabet would not be involved. Part of FTX’s stake is being shopped around through special purpose vehicles, or SPV, which allows multiple investors to pool capital. SPVs have been emailing venture firms to solicit participation, three sources said. Investment bank Perella Weinberg is handling the sale on behalf of FTX.
Representatives from Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and Saudi Arabia’s Public Investment Fund, or PIF, didn’t immediately respond to a request for comment.
The PIF, Saudi Arabia’s sovereign wealth fund, has more than $900 billion in assets and has been plowing capital into technology to diversify the nation’s revenue away from oil. The fund is in talks with venture firm Andreessen Horowitz to create a $40 billion fund to invest in AI, two sources with knowledge of the matter told CNBC. The discussions were first reported by the New York Times. 
Saudi Crown Prince Mohammed bin Salman’s ambitious “Vision 2030 Initiative” has looked to modernize the economy and strengthen ties in global finance. The PIF has investments in companies including Uber, while also funding the LIV golf league and spending heavily in professional soccer and tennis.
Anthropic’s national security concerns regarding Saudi Arabia could be over dual-use technology — software or tech that can be used for both civilian and military applications. That’s an area of notable focus for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investments from particular sources in certain areas. Saudi Arabia has also been warming to China.
The kingdom’s human rights record remains a major problem for some Western partners. The most notable case in recent years was the alleged killing of Washington Post journalist Jamal Khashoggi in 2018, an event that triggered international backlash in the business community.
In November, Bankman-Fried was convicted of seven criminal counts tied to the collapse of FTX. His sentencing is scheduled for next week, and prosecutors are recommending a sentence of 40 to 50 years.
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