—— Blackstone Receives $4 Billion Investment From University of California; Rolex Raises Watch Prices by 2.5% on Average; Foxconn Zhengzhou Plant Returns to 90% Capacity; Outlook for Venture Capital in 2023; Tesla Misses Delivery Expectations Again; PIMCO Bond ETF Sees Record Outflows; Twitter’s San Francisco Office in Disarray
1. Blackstone Receives $4 Billion Investment From University of California
Today, the University of California (UC) announced that its investment division has injected $4 billion into Blackstone’s BREIT real estate investment trust fund, purchasing the highest-tier Class I common shares.
BREIT primarily serves high-net-worth retail investors, but due to a recent surge in redemption requests, the fund has imposed withdrawal limits.
UC’s investment arm manages $150 billion in assets. After BREIT received widespread media attention, the university conducted due diligence with Blackstone. Reportedly, UC’s funds will be locked in for six years and will not enjoy the monthly liquidity available to retail investors.
Blackstone President Jon Gray stated in a press release that the firm is honored to receive support from UC, which he described as one of the world’s most prestigious institutional investors.
As of November last year, BREIT delivered an 8.4% return, benefiting from industrial and residential properties.
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2. Rolex Raises Watch Prices by 2.5% on Average
According to analysts at Barclays, Rolex SA has raised watch prices by an average of 2.5% in the U.S. and U.K. markets.
Data shows the prices of Rolex’s most popular models have increased by 1% to 3%. Prices rose by 2.6% in the U.K. and 2.2% in the U.S.
Historically, Rolex raises prices once a year in January. However, in 2022, it raised prices in September and November in the U.K. and Europe due to the sharp appreciation of the U.S. dollar.
Barclays analyst Richard Taylor stated that watch collectors and investors are already accustomed to price hikes in the industry, and Rolex sales are unlikely to be impacted.
Like luxury fashion brands, Rolex adjusts its pricing annually to reflect inflation and rising demand.
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3. Foxconn Zhengzhou Plant Returns to 90% Capacity
This week, a Foxconn executive revealed that the iPhone factory in Zhengzhou has resumed around 90% of its peak production capacity, with about 200,000 workers on-site.
The recovery ahead of China’s Lunar New Year shopping season is seen as a major positive for Apple.
In November, strict COVID control measures led thousands of workers to flee the site. In December, Foxconn raised wages and benefits for current and new workers to restore normal operations.
Due to disruptions at the Foxconn plant, Apple’s iPhone production was reduced by as many as six million units.
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4. Outlook for Venture Capital in 2023
In 2022, although U.S. startups saw a sharp decline in fundraising, venture capital firms continued to raise record-breaking fund sizes.
According to Lightspeed Venture Partners, dry powder held by global private equity and venture capital firms has reached $1.3 trillion and $580 billion, respectively.
In the third quarter of 2022, global VC fundraising fell 50% year-over-year. Late-stage deal funding plunged by 63%.
Experts believe that in the short term, investors will adopt a cautious strategy in 2023, as startup valuations still face downward pressure. In addition, due to capital constraints, founders will spend more frugally, which may slow the pace of growth. These factors could make it harder to raise funds this year.
Over the next few years, limited partners (LPs) may reduce their capital commitments, and startups with previously high valuation multiples will likely become more reasonably priced and investment-worthy.
In today’s market environment, startup survival and fundraising have become more difficult, and investors may scale back VC allocations.
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5. Tesla Misses Delivery Expectations Again
Today, Tesla announced that it delivered 405,278 electric vehicles over the past three months—a company record but below the average forecast of 421,000. As a result, Tesla’s stock fell more than 10%.
Despite launching two new gigafactories last year, the company still missed its 50% production growth target.
Tesla has now missed delivery expectations for three consecutive quarters, prompting many analysts to lower their price targets today.
Analyst Ryan Brinkman wrote that under current models, Tesla’s revenue growth rate may be entering a decline.
Although Tesla set a delivery record last quarter, it failed to meet analysts’ “strict” expectations.
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6. PIMCO Bond ETF Sees Record Outflows
According to Bloomberg data, more than 20 bond ETFs managed by PIMCO and Allianz saw total redemptions of $3.6 billion in 2022—a U.S. record. That same year, investors put a total of $580 billion into ETFs.
PIMCO’s bond ETFs experienced heightened volatility due to Fed rate hikes. Since these are actively managed funds, many investors pulled out amid concerns.
ETF analyst James Seyffart noted that although PIMCO offers a wide range of funds, it specializes in actively managed fixed income—one of the hardest-hit categories in 2022.
Bloomberg data shows that while $194 billion flowed into all bond ETFs in 2022, only about $10 billion went to actively managed funds.
Aggressive Fed rate hikes eroded investor confidence in actively managed bond ETFs.
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7. Twitter’s San Francisco Office in Disarray
《This week, The New York Times reported that Twitter’s new CEO Elon Musk has reduced the company’s San Francisco headquarters office space from six floors to two, in a move aimed at significantly cutting costs.
Within a few weeks of acquiring Twitter, Musk fired thousands of employees, including 800 staff from the San Francisco office.
The building’s owners, JPMorgan and Shorenstein Properties, missed a refinancing deadline last September and failed to repay a $400 million loan. They are currently in negotiations with creditors to resolve the issue.
Twitter has been leasing the office space at Market Plaza since 2011. Notably, there were reports that Musk had set up bedrooms in the office to encourage employees to work overtime, prompting an investigation by San Francisco’s Department of Building Inspection.
It was also reported that Musk dismissed the building’s janitorial staff, leaving the office space with a severe stench.
After completing the Twitter acquisition, Musk’s abrupt dismissal of key employees has plunged the company’s operations and headquarters into chaos.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.