GIULIETTA TALEVI: How the business lunch hiatus killed deal-making
The number of business transactions has dropped steeply all over the world. There are various reasons for this, but the importance of a face-to-face chat over a pleasant meal in a pub or restaurant, which was forbidden during lockdown, must surely not be underestimated
Ah, business lunch. How do I miss thee? Let me count the ways.
Sure, as of this week, sit-down dining in restaurants is back on the menu; but it’s just not the same. People are nervous, masks are inhibiting, a packed establishment full of raucous punters is a no-no, and you can’t even lubricate your way through this stifling new reality with a bottle of chilled deliciousness …
Really, of all the things prohibited during lockdown, what I have missed most is lunch in a bustling locale or post-work drinks at a bar.
I’m willing to bet my last corona dollar that this is one factor behind a slump in global deal-making, reported on by the Financial Times (FT) here.
Clearly, extreme nervousness combined with vanishing corporate cash are mainly to blame, but the importance of a face-to-face chat over a boozy lunch or an elegant supper or a conversation in a pub should not, I’d argue, be underestimated.
Throngs of carefree people, enjoying themselves with nary a mask in sight, will not be part of the European summer tourist season this year either, sadly.
The biggest tourist destination in the world, Europe as a bloc boasts an $800bn tourist industry and, needless to say, this year will be a write-off it that regard. The problem is that as much as 10% of European economic activity depends on tourism. This issue is the subject of the FT’s Big Read this week, while The Economist reports on legions of ghost yachts.
Reputations made and broken
The biggest shift of our lifetime is also being amplified in the stock market, where post-corona liquidity, released by governments across the world, is being channelled.
This wall of money is, we’d argue, wreaking havoc with incumbent investors like traditional fund managers. Indiscriminate money funnelled into exchange-traded funds, for example, is having an intriguing impact on the fund managers.
This week money manager John Paulson hung up his boots. A star of the 2008 financial crisis, Paulson, reports Bloomberg, “never managed to sustain the success and notoriety he found by betting against the housing market in the run up to the last financial crisis”.
It goes on to say that his retirement “also underscores the wider tumult in the investing world, where fund managers who for decades bestrode Wall Street as revered money makers find themselves struggling to compete with computer-driven, index-tracking funds that closely follow seemingly ever-rising markets at a fraction of the cost of traditional offerings”.
Read about that here.
Finally, if anything exemplifies old money versus new – corona-victim versus corona-victor played out in the stock markets – it’s the remarkable surge in the share price of Tesla. Yesterday, the company founded by Elon Musk became the world’s most valuable carmaker by market capitalisation ($205bn), pipping the venerable Toyota to the post.
In fact, Tesla’s shares are up almost fivefold over a year. Not bad for a company that may or may not break even in the June quarter. Not bad for an old Pretoria boy, either.
*Talevi is the FM's Money & Investing editor.
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