The list of such exchanges is growing, and the trend is global. For example, the Eastern Caribbean Securities Exchange (ECSE) is the Caribbean’s major regional stock exchange, designed to attract companies with regional interconnectivity and regional investors. Companies such as Grenada Electricity Services from Grenada and the Bank of Nevis from St. Kitts and Nevis found their listing home there.

Recent discussions about a new stock exchange in the US state of Texas, which would compete against the triumvirate of US exchange operators—the New York Stock Exchange, Nasdaq and CBOE—have amplified the trend.

The Texas Stock Exchange (TXSE), to be based in Dallas, will be initially funded with a $120 million investment. In recent years, anti–New York sentiment around issues such as compliance requirements and environmental, social and governance rules has triggered a backlash among many businesses. This, among other factors, has led to the current Texan proposal.

Major liquidity providers, such as BlackRock and Citadel Securities and many Texas-based Fortune 500 companies, are backing the proposed all-electronic bourse.

The TXSE founders applied for US Securities and Exchange’s approval, which is currently pending. The new exchange would give companies a reduction in the high listing requirements often associated with the established exchange operators. Texas is perceived as a business-friendly, low-tax state with limited regulatory requirements, and the entrepreneurs behind this venture hope to bring this type of thinking to the stock exchange space while reducing red tape. Texas’ specialization in the energy sector, meanwhile, would provide energy companies with another avenue for corporate finance solutions.

This SWF growth has provided markets with additional liquidity, and many of these funds have become leading limited partnerships in financial markets. Many other governments are watching the trend with interest.

The strategy is proving successful. Recent months showed a new wave of SWF, not driven by the typical economic forces that created the older funds, such as oil and gas revenue. Egypt’s main fund, the Sovereign Fund of Egypt, has launched a new separate sovereign industrial fund that will invest in various industrial sub-sectors in Egypt including, among other things, food, building materials, and manufacturing of railway and train supplies. This new model follows locally oriented funds, like Singapore’s Temasek, which traditionally supports national champions without worrying about the local economy’s inflated prices.

The proposed structure allows the Egyptian government to tap other pools of capital, such as other sovereign governments and funds, to serve as investors in the new vehicle. Reaching out to governments like the UAE will also strengthen regional economic and security cooperation.

Similarly, Ireland faces a significant surplus created by corporate tax paid by foreign multinationals. Towards the end of last year, it announced that it would establish two sovereign funds to absorb this revenue and reinvest in local and international markets. The government has started executing the plan in recent months and allocated around $100 billion to the funds, one of which also targets local and short-term assets. The new sources of capital for these emerging funds, the growing interest in local assets, and the revival of local industries reflect the latest political and economic environment designed to support local players in an inflationary and high-interest context.

The shift is global. According to International Data Corporation (IDC), 80% of chief information officers will leverage organizational changes to harness AI, automation and analytics by 2028 in the Asia-Pacific region.

This new reality is forcing organizations to develop AI leadership skills in-house and coordinate AI implementation across multiple parts of the company while strengthening their AI strategy and goals.

More and more companies, consequently, are creating a chief AI officer role to coordinate AI applications internally and better utilize AI in dealing with stakeholders such as suppliers and customers. Foundry Report revealed that 11% of midsize-to-large organizations have already appointed a chief AI officer and an additional 21% of large organizations are searching for one.

The appointments cross sectors and are appearing in both public and private organizations. In the US, President Biden is requiring all governmental agencies to appoint a chief AI officer. On the private side, leading technology companies such as software powerhouse SAP, older industrial leaders such as Japan’s Hitachi, and others ranging from midsize to large companies are rushing to find and hire one. Smaller companies are still addressing the need via other internal tech groups.

The advent of the chief AI officer fits into a wider trend to create more specialized roles within organizations. In the past, compliance, risk, and innovation roles, for example, were under other corporate functions; now, they have their own leadership structure. The chief AI officer role, like the chief risk officer, is designed to consolidate capabilities and project the significance of the role to the organization. The new role has faced some backlash recently, however, including in the AI space, as some scholars and industry leaders have argued that all employees should have a hand in this strategically important area.

Since the Covid-19 pandemic and the logistical and supply-chain challenges that came with it, corporate financial and operational professionals have started to realize the potential economic value of such data and its usefulness in cost-management decisions.

International organizations have pushed for better coordination between the public and private sectors that share this space and its wide-ranging fields of purview, from port ownership and management to security. The World Economic Forum, for instance, has launched a maritime working group, pushing for better information sharing and coordination among public and private entities.

This working group identified the quality, integrity and real-time availability of trusted data, focusing on key performance indicators and artificial-intelligence data-driven risk management systems, among others, as crucial factors behind better information sharing and coordination.

Recent geopolitical and national-security developments have highlighted the uncertainty and ongoing risks that are unique to international shipping operations. Houti attacks in the Red Sea have prompted many maritime companies to change their sailing routes, increasing pricing and causing delays in delivery times. Meanwhile, severe droughts forced the Panama Canal to reduce shipping capacity by more than 30%.

These new realities have given rise to startup companies focused on data collection, gleaning actionable information from data sets, and connecting shipping data to other systems. For example, Winward, a UK-listed tech company, provides insights to help identify and track maritime criminal activities in real time. Other companies, like FleetMon, can provide maps for real-time vessel tracking and historical data for ship movements, a critical part of supply chain knowledge. Mainstream financial-data companies like IHS Markit, meanwhile, are adding maritime data to their portfolios.

The growing interest in maritime information can lead to positive and negative action items, whereby companies can manage their supply chain effectively in real time or avoid areas where significant risk is looming, based on early-detection data.

In 2023, five new SWFs and nine more offices internationally opened their doors. The impact cannot be understated. Their financial activities, for example, have been an important part of the energy transition efforts.

An essential part of the growth story has been the rise of sovereign development funds as part of the global economic development push. Sovereign development funds are a tool to support economic growth and development to accelerate private market investment. Traditionally, these funds invest in infrastructure and human capital, leading to job creation and poverty reduction. Examples include the Bayelsa Development and Investment Corporation of Nigeria and South Africa’s Industrial Development Corporation.

Leading economies have become limited or general partners in such funds to promote economic development in target markets and strengthen political, diplomatic and security relations. For example, the China-Africa Development Fund is designed to inject Chinese capital into African projects.

In 2021, Indonesia launched a sovereign development vehicle, the Indonesia Investment Authority, in which China has become a leading partner. According to both governments’ statements, China’s Silk Road Fund has signed an agreement to invest approximately $3 billion.

Beijing expects the Indonesian leadership to open more sectors to foreign investment. The United Arab Emirates followed China with a pledge to invest $10 billion. Indonesia also set up a $3.75 billion toll-road fund with Canadian, Dutch, and Emirate sovereigns to develop Indonesia’s highway system further.

Similarly, the Filipino government approved its first-ever SWF, Maharlika Investment Fund, in mid-2023. The fund will support economic development of agricultue, climate mitigation, digitalization and energy projects, according to fund documents. The launched structure will encourage foreign investors, including other sovereigns, to coinvest in the country’s key projects with the Philippines government.      

Two of the several blood-drenched conflicts on the agenda at the 32nd Arab League summit, which concluded last month in Jeddah, Saudi Arabia, were the recent civil war in Syria and Ukraine’s ongoing defense against Russia. Syrian President Bashar al-Assad was readmitted to the league after 12 years of expulsion following the 2011 Arab Spring uprising. He was attending the summit for the first time since. Ukrainian President Volodymyr Zelenskyy also appeared, on his way to the G7 summit in Japan, to plead for support from Arab nations.

Assad used the forum to pitch a new alignment of world powers and for the league to reject external intervention in the politics of Arab states. More urgently, he aimed to persuade league members to force Western nations to lift sanctions against Syria. They can benefit, he argued, from rebuilding Syria and from multiple, sometimes even conflicting, alliances in a world not dominated by one or two superpowers.

Syria’s economy suffers from high inflation, a sinking currency and limited energy supplies. The Syrian pound hit an all-time low of 9,000 to the dollar in May. Doing business with Syria while Western economic sanctions are still in place could put Arab League members at risk. Even the recent Saudi-Iranian diplomatic truce did not immediately include complete restoration of bilateral commercial relations.

Zelenskyy’s ask at the Arab League Summit was also a big one. He wants the Arab nations to leverage their close relationships with Moscow, as well as its allies China and Iran, to end the Russian invasion. This, too, remains to be seen. But Assad’s and Zelenskyy’s visits to the summit underscore the opportunity many Arab nations seemingly face in a conflict-ridden global landscape to pursue policies that once would have been seen as inconsistent: supporting Ukraine at the same time they reconcile with a Russian-allied regime like Assad’s Syria, for example.

Following seven years of noncommunication between Saudi Arabia and Iran, the two Gulf states last month concluded a normalization agreement and restoration of diplomatic relations, brokered by the Chinese leadership. Signed March 10, 2023, the accord calls for both countries, which have been fighting a proxy conflict in places such as Yemen and Syria, to reduce tensions and pursue stability in the region, respect prior signed security agreements, and pursue economic collaboration.

The prevailing view among analysts is that the surprise deal was made possible by reducing US influence and China’s assertion of a new role as regional peace broker. Others, however, see it as a reflection of the Saudis’ pragmatic policy in the region, their interest in new alliances regionally and globally, and their desire to smooth the path for their economic expansion.

The Iran agreement “may have more to do with resolving the Yemen War than rebuking the Biden administration,” says Simon Henderson, a Saudi expert with the Washington Institute, a DC-based think tank.

Both parties could use an economic boost. Iran’s economy has deteriorated dramatically in recent years. As of the beginning of March, inflation has reached more than 50%, and Iranians’ household savings have been shrinking. The rial reached an alltime low last month, and Iranian oil production, a critical source of growth, continues to decline. The Saudi economy, meanwhile, needs foreign investment urgently to rebound from pandemic disruption and fluctuating oil prices.

The Beijing-brokered deal also begs the question of whether US influence in the Middle East is under threat. Yet, US-Saudi relations have improved greatly in recent years as countries in the region look for ways to build a more integrated greater Middle East; the “Abraham Accords” between Israel and some of the smaller Gulf states are a case in point. The US still plays a significant role in providing a security umbrella for its allies in addition to building security and economic alliances that counterbalance insurgencies in the region.

That suggests Saudi leaders are unlikely to face sanctions from the US and will focus on strategic and security components of the new Iranian relationship. In addition, the behind-the-scenes Saudi-Israeli normalization process, with its potential economic fruits, will still depend on limiting Iran’s  influence on Saudi and US decision making, including on nuclear matters. 

Financial institutions have traditionally developed operational capabilities internally, from their IT to human resources, in addition to using external experts as needed. However, in recent years banks and institutional investors have become strategic investors in startups and businesses that expose them to new technologies while diversifying their risks and gaining better returns on investment.

Among the recent notable transactions is a $300 million investment made by global Spanish bank BBVA in Brazilian digital bank Neon. In comparison, Citibank has invested $175 million in Synk as part of the cybersecurity firm’s Series E fundraising round.

There has been a significant rise in vertical investment, triggered by a substantial decline in target companies’ valuation and the ongoing decline in funding opportunities. In addition, overfunding in the cyber, fintech and AI sectors and the bearish the financial markets have provided banks and pension firms with meaningful investment and acquisition opportunities.

ABN AMRO took a stake in ThetaRay, a big data analytics provider that combats financial cybercrime and operational failures. Initially, the bank used ThetaRay technology to detect money laundering, human trafficking and terrorist financing. It then realized that taking a significant strategic stake in the company positions the bank well for the future of the financial sector and tech investing.

Financial institutions, in that respect, follow management consulting and other advisory firms that are using the attractive tech acquisition environment in 2022 and 2023 to expand their tech capabilities and have a market edge against competitors.

Although investing in or acquiring tech companies can provide global financial institutions with a unique entry point to new opportunities, it also poses some serious challenges for banking executives. For example, it can be difficult to integrate new tech into existing IT platforms or the bank more generally. Also, some among banks’ leadership ranks worry that greater tech exposure brings new financial risks, especially during the credit crunches and financial downturns.           

The crypto industry saw its reckoning in 2022, as many crypto exchanges and startups experienced significant financial challenges. A few, such as Celsius, posed significant risks to the financial system, leading to several bankruptcies and restructuring cases. The collapsed crypto exchange FTX, for example, led to losses of more than $1 billion in customer funds.

Although financial restructuring has been developed as a stand-alone practice within international firms, especially during countercyclical economic periods, restructuring the digital-asset space is revolutionary and new. As financial and advisory firms identify crypto restructuring as a fast-growing area with significant potential revenue streams, they have been developing their expertise and capacity building in recent months to respond to the new environment.

The number of cases is growing fast, calling for broader advisory services. Coinbase, a publicly listed company, announced a restructuring plan, considering the new crypto-economic environment, while Genesis and Babel Finance announced similar plans. Crypto-trading firm Auros is dealing with potential liquidation. Vauld, a Singapore-based crypto-trading firm, has hired Kroll, a risk management and advisory firm, to advise on its restructuring.

Several factors make this trend unusual. Crypto restructuring requires a deep understanding of the technical part of the asset and its trading, which gives a significant edge to firms with technology divisions, such as cyber advisory. It requires a hybrid approach, whereby corporate finance specialists collaborate with experts in the digital assets space.

In addition, the valuation of crypto assets is inconsistent; unlike other financial assets, different methodologies are used to value the assets. Thus, connecting standard valuation work and the new cutting-edge crypto restructuring advisory has been critical.

Also, like mega-restructuring cases in the 2010s, the crypto restructuring wave is enormous, requiring firms to respond quickly with a deep bench and fast delivery times. According to CNBC, crypto investors lost $1.4 trillion in assets globally in 2022. Corporate finance organizations and advisory firms are working to recoup some of these losses, and restructuring the crypto companies behind them if needed.

The decline in valuation of tech companies, the funding crisis and the competitive landscape for startup companies have all put significant pressure on startups to act swiftly in order to survive and thrive.

North American startup funding for the third quarter shrank 50% from its level a year ago, according to data firm Crunchbase. Late-stage financings saw an even steeper decline.

As a result, many startups have been forced to pursue M&A opportunities, especially since public markets shut down and raising capital in capital markets has been challenging.

Historically, large multinational companies used such dynamics to acquire startup companies. But liquidity concerns, market uncertainties and a lack of faith in the investment community have stymied such potential acquisitions. Global M&A volume for the third quarter (Q3) of 2022 was $642 billion—a 42% drop from the previous quarter and the lowest Q3 number over the last decade.

Markets are now seeing a growing number of tech mergers in order to survive. Many of these transactions are cross-border. Zurich-based Ava, which focuses on advancing women’s health, recently announced being acquired by Houston-based FemTech Health, a technology firm with branches across the globe.

Similarly, France’s small-business banking platform Qonto acquired Germany’s Penta, which provides around 50,000 small German businesses with banking, budgeting and bookkeeping tools. The unified entity is poised to become a unicorn, Qonto touted.

“Joining forces is a great opportunity for both Qonto and Penta, and the resulting union promises to be greater than the sum of its two parts,” the company stated.

Often, the key driver for a wave of startup mergers is the nature of the sector. The cyber sector, for example, experienced exponential growth in recent years, which led to overvaluation, excessive funding and overlapping ideas and companies.

Similar cycles have led to a few leading market solutions, as chief information security officers try to consolidate IT and cyber solutions and optimize cyber investments and expenses. Recent examples include Human Security’s acquisition of clean.io in the e-commerce fraud space, and 1Password’s acquisition of Passage in order to advance password-free authentication.