News of the week summary - 04/01/2026
Bulgaria joins the euro
Bulgaria officially adopted the euro, becoming the Eurozone’s 21st member, marking a major milestone in its European integration. This achievement, however, comes amid significant domestic unrest and persistent pressure from pro-Russian forces. For nearly five years, Bulgaria has struggled to maintain a stable government, with the latest cabinet collapse in November prompting fears of yet another election. Allegations of corruption, the lack of a finalized 2026 budget, and active misinformation campaigns have all overshadowed the currency switch.
Public sentiment is deeply divided. Surveys indicate that less than half of Bulgarians support the euro, with concerns ranging from potential price increases during conversion to distrust in political authorities. Pro-Russian actors, including far-right parties and President Rumen Radev, have actively opposed the transition, calling for a referendum and organizing demonstrations, some of which turned confrontational. Analysts note that Russia has long sought to slow Bulgaria’s integration into European institutions, including the EU, NATO, Schengen, and now the Eurozone.
Economically, the immediate effect of adopting the euro is expected to be limited. Bulgaria’s lev has been pegged to the Deutsche Mark and subsequently the euro since the 1990s, so prices and exchange mechanisms are already closely aligned. Nevertheless, the move signals a strategic commitment to European economic and political structures despite domestic divisions and external influence campaigns.
Private Equity firms sell assets to themselves as market exits falter
Private equity firms are increasingly selling companies they already own to new funds under their management, a tactic designed to retain control of assets when traditional buyers or public markets are scarce. In 2025, roughly one in five private equity sales used this approach, up from around one in eight the previous year. Analysts predict that these so-called continuation vehicle transactions will total over $100 billion globally, setting a new record.
The mechanism works by moving assets from older funds into newer ones managed by the same firm. This allows firms to return cash to early investors while keeping the underlying companies under their control, often in hopes of achieving higher valuations later. High-profile deals include European firm PAI Partners transferring part of its stake in ice cream group Froneri to a continuation vehicle for the second time, as well as large-scale moves by Vista Equity Partners, New Mountain Capital, and Inflexion.
While continuation vehicles provide liquidity and potential future earnings through management and performance fees, they raise concerns among investors about conflicts of interest. Some worry that firms may undervalue assets during transfers to benefit themselves, particularly when the same firm acts on both sides of the transaction. Though fund managers claim that original investors can roll over their stakes and new investors help set fair prices, critics note that many backers, such as pension funds, may lack the expertise to independently assess company valuations. Legal disputes have already emerged, including a lawsuit by Abu Dhabi Investment Council against Energy & Minerals Group over a contested sale of a gas drilling stake.
Despite the boom in continuation deals, most investors still prefer traditional exits through outright sales or public listings. The trend highlights the challenges private equity faces in an environment where market valuations are still recovering from last year’s lows, forcing firms to innovate while balancing investor trust.
Global markets outshine US as tech fears and policy uncertainty weigh on Wall Street
In 2025, US stocks lagged behind markets elsewhere, marking a rare year in which Wall Street underperformed global peers. The S&P 500 rose 17 per cent, while a broad measure of international equities excluding the US climbed 29 per cent, the widest gap since the 2009 financial crisis. Investors attributed this divergence to high US stock valuations, concerns over former President Donald Trump’s disruptive economic policies, and a major technological breakthrough in China.
Despite a rebound from earlier sell-offs spurred by Trump’s “liberation day” tariffs, US investors grew cautious. Many questioned whether the heavy exposure to American tech companies, especially those benefiting from AI investments, remained justified. A notable setback came when Chinese start-up DeepSeek unveiled a large language AI model that rivaled US technology at lower cost, leading to a sharp one-day drop in Nvidia’s share price and fueling broader doubts about AI-driven growth projections.
Meanwhile, markets in Asia and Europe flourished. China’s MSCI index rose 29 per cent, and Hong Kong’s Hang Seng gained nearly 28 per cent. South Korea’s Kospi index soared over 75 per cent, propelled by massive gains in tech giants Samsung and SK Hynix. European stocks also recovered, supported by expectations of economic stimulus in Germany, with the Dax, Spain’s Ibex 35, and Greece’s Athex index posting double-digit gains.
The trend highlights a broader shift in investment strategy as global investors diversify geographically, seeking opportunities outside the US to manage risk and capitalize on faster-growing or undervalued markets. The combination of high valuations, political uncertainty, and rising competition from international tech firms has prompted many to reconsider the traditional dominance of American equities in global portfolios.