The Diamond Industry Gets Shaken Up, Asian Markets Surge and a New Age Gold Rush is upon Us in this Week's Edition...
Take a Lap Around the Industry
Meme-Stock Frenzy Returns, Leaving Short Sellers with Heavy Losses (Bloomberg)
Robust Services Sector Drives US Producer Inflation Higher in April (Reuters)
Traders Abandon Thematic ETFs, Billions Withdrawn from Popular Funds (Bloomberg)
Fed Chair Admits Reduced Confidence in Controlling Inflation (NYT)
Anglo American's De Beers Spin-Off: A Turning Point for the Diamond Industry
Anglo American Plc's decision to sell or spin off its De Beers business marks a significant shift in the diamond industry. After nearly a century of dominating the market, De Beers' future is now uncertain. This move is part of Anglo’s broader restructuring strategy aimed at fending off a $43B bid from BHP Group and focusing on its more lucrative copper operations. The announcement has sent ripples through the industry, particularly among De Beers’ 80 sight-holders who rely on its established supply chain. As inflation and the rise of lab-grown diamonds pressure the market, the departure of Anglo’s financial backing raises concerns about De Beers' ability to maintain stability. Despite assurances from De Beers' CEO about potential operational flexibility, the industry is bracing for possible disruptions. With few obvious buyers, the sale or spin-off of such a storied brand could reshape the diamond market significantly.
"De Beers is a bit of a trophy asset. It’s really rare that something this exceptional becomes available, but if it does, it offers the buyer a unique opportunity to take leadership of a luxury segment..."
Anish Aggarwal, Gemdax
Private Funding Pulse Check
Securing $33M in Series B funding, Brixton Biosciences, a clinical-stage life sciences company, has received backing from Boston, MA-based Schooner Capital
The Arkin family office, Arkin Holdings, recently took part in a Series C funding round, investing $182M in Bluejay Therapeutics, a biotechnology company developing innovative cures to viral and liver diseases
All Things Butter, an organic butter manufacturer, has successfully closed a $2.8M Seed funding round, with participation by Len Blavatnik's family office, Access Industries
An infant nutrition company aimed to deliver formula innovations, ByHeart, has attracted a $95M Venture investment from Bellco Capital
J.P. Morgan Advisors successfully recruited a top-tier private wealth team from Merrill Lynch in Los Angeles, which managed $28B in client assets and generated $10M in annual revenue
The team, led by Eric A. Gray and Lance M. Polverini, is recognized for its high standing in Los Angeles and has significantly contributed to establishing Merrill's private wealth presence in the Century City area
Eric Gray, co-leader of the team, brings extensive industry experience to J.P. Morgan, having started his career at Goldman Sachs in 1992 before joining Merrill Lynch in 2000
The move was described by industry recruiter Phil Waxelbaum as a "devastating blow" to Merrill Lynch in terms of revenue loss and reputational impact, underscoring the competitive dynamics in wealth management
Chinese and Hong Kong Stocks Surge as Investors Eye Opportunities
Chinese and Hong Kong stocks are making a significant comeback after a prolonged slump, capturing the attention of global investors. The Hang Seng Index and the MSCI China Index have both risen by over 9% this year, matching the performance of the S&P 500. This resurgence is driven by a tech-fueled rally and relatively cheap valuations, drawing interest as investors anticipate supportive policies from Chinese officials. However, potential risks loom, including geopolitical tensions and uncertainties about China's economic stability. While tech giants like Alibaba and Tencent have bolstered recent gains, the long-term sustainability of this rally remains in question.
"Comparing Hong Kong stock valuation to other markets like Japan or India, you see more interest in Hong Kong...Global money has seen and is thinking, maybe I shouldn’t miss out."
Chok Wai Lee, Morningstar
Global Economic Fears Fuel Modern Gold Rush
Economic uncertainties and geopolitical tensions are driving a modern gold rush, with small investors and institutions alike flocking to purchase physical gold in the form of bars, coins, and jewelry. Eric Vazquez, a lineman in Florida, reflects this trend by stockpiling gold in various secret locations to ensure his family's safety amid what he perceives as growing chaos. This widespread demand has driven gold prices up by over 40% since October 2022, even as traditional financial metrics would suggest otherwise. Analysts attribute the surge to global buyers, particularly from China, seeking stability outside their struggling economies. The rise in physical gold demand has been compounded by central banks doubling their gold purchases post-Ukraine invasion, diversifying away from dollar-based assets. With global debt ballooning, many investors are turning to gold as a hedge against potential economic catastrophes, driving prices higher and reshaping traditional market dynamics.
"There’s just growing uncertainty, whether it’s economic uncertainty or geopolitical uncertainty..."
David Wilson, BNP Paribas
Dentons Survey Reveals Critical Risks for Global Family Offices
Dentons, the world’s largest global law firm, has released its annual survey report, "The Evolving Risk Landscape for Family Offices," highlighting key risks and offering mitigation strategies for family offices worldwide. The report, based on responses from over 200 family offices in more than 30 countries, identifies critical risks including cyberattacks, geopolitical upheaval, and legal and regulatory issues. Despite 70% of family offices reporting a dramatic increase in cyberattack likelihood, only 31% have robust risk management programs and just 29% consider their training programs sufficient. Geopolitical risks are another major concern, yet only 17% have clear processes to address them. The survey also reveals that while 48% hold cyber insurance, significant coverage gaps remain. Edward Marshall, Dentons' Global Head of Family Office, stresses the need for a proactive approach and better resource allocation to enhance risk management and protect family assets.
"Dentons is at the forefront of providing the family office community with actionable intelligence and valuable benchmarks to compare risk profiles with peers similar in size and geographic reach."
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