S&P Global To Buy IHS Markit And Chinese Economic Activity Climbed

S&P Global To Buy IHS Markit And Chinese Economic Activity Climbed

about 3 years ago3 mins

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S&P Global is restarting as it means to go on: the data and analytics company agreed on Monday to buy fellow data company IHS Markit for $44 billion 💻

What does this mean?

With markets having become increasingly computerized in the last few decades, financial data has exploded in popularity. This deal, then, would combine two of its biggest providers: S&P Global – best known for its bond ratings and stock market indexes, like the S&P 500 and Dow Jones Industrial Average – and IHS Markit, which tracks millions of financial data points.

Providing market data and indices will be the firm's top revenue source
Source: Bloomberg

The deal is an “all-stock” deal, meaning S&P Global will pay for IHS Markit using its own shares rather than nickels and dimes. And since there’s no cash to raise, that’ll make it far cheaper and more efficient. Investors sure seemed pleased: S&P Global shares were up after the announcement.

Shares of S&P Global, IHS Markit have trounced the market

Why should I care?

The deal is the latest in the race to put the “big” in Big Data: the London Stock Exchange, for instance, agreed to buy Refinitiv last year 👀 But that deal is still under scrutiny from European regulators, which are concerned that combining the two companies – a move that would give them control of both the creation of data and its distribution – would enable them to block their competitors from the market. S&P Global and IHS Markit’s plan, then, isn’t a done deal just yet.

If it does get the go-ahead, this deal will be 2020’s biggest. And that’s in a year where – aside from a quiet few months where companies held their breath – deals have been all the rage, even hitting record highs in September 🤝 Businesses are increasingly using their own shares to pay for them too – probably because stock markets’ own all-time highs have given them plenty of money to spend.

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Chinese Economic Activity Climbed

China image

China’s making the rest of us feel small: fresh data released on Monday showed the country’s economic activity climbing to new highs in November 🇨🇳

What does this mean?

The data – based on surveys that ask business managers how busy they’ve been compared to the month before – painted a promising picture for the Chinese economy. The country’s manufacturing sector hit its highest activity level in three years, driven by both strong domestic demand and a boost in exports ahead of the Christmas period 🎄 Likewise, its services sector – which covers everything from accountancy to hospitality – hit levels not seen since 2012, suggesting life is returning to something resembling – whisper it – normal.

China official manufacturing PMI

Why should I care?

This data highlights China’s status as the only major economy expected to grow this year. Unlike the US and Europe – where lockdowns are causing even more economic shrinkage – the country has managed to avoid a coronavirus surge now winter’s arrived 💉 And the best could be still to come: some economists reckon the Chinese economy will get another lift when a vaccine becomes widely available, with the US and Europe’s economic recoveries driving demand for its goods. But others argue it might have the opposite effect: anyone with a vaccination might, after all, go straight back to spending their money on restaurants, concerts, and… well, real life.

One investment advisor says investors should think about investing more money in China – and not just because of the country’s role as a global economic bright spot ☀️ He thinks it’s especially appealing because the worsening US-China trade war might knock the two countries’ economies further out of sync. In other words, Chinese stocks won’t depend as heavily on the West’s performance – and they might just save your portfolio if things go wrong over here.

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