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Greening the recovery by greening the fiscal consolidation
July 8, 2020-In the wake of COVID-19, some economic recovery policies will help green the economy- for example, energy renovation of buildings. But there are limits to the share of stimulus that can be explicitly green. The European Union should therefore also green the fiscal consolidation by setting out the path to much higher carbon prices than today.
This would guide investment and provide revenues to help the fiscal consolidation.
The issue
The long road to economic recovery from the COVID-19 shock is just beginning. European countries are considering how best to reboot their economies, with fiscal stimulus plans at the core of the consideration. Meanwhile, the European Commission has put forward its Next Generation EU plan. These stimulus packages will amount to several percentage points of GDP, and can therefore influence the future orientation of the economic system.
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Source: bruegel.org
ESMA updates its Q&As on MiFID II and MiFIR transparency-July 2020
July 8, 2020--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, updated today its Questions and Answers regarding transparency issues under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).
The new Q&A document provides technical clarifications for the performance of the mandatory systematic internaliser (SI) test. The Q&A specifies how the number of transactions and the nominal amount traded of a derivative shall be allocated when a derivative contract changes over the observation period from one sub-class to another.
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Source: ESMA
Solactive collaborates with ISS ESG to release Solactive ISS SDG Leaders Index based on the 17 United Nations' Sustainable Development Goals
July 8, 2020--In 2015, all member states of the United Nations adopted the UN’s 2030 Agenda for Sustainable Development. This proposal serves as a fundamental concept for a peaceful and prosperous society, and contains, at its core, 17 Sustainable Development Goals, including, for example, Zero Hunger, Quality Education, and Gender Equality.
To enable conscious investors to leave a positive impact on the planet in accordance with the UN's Sustainable Development Goals, Solactive and ESG provider ISS ESG teamed up to develop an index containing only those companies actively engaging with the important goals.
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Source: Solactive AG
Summer 2020 Economic Forecast: An even deeper recession with wider divergences
July 7, 2020--The EU economy will experience a deep recession this year due to the coronavirus pandemic, despite the swift and comprehensive policy response at both EU and national levels. Because the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring Forecast, the impact on economic activity in 2020 will be more significant than anticipated.
The Summer 2020 Economic Forecast projects that the euro area economy will contract by 8.7% in 2020 and grow by 6.1% in 2021. The EU economy is forecast to contract by 8.3% in 2020 and grow by 5.8% in 2021. The contraction in 2020 is, therefore, projected to be significantly greater than the 7.7% projected for the euro area and 7.4% for the EU as a whole in the Spring Forecast. Growth in 2021 will also be slightly less robust than projected in the spring.
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Source: ec.europa.eu
New UBS ETF on Xetra: Sustainable investments on S&P 500
July 7, 2020--Since Tuesday, a new ETF issued by UBS Global Asset Management has been tradable on Xetra and Börse Frankfurt.
With the UBS ETF (IE) S&P 500 ESG UCITS ETF (USD) A-acc, investors can invest in currently 310 companies from the S&P 500 Index, taking into account sustainability criteria.
The sectors are represented in the same way as the composition of the S&P 500 Index. Companies are excluded if they are active in the tobacco industry, trade in or produce controversial weapons, have a low rating according to the UN Global Compact guidelines or are among the 25 per cent of the worst rated companies within their own industry according to the S&P Dow Jones Index ESG scores.
Any dividends received are reinvested. The annual costs amount to 0.12 percent.
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Source: Deutsche B&puml;rse
The impact economy: balancing profit and impact
July 7, 2020--Governments and companies can reinforce each other in their pursuit of sustainable development, which is based on three pillars: economic, social and environmental. An impact economy, in which governments and companies balance profit and impact, is best placed to achieve the United Nations sustainable development goals.
How can governments and companies be jointly empowered to have a positive impact on the sustainable development goals? The current economic system is largely geared towards increasing economic growth. But this could come at the expense of rising social inequality and environmental degradation.
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Source: bruegel.org
Hedge fund launches seize up in tough markets
July 6, 2020-- Just 84 funds got going in the first quarter, while 304 were liquidated. The coronavirus crisis has made life even tougher for start-up hedge funds around the world.
While some of the biggest names in the industry..
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Source: FT.com
Russian Economy Faces Deep Recession Amid Global Pandemic and Oil Crisis, Says New World Bank Report
July 6, 2020--Fueled by a COVID-19 triggered deep global recession, Russia's 2020 GDP growth is projected to contract by 6 percent, an eleven-year low, with a moderate recovery in 2021-2022, according to the World Bank's latest Russia Economic Report (#43 in the series). The decline of Russian economic growth is further exacerbated by plummeting crude oil prices that dropped 53 percent between January and May 2020.
In 2020, overall household consumption is expected to shrink by 4.9 percent, and gross fixed capital investment by 8 percent. Through April and May 2020, negative growth was reflected in most sectors, with manufacturing contracting 8.6 percent in this period; mineral-resource extraction decreasing by 8.4 percent, resulting in rapid shrinking of industrial production; and the transport sector experiencing a 7.7 percent contraction, driven by falling trade volumes since the beginning of the year.
view the Full Report: Russia-Recession and Growth under the Shadow of a Pandemic
Source: Worldbank.org
Passives paradox: is active the only way to make an impact on ESG?
July 5, 2020--Does the passive push into ESG mean giving up one of the key tenets of responsible investing? We asked specialists in this area how to engage in the era of indices.
The future may well be green for passives. With ETF giant BlackRock nailing its colours to the ESG mast, the sheer volume of assets allocated to ESG via passive strategies is likely to skyrocket in the not-too-distant future.
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Source: citywireselector.com
Euro area bank interest rate statistics: May 2020
July 3, 2020--The composite cost-of-borrowing indicator for new loans to corporations and for new loans to households for house purchase remained broadly unchanged in May 2020, at 1.46% and 1.42%, respectively.
In the same month, the euro area composite interest rate for new deposits with agreed maturity from corporations decreased by 5 basis points to -0.10%, driven by the interest rate effect, whereas the interest rate for overnight deposits from corporations showed no change at 0.00%.
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Source: ECB