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Today's big stories

German property firm Vonovia agreed to buy rival Deutsche Wohnen
Our analyst asks whether this is the beginning of the end for bitcoin – Read Now
BlackRock thinks investors are so preoccupied with inflation risks that escalating geopolitical risks might catch them by surprise

Höme Sweet Höme

What’s Going On Here?

Looks like all that alone time during lockdown was quite enough for Vonovia: the German real estate giant agreed to bring rival Deutsche Wohnen into the fold in a $22 billion acquisition.

What Does This Mean?

The residential real estate market is popping off across much of the world right now, and Germany is no exception. So it’s not surprising that Vonovia – the country’s biggest residential landlord – should be looking for a bigger slice of the strudel with its third attempted takeover of slightly smaller competitor Deutsche Wohnen.

Despite its size, Vonovia currently only controls less than 1% of Germany’s residential real estate market – or around 350,000 apartments. And considering half the country’s population rent rather than own, the opportunity for growth is massive. So is the deal, for that matter: it’s Europe’s biggest merger so far this year.

Why Should I Care?

For markets: This is an expensive neighborhood.
Vonovia’s bid for Deutsche Wohnen valued the company 18% higher than it was worth last week, so it’s no wonder that the firm’s stock price jumped 16% on Tuesday. But Vonovia’s investors were less impressed, sending its shares down 6%. That’s not an uncommon reaction to this sort of big-ticket deal: investors often worry that the company’s either overpaid for the acquisition, is taking on too much debt, or will struggle to integrate the new firm successfully.

The bigger picture: Germany’s big summer blowout.
Vonovia’s announcement comes just as things are looking up for Europe’s biggest economy: a major monthly survey of 9,000 German companies on Tuesday showed business morale at its highest in two years (tweet this). It’s the latest sign that economic activity is picking up across the continent.

You might also like: Do acquisitions like this help or harm your portfolio?

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2. Analyst Take

Is Bitcoin Over?

What’s Going On Here?

It’s fair to say bitcoin’s had a tough time of it recently, with its price falling more than 40% from all-time highs.

But whatever the doomsayers might be yelling, the case for investing in bitcoin hasn’t fundamentally changed.

It’s still trending upward, it’s still a promising hedge against inflation, and institutional investors still want in.

That’s not to say you should necessarily buy, buy, buy: bitcoin’s price could have a lot further to fall, after all. But this latest collapse might’ve actually revealed a smarter way to invest in bitcoin.

So that’s today’s Insight: how bitcoin’s recent collapse could present you with a new kind of investing strategy.

Read or listen to the Insight here

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