Why European investors are rushing into some bond ETFs
July 27, 2023--First half fund flows into fixed income vehicles demonstrate investor expectations about interest rates, analysts say
The appetite for equity exposure may have faltered in Europe in the first half, but the picture is markedly different for some bonds.
While inflation-linked bond funds have admittedly failed to attract much interest, fixed-income exchange traded funds in aggregate took in €15.9bn in the second quarter, up slightly from €15.1bn in the first three months-a record level of demand.
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Source: ft.com
Eurozone interest rates reach joint record high
July 27, 2023--The European Central Bank (ECB) has raised interest rates in the eurozone once again, taking its key rate to a record high last seen in late 2000.
The bank raised the deposit rate in the 20-nation bloc for the ninth time in a row - to 3.75%, up from 3.5%.
The ECB said inflation continued to ease, but was still expected to remain "too high for too long".
On Wednesday, the US central bank raised rates to their highest level in 22 years in its bid to control prices.
In the UK, where inflation fell to 7.9% in June, the Bank of England's base rate is at 5%, At its next decision on 3 August, the Bank is widely expected to raise rates to 5.25%.
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Source: bbc.com
ECB-Monetary developments in the euro area: June 2023
July 26, 2023--Annual growth rate of broad monetary aggregate M3 decreased to 0.6% in June 2023 from 1.0% in May (revised from 1.4%)
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was -8.0% in June, compared with -7.0% in May
Annual growth rate of adjusted loans to households decreased to 1.7% in June from 2.1% in May
Annual growth rate of adjusted loans to non-financial corporations decreased to 3.0% in June from 4.0% in May
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to 0.6% in June 2023 from 1.0% in May, averaging 1.0% in the three months up to June. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, was -8.0% in June, compared with -7.0% in May.
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Source: ECB
IMF Staff Country Report-Italy: Selected Issues
July 26, 2023--POPULATION AGING IN ITALY: ECONOMIC CHALLENGES AND OPTIONS FOR OVERCOMING THE DEMOGRAPHIC DRAG1
Italy's population is shrinking and aging rapidly. To counteract the effect of demographic decline on GDP, a coherent strategy is needed to significantly boost productivity and raise active employment. Ample scope for catchup exists on both fronts.
The Demographic Challenge
1. The Italian economy faces a daunting demographic challenge. The country's workforce is beginning to shrink due to rapid population aging, an extended period of very low fertility, and unfavorable net migration dynamics in the context of low female and youth labor participation. The outlook is set to worsen: projections by the United Nations Population Division indicate that Italy's working age population will decrease by nearly 30 percent over the next 25 years (Figure 1)2.
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Source: imf.org
New Equity ETF by HANetf on Xetra: access to companies in line with the objectives of the European Green Deal
July 25, 2023--Since Tuesday, a new exchange-traded fund issued by HANetf has been tradable on Xetra and via Börse Frankfurt.
The European Green Deal UCITS ETF offers investors a sustainable investment in around 50 equally weighted companies that can potentially benefit from the European Green Deal.
The selected companies must generate at least 20 per cent of their turnover in Europe in one or more of the four business areas: clean energy, sustainable mobility, refurbished, energy-efficient buildings or circular economy. In addition, they must have a market capitalisation of at least 500 million euros and be among the two-thirds best companies based on environmental scoring.
The European Green Deal is a concept of the European Commission with the aim of achieving climate neutrality by 2050.
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Source: Xetra
3x Tesla ETP fails to deliver promised returns in June
July 25, 2023--Leverage Shares' $320mn vehicle was unable to deliver the full three times returns on six trading days during the month
Investors have been left out of pocket by what appears to be an unprecedented technical glitch at one of Europe's largest leveraged exchange traded products
Leverage Shares' highly popular $320mn 3x Tesla ETP (TSL3), which aims to provide returns equal to three times the daily movement in the share price of the electric-vehicle manufacturer, before fees, ran into trouble last month.
For six trading days it was unable to provide the full three times leverage due to "technical issues with the margin loan provider", it said in filings to the London Stock Exchange, one of four European bourses on which it is listed.
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Source: ft.com
Assets in Ireland-domiciled ETFs top 1 Trillion Euros for first time
July 25, 2023--The total accounts for 68% of the nearly €1.5tn European market Exchange traded funds in Ireland have risen above €1tn for the first time, making up 68 per cent of the nearly €1.5tn European market.
The overall fund industry is currently seeing a secular trend towards greater ETF investment, and Ireland is seen as a global centre of excellence for the wider, global asset management industry. Assets in Irish ETFs have grown 160 per cent since the end of 2018 compared with 34 per cent for other funds in the country, causing their share of Ireland-domiciled assets to jump from 21 per cent to about a third.
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Source: ft.com
ESMA performs an analysis of the cross-border investment activity of firms
July 19, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, and national competent authorities (NCAs) completed an analysis of the cross-border provision of investment services during 2022.
The increase in the cross-border provision of financial services has benefits for consumers and firms, as it fosters competition, expands the offer available to consumers and the market for firms.
However, it also requires that NCAs intensify their efforts and focus more on the supervision of cross-border activities and cooperation to tackle the issues arising from these activities.
The data collected and analysed across 29 jurisdictions allows ESMA and NCAs to shed light on various aspects of the market for retail investors that receive investment services by credit institutions and investment firms established in other Member States.
Key findings of the data collection[1] include:
A total of around 380 firms[2] provided services to retail clients on a cross-border basis in 2022. The majority of them (59%) are investment firms, while 41% are credit institutions.
Approximately 7.6 million clients in the EU/EEA received investment services from firms located in other EU/EEA Member States in 2022.
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Source:ESMA
State Street's ETF back-office dominance is a 'potential concern'
July 19, 2023--The bank acts as custodian for more than two-thirds of European ETF assets, Refinitiv Lipper data shows
State Street's dominance in servicing Europe's exchange traded fund market could be a problem for the sector, industry figures say.
The US bank acts as custodian for more than two-thirds of European ETF assets, totalling over €830bn, figures from Refinitiv Lipper show.
Manooj Mistry, chief operating officer at HANetf, a white-label ETF provider, said "one area of potential concern" was the concentration risk resulting from State Street's dominance as fund administrator.
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Source: ft.com
Official Statistics: Forecasts for the UK economy: July 2023
July 19, 2023--A comparison of independent forecasts for the UK economy in July 2023.
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Source: gov.uk
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