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Banking regulation in the Euro Area: Germany is different
May 7, 2020--Despite progress in recent years towards a single banking policy framework in the euro area-a banking union-much of the German banking system has remained partly sheltered from uniform rules and disciplines that now apply to nearly all the area's other banks.
The resulting differences in regulatory regimes could generate vulnerabilities in the still-incomplete banking union, which is being tested in the context of the COVID-19 pandemic.
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Source: bruegel.org
Qontigo Expands Factor-Based Index Suite To Include Sustainable Indices
May 6, 2020-- Qontigo, an investment intelligence leader and provider of best-of-breed analytics and world-class indices, has announced the expansion of the STOXX Factor Index suite to include a family of ESG-screened indices.
The STOXX ESG-X Factor Indices provide sustainability-driven investors with ESG-screened indices that can target similar levels of factor exposures as the STOXX Factor Indices, while controlling for unintended exposures. These factor exposures are derived from the institutionally tested analytics of Axioma Factor Risk Models.
With the addition of the STOXX ESG-X Factor Indices, the STOXX index portfolio now includes ESG-screened versions of more than 50 benchmarks that meet the responsible-investing criteria of leading asset owners. The suite offers ESG-X versions of global, regional and emerging markets benchmarks, including ESG-X versions of the EURO STOXX 50(R) and the STOXX(R) Europe 600.
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Source: Qontigo
European Commission-Spring 2020 Economic Forecast: A deep and uneven recession, an uncertain recovery
May 6, 2020--The coronavirus pandemic represents a major shock for the global and EU economies, with very severe socio-economic consequences. Despite the swift and comprehensive policy response at both EU and national level, the EU economy will experience a recession of historic proportions this year.
The Spring 2020 Economic Forecast projects that the euro area economy will contract by a record 7¾% in 2020 and grow by 6¼% in 2021. The EU economy is forecast to contract by 7½% in 2020 and grow by around 6% in 2021. Growth projections for the EU and euro area have been revised down by around nine percentage points compared to the Autumn 2019 Economic Forecast.
view the European Economic Forecast. Spring 2020
Source: European Commission
ESMA reminds firms of conduct of business obligations under MiFID II
May 6, 2020--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, is issuing a Public Statement on the risks for retail investors when trading under the highly uncertain market circumstances due to the COVID-19 pandemic.
ESMA also reminds investment firms of the key conduct of business obligations under MiFID when providing services to retail investors.
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Source: ESMA
ECB-Euro area bank interest rate statistics: March 2020
May 6, 2020--The composite cost-of-borrowing indicator for new loans to corporations decreased by 6 basis points to 1.46% in March 2020, driven by the interest rate effect, whereas the one for new loans to households for house purchase remained broadly unchanged at 1.39%.
In the same month, the euro area composite interest rate for new deposits with agreed maturity from corporations remained broadly unchanged at -0.07%, and the interest rate for overnight deposits from corporations showed no change at 0.00%.
The euro area composite interest rate for new deposits with agreed maturity from households remained broadly unchanged at 0.34% in March 2020, and the interest rate for overnight deposits from households showed no change at 0.02%.
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Source: ECB
New UBS ETFs on Xetra: Sustainable investing in the USA
May 6, 2020--Since Wednesday, two new exchange traded funds issued by UBS Global Asset Management have been tradable on Xetra and Börse Frankfurt.
The UBS ETF (IE) MSCI USA Socially Responsible UCITS ETF (USD) invests in large and medium-sized US companies that meet ESG sustainability criteria. Companies with significant business activities in nuclear energy, tobacco, alcohol, gambling, weapons and genetically modified organisms are excluded from the index.
In addition, the weighting of a share is limited to a maximum of five per cent.
With the UBS ETF (IE) MSCI USA Socially Responsible UCITS ETF (USD), investors can choose between two share classes that differ in the allocation of income. In the case of the A-dis share class, the dividend is paid out and in the case of the A-acc share class, it is reinvested.
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Source: Deutsche Börse
Euro drops after German court ruling fuels uncertainty
May 5, 2020--The euro weakened across the board on Tuesday after a German consitutional court ruled that the Bundesbank must stop buying government bonds if the European Central Bank cannot prove those purchases are needed.
The decision did not apply to the ECB's latest pandemic-fighting programme, a 750 billion euro scheme to prop up the economy, but the ruling unsettled financial markets, which had been calmed by aggressive ECB asset purchases to prevent the coronavirus crisis leading to an economic meltdown.
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Source: reuters.com
BlackRock launches smart city infrastructure ETF
March 5, 2020--BlackRock has expanded its iShares portfolio with three new passive funds.
BlackRock has launched an ETF focused on smart city infrasrtructure alongside two other new passive products tapping ESG theme.
The three funds are aimed at investors looking to manage long-term risks linked to ESG factors.
The launch of the three new passive strategies comes at a time when the global sustainable ETF industry attracted $5.7bn in February alone, with over $1bn inflows coming in only last week.
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Source: citywireselector.com
German court asks ECB to justify key stimulus program
May 5, 2020--Germany's highest court cast doubt on key eurozone stimulus efforts by giving the European Central Bank three months to prove that its key bond-buying program is justified and appropriate.
If it doesn't make that showing, the court ruled, Germany's own national central bank can no longer participate in the program- and would even have to sell bonds that it had purchased.
The euro fell after the decision by a half-cent to $1.0850.
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Source: washingtonpost.com
IMF-Connectedness of the Dutch Economy Leads to Lower GDP Growth Forecast
May 4, 2020--The GDP growth forecasts for the Netherlands issued by the IMF in its April 2020 World Economic Outlook (WEO) surprised many, not only for the large negative 2020 number itself, but for it being weaker than some other leading European economies.
Let me make some general considerations about forecasting amid today's immense uncertainties, and then look at the Dutch economy.
Forecasting the effects of an unprecedented shock
Economists often conceptualize macroeconomic variables, such as real GDP growth, as the sum of a predictable or systematic component and an unpredictable shock. We develop and estimate statistical models of the predictable part and use them to make forecasts.
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Source: IMF