March 2025
- Bocconi Students Women in Finance
- Sep 15
- 14 min read
Newsletter March 2025
March Recap
Don’t miss out on our social media where we post our weekly tips, market news and market quizzes as well as stories of women that keep inspiring us! News Recap
Tariffs, Inflation, and Consumer Pessimism in the US March brought renewed turbulence to US financial markets, driven largely by intensifying trade disputes and mounting inflation fears. On March 4th, 25% tariffs on import from Mexico and Canada were imposed., escalating trade tensions. The same day both the S&P 500 index and the Nasdaq-100 started declining, and have from this day until the end of the month declined by 4.4% and 5.4%. This implementation of tariffs is expected to lead to rising inflation inthe near future. We will see the figures from March in April, while the most recent numbers (from February) showed a 2.8% year-over-year rise in core Personal Consumption Expenditures (PCE) price index inthe US. In addition, consumer spending has also fallen short of forecasts, sparking concerns of potential stagflation. According to a report from the University of Michigan, the consumer sentiment dropped from 64.7 in February to 57 in March, which is the lowest level since 2022. On March 27th, the Trump administration imposed 25% tariffs on imported automobiles, meaning we can expect higher prices for cars from international brands. This has led to declines in the stock market in this sector. General Motors´ stock price decreased by 7.4% from the previous day, while Ford and Stellantis experienced decreases around 4% in the same time frame. The market is still volatile, and it will be interesting to see what the Fed´s and the Trump administration´s next moves are. Argentina in Discussions for a $20bn Loan Deal with IMF In Argentina, Javier Milei is about to conclude a deal that could be at high stakes for his economic strategy. The president has, since he came to power, conducted an austerity policy leading to a rise of poverty but also to an impressive drop of inflation. Whereas next midterm election is coming in October, Milei expects IMF to help him maintaining his popularity. The deal would indeed keep stabilizing the currency as dealing with the inflation by increasing the reserves of the central banks and lowering the weight of debt with a $20bn new loan. The announcement follows the decree signed in the beginning of the month and the board of funds should approve it in the next few weeks. If the conditions are not completely determined yet it was important for the country to count on the certainty of the deal to reassure the market that had started to sell-off Argentine pesos. Whereas having the highest IMF’s debt with a current $40bn to be reimbursed, Milei expects this deal to help repay some of the debt but mostly to lift the country’s strict capital and currency controls. Argentine has indeed faced lots of restrictions in the past 9 years and is now trying to loosen them, starting with the regain of importations. Milei and his minister of economy Luis Caputo are also going beyond through the negotiation of loans with several other banks. They aim to increase the reserve to $50bn, which are now of $6bn in the red excluding liabilities.
Russia & US Discussions on Rare Earth Metal Cooperation Russia and the United States have initiated discussions on collaborative projects involving rare earth metals within Russia. Kirill Dmitriev, President Vladimir Putin's investment envoy, announced that some companies have already expressed interest in these ventures, though specific details were not disclosed. Following President Putin's February statement expressing Russia's openness to joint projects with American partners in developing its substantial rare earth metal deposits. He highlighted that Russia possesses significantly larger reserves of these critical resources compared to Ukraine and is willing to collaborate with foreign partners, including the United States, in both Russia and newly integrated regions. The discussions occur amid broader geopolitical negotiations, including efforts to resolve the conflict in Ukraine. President Donald Trump has expressed frustration over the stalled ceasefire negotiations and has threatened secondary tariffs on countries purchasing Russian oil if a peace deal is not reached. Rare earth metals are vital for various industries, including electronics, energy, and defense. China currently dominates global production, accounting for approximately 95% of output, prompting other nations to seek alternative sources. The U.S. Geological Survey estimates Russia's reserves at 3.8 million metric tons, though Russian reports suggest much higher figures. Further discussions between Russia and the United States on these projects are anticipated in mid-April inSaudi Arabia.
Dealflows & IPOs
Breakthrough in Cell Therapy: AstraZeneca Acquires EsoBiotec On March 17th, AstraZeneca finalised a 1bn dollar deal to acquire the Belgium-based biotech company EsoBiotec, yet another expansion made by the pharmaceutical group in its ambition to advance cell therapy in treating cancer. The deal is set to close in the final quarter of 2025, making EsoBiotec a full subsidiary of AstraZeneca. The Anglo-Swedish company plans to pay 425 million dollars upfront and 575 million dollars in contingency payments conditional on EsoBiotec reaching specific development milestones. Such a structure will not have a negative financial impact on AstraZeneca. EsoBiotec is a company founded in 2020 specialised in developing technology for cancer treatment. Their method is in vivo cell therapy- intravenously administering substances that genetically engineer immune cells within a patient's body rather than engineering them externally and then inserting them into the patient's system. According to AstraZeneca, the in vivo therapy is promising, and the company is excited to uncover its full potential. AstraZeneca has already made progress in cell therapy by acquiring Gracell Biotechnologies in a 1.2bn dollar deal in December 2023. The firm is developing a new treatment for multiple myeloma, a type of bone cancer. Furthermore, in February 2024, AstraZeneca announced an investment of 300 million dollars towards cell therapy discovery and development.
Google to Realize its Biggest Deal Ever with $32bn Acquisition of Wizz After a first attempt to buy the cyber-security company Wizz last July, Alphabet announced it would buy Wizz for $32bn which would represent its biggest deal ever. Wizz was founded by four ex-Israeli members of the army in 2020 and offers a cyber software mapping out a company’s vulnerabilities very accurately to ensure maximum protection. It performed an incredible growth by going from 0 annual recurring revenue in the first year to $350 millions in 2023 and plans on reaching $1bn this year. As a comparison, it took an average of a decade for Wizz’s competitors to achieve this growth. However, even by taking this into consideration, the price offered by Alphabet is still very high since the deal values Wizz at 32 times sales and the price is also the only information that has been released for now (which is not so unusual in the Silicon Valley). Acquiring Wizz would allow Alphabet to reinforce its position incybersecurity which is becoming increasingly important with the development of AI (meaning more and more data to protect). The probability of the deal going through is however uncertain since the process had already been interrupted last summer because of antitrust concerns and these have not been reduced even under the Trump administration. To reduce this risk, Google announced that Wizz customers will be able to use its services on other clouds too and has agreed to pay a 10 per cent break fee if the acquisition fails again.
Analysis of the Markets
Trump's Auto Import Tariffs Shake Investor Confidence The U.S. stock markets close the month of March experiencing consecutive drops after the latest developments on Trump’s tariffs, with auto sector stocks leading the decline. Even after a moment of relief created by investors’ increasing hope of a possible relaxation of the tariffs, marked by the main indexes showing weekly gains for the first time in more than a month, the announcement of a 25% tariff on foreign-made cars and auto parts brought back market uncertainty. Despite the administration's claims that the tariffs will support U.S. manufacturing and create jobs, investors are growing cautious due to economists' warnings of possibly slower economic growth and increasing prices. Since the announcement, the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite already experienced losses, but the auto stocks were hit even harder. On the following day, General Motors (GM) fell over 7%, Ford (F) dropped 4%, and Toyota (TM) and Honda (HMC) each lost around 3%. Auto parts suppliers were also affected, while Tesla (TSLA) rose slightly as investors saw it as less affected by the tariffs. Technology stocks were mixed, with chipmakers Nvidia (NVDA) and Broadcom (AVGO) falling, while Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) saw small gains. From this point forward, the impact of the tariffs on the auto sector will become increasingly more evident, with predictions of costs for the industry doubling after the latest announcement. JPMorgan analysts had estimated a cost for automakers of about $41 billion a year (if they absorbed all costs) but now doubled their estimate to $82 billion. If manufacturers pass the cost along to consumers, then car prices will increase by nearly 12%. Schroders Targets European Active ETF Market Amid Rapid Sector Growth Schroders, one of the UK’s largest investment groups with nearly £780 billion in assets under management, is poised to introduce actively managed Exchange-Traded Funds (ETFs) in Europe in an effort to attract additional clients. This development aligns with a broader trend in the European investment landscape, where ETFs have gained considerable traction and are increasingly challenging traditional mutual funds. By offering simplified position initiation, lower management fees, and enhanced liquidity - facilitated by continuous trading on stock exchanges - ETFs have triggered notable capital shifts away from traditional asset managers, with actively managed ETFs drawing particular interest. According to a recent Financial Times report, the global market for actively managed ETFs has expanded significantly, with assets under management reaching $1.03 trillion - representing a 50% increase over the past year. However, European asset managers face an uphill battle in this growing segment, as U.S. firms currently dominate. For example, JPMorgan Asset Management leads the field with approximately $32 billion in active ETF assets. Whether mutual funds - particularly those based in Europe - can remain competitive is an open question. Failure to adapt, however, could result in even larger outflows for these traditional managers. Turkey's Market Decline On March 19th, President Erdoğan ordered the arrest of his primary political opponent, Ekrem İmamoğlu, causing political and economic chaos in Turkey. Given the immediate concerns on political stability, markets quickly reacted. The Turkish lira hit an all-time low before partially recovering, dropping more than 10% vs the US dollar and closing the week with a 4% slump. As an effort to calm markets, the Central Bank spent a record of $12 billion in foreign exchange reserves to protect the lira, corporate repurchase policies were relaxed, and short selling was prohibited. Consequently, there was an unexpected 350 basis point emergency rate increase to discourage capital flight and encourage savers to remain with accounts denominated in lira, hiking its overnight lending rate to 46%. Despite such efforts, by the end of the week, the BIST 100 index had lost 16.3%, the worst drop since the global financial crisis of 2008. Moreover, Turkish benchmark currency bonds had their worst day since 2023. It is anticipated that the actions taken would raise funding costs and put additional pressure into bank’s balance sheets. Data from S&P Global Market Intelligence showed that the cost of insuring Turkey’s debt against default increased by 18 basis points to 322 bps, the highest levels since March 2024. However, Turkey’s finance minister, Mehmet Simsek, describes the market fluctuations as “temporary”, and stated that the required actions were being taken. Nevertheless, according to JP Morgan, Hedge Funds and other investors are seeking to take advantage of the interest rates, placing roughly $35 billion incarry trades.
Technicals Explained:Derivatives
Derivatives play a fundamental role in modern financial markets, used daily by corporations, investors, and financial institutions to manage risk, enhance returns, or gain exposure to specific assets without directly owning them. They are financial contracts whose value depends on the price movements of an underlying asset, such as a stock, bond, interest rate, commodity, or currency. These financial instruments were originally developed to help producers and consumers in hedging against price volatility, like farmers locking in grain prices before harvest. Derivatives also play a critical role in maintaining market efficiency: by enabling price discovery, improving liquidity, and facilitating risk transfer, they contribute to the smooth functioning of both capital and commodity markets. However, while they offer many benefits, their complexity can lead to significant losses if not properly managed, highlighted by the various financial crises where derivatives played a key role. A perfect example is the 2008 financial crisis, where mortgage-backed derivatives amplified systemic risk and triggered widespread market collapse. There are several main types of derivatives, each serving distinct purposes depending on the investor’s objectives and risk profile: The most widely known and used derivatives in the field of hedging and speculation within the markets include Options (such as Calls and Puts), Swaps as well as Futures and Forward Contracts. Options are contracts which give the investor the right, but not the obligation, to buy or sell an asset (for Calls and Puts respectively). Through these contracts, the investor is able to seamlessly choose when to make their purchase (either before or on a set date), as well as allowing them to determine a specific price at which to do the transaction. Swaps, infamous after the 2008 Financial Crash, are agreements between two parties to exchange cash flows based on different financial instruments. The most known types of Swaps include: Interest Rate Swaps, Currency Swaps, Commodity Swaps, and Credit Default Swaps (CDS). The CDS were created by banks prior to 2008 inorder to downplay the risk involved with Collateralized Debt Obligations (CDOs), limiting the economic damage CDOs could have on investors if the debt were to not be repaid. Futures Contracts are standardised contracts that obligate the buyer to purchase (or the seller to sell) an asset at a predetermined price on a future date, while Forward Contracts are customized contracts allowing for greater flexibility. Specifically, Futures Contracts are traded in exchanges and they require an initial margin (a deposit) and daily mark-to-market settlement. As these are regulated by financial authorities, they have a lower default risk. On the other hand, Forward Contracts are traded over-the-counter (OTC) and are only settled at maturity, meaning that there is a higher counterparty risk. In general, in terms of risk, Futures Contracts and Options offer investors the least risk, whilst Swaps and Forward Contracts place the investor at a higher risk of both default, as seen with the CDS. Airlines such as Southwest have famously implemented fuel hedging inthe past by buying futures contracts to lock in jet fuel prices inadvance. As fuel accounts for around 20–30% of their expenses, this strategy helps protect margins from price volatility. Airlines have also used options contracts to mitigate risk, as they offer greater flexibility by giving carriers the right, but not the obligation, to purchase fuel at a set price and time. In the early 2000s, Southwest successfully hedged fuel during an oil price surge, gaining a significant competitive advantage over other carriers. Nonetheless, fuel hedging isn’t free and carries risks. In 2024, Southwest paid over $150 million in hedging premiums, which become essentially wasted if prices don’t move as expected. With rising premium costs and continued market volatility, many airlines, including Southwest, are finding the trade-off too steep and are moving away from fuel hedging practices.
Article Highlight: The Unseen Influence of Shadow Banking
Shadow banks are quietly changing how credit flows through our economy. Unlike traditional banks, they operate without the safety nets of deposit insurance, strict capital requirements, or the right to central bank liquidity. This lack of oversight isn’t accidental; it’s a regulatory gap that has allowed these institutions, ranging from hedge funds and private equity firms to broker-dealers, to grow rapidly and take on risky activities like aggressive securitization and complex repo transactions. After the 2007-2008 crisis exposed flaws in regulated banking, shadow banks grew rapidly as investors sought alternative financing. Today, shadow banking assets reached $63 trillion in 2022, up from $28 trillion in 2009, representing 78% of global GDP. This immense growth proves shadow banking’s rising importance and the demand for credit beyond traditional banks’ strict regulations. The most relevant oversight gap lies in the absence of standard disclosure requirements and capital buffers. Since areas such as securitization markets and complex derivatives often escape rigorous regulatory scrutiny, these often hide excessive leverage and risky exposures. In the past, unchecked activities in these areas contributed to systemic vulnerabilities; for instance, the buildup in shadow banking sectors was a factor in deepening the financial crisis as hidden risks rapidly spread when market conditions worsened. The time has come for policymakers to stop treating these institutions as an afterthought and bring them under meaningful regulatory oversight. Only by doing so can we ensure financial stability and protect the economy from the cascading effects of hidden, unchecked risks.
Woman of the Month: Mary Barra
Mary Barra is February’s woman of the month, having topped Fortune’s 100 most powerful women inbusiness 2024 (MPW list). Barra has been CEO of General Motors since 2014, where she first joined in 1980 as a student. She started off checking fender panels and inspecting hoods to pay for her college tuition. She holds a Bachelor’s degree in Electrical Engineering and earned her MBA from Stanford Graduate School in 1990. Before becoming CEO, Barra held various engineering and administrative roles at GM, eventually serving as Executive VP of Global Product Development, Purchasing and Supply Chain. General Motors is a multinational automotive manufacturing companies, which owns known brands such as Cadillac and Chevrolet. The company ranks 25th by total revenue out of all American companies on the Fortune 500, and Barra makes waves as the first woman to lead any major automaker. Barra is leading GM’s focus on electric vehicles, naming it a priority for the business which plans to exclusively offer EVs by 2035, aligning with the mandates the US may implement. Last year, she oversaw two joint venture plants to supply to the EV factories. She also directed the company’s move towards driverless cars, making several strategic acquisitions of start-ups in the specialised technologies. Focusing on electric-powered and driverless vehicles shows Mary Barra is pushing General Motors to invest in the future of the automotive industry.“We’re in an industry that is transforming, we’re a company that’s transforming”.
2 Truths & 1 Lie
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What’s next?We are looking forward to all of the workshops we have planned in the upcoming month! Follow us on Instagram to catch all the action and the latest news on WiF. |
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