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Initiatives taken to try and help EU Savers and Investors navigate the Economic Fallout from the Coronavirus epidemic
April 7, 2020--The continued spread of the COVID-19 virus around the world and the emergency confinement measures have severely disrupted capital markets. EU Citizens in their capacity as investors and savers are already feeling the squeeze and will be among the first in line to suffer from the economic and financial fallout that will undoubtably ensue following the large array of different financial measures taken by governments and financial institutions.
BETTER FINANCE and its members are scrambling to put tools in place and to provide clear information and guidance for individual investors and financial services users across all EU Member States. Hereunder follows a list of some of the initiatives already up and running:
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Source: betterfinance.eu
ECB-Euro area quarterly balance of payments and international investment position: fourth quarter of 2019
April 7, 2020--Current account surplus at €320 billion (2.7% of euro area GDP) in 2019, down from €361 billion (3.1% of GDP) in 2018.
Geographic counterparts: largest bilateral surpluses vis-à-vis the United Kingdom (€184 billion in 2019, up from €158 billion in 2018) and the United States (€111 billion, down from €133 billion), with largest deficits vis-à-vis offshore centres (€77 billion, up from €9 billion) and China (€69 billion, up from €65 billion).
International investment position at end-2019 showed net liabilities of €63 billion (below 1% of euro area GDP), after net liabilities of €153 billion at the end of the third quarter of 2019.
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Source: ECB
ESMA report stresses impact of costs on retail investor benefits
April 6, 2020--The European Securities and Markets Authority (ESMA), the EU securities regulator, today publishes its second annual statistical report on the cost and performance of retail investment products in the European Union (EU.)
The analysis contained in this report complements ESMA's risk assessment and supervisory convergence work within its investor protection mandate, and contributes to the European Commission's project on cost and performance of investment products under the Capital Markets Union Action Plan.
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Source: ESMA
Retail investors flock to Moscow Exchange in March
April 6, 2020--Retail investors flocked to Moscow's stock exchange in March opening twice as many accounts as the monthly average in 2019 and ploughing more than half a billion dollars into shares during a volatile month's trading.
The Moscow Exchange (MOEX) slumped to a one-year low on March 19 as global investors fled riskier assets due to uncertainty over the coronavirus outbreak and oil prices collapsed as demand worldwide dried up. Since then, the main share index has pared half its losses since mid-February.
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Source: reuters.com
ESMA publishes guidance on performance fees in UCITS and certain AIFs
April 3, 2020--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, has published today its final guidance on performance fees in investment funds-applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and certain types of Alternative Investment Funds (AIFs).
The guidelines provide comprehensive guidance to fund managers when designing performance fee models for the funds they manage, including the assessment of the consistency between the performance fee model and the fund's investment objective, policy and strategy, particularly when the fund is managed in reference to a benchmark.
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Source: ESMA
New Invesco ETF on Xetra: Short-dated US government bonds
April 3, 2020--Since Friday a new Exchange Traded Fund issued by Invesco is tradable via Xetra and Börse Frankfurt.
With the Invesco US Treasury Bond 0-1 Year UCITS ETF EUR Hdg-Acc investors can participate in the performance of US dollar-denominated fixed-interest bonds issued by the US Treasury Department.
The investment universe includes bonds with a minimum maturity of one and a maximum of twelve months. Investors are hedged against currency fluctuations and returns are reinvested.
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Source: Xetra
Sustainable Funds Weather the First Quarter Better Than Conventional Funds
April 3, 2020--These funds were helped by a focus on companies with strong ESG profiles and less exposure to energy.
Like all equity funds, sustainable equity funds suffered sudden and large losses during the first quarter of 2020 because of the coronavirus pandemic, but they held up better than conventional funds.
Seven out of 10 sustainable equity funds finished in the top halves of their Morningstar Categories, and 24 of 26 environmental, social, and governance-tilted index funds outperformed their closest conventional counterparts.
Sustainable Funds Lost Less Than Their Peer Groups
Based on a comparison of the first-quarter returns of 206 sustainable equity open-end and exchange-traded funds available in the United States with those of their respective categories, sustainable funds performed better on a relative basis.
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Source: Morningstar
ESMA updates its risk assessment in light of the COVID-19 pandemic
April 2, 2020--The European Securities and Markets Authority (ESMA), the EU securities markets regulator, today updates its risk assessment to account for the impact of the COVID-19 pandemic.
The pandemic. in combination with existing valuation risks, has led to large equity market corrections since mid-February, driven by a sharp deterioration in the outlook for consumers, businesses and of the economic environment. Corporate bond, government bond markets and a number of investment funds show signs of stress. Market infrastructures have continued to function in an orderly manner despite significant surges in trading activity, the use of circuit breakers and increases in derivatives margins.
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Source: ESMA
Cash market trading volumes in March
April 1, 2020--Deutsche Börse's cash markets generated a turnover of €300.7 billion in March (previous year: €130.3 billion).
€259.6 billion were attributable to Xetra (previous year: €117.8 billion), bringing the average daily Xetra trading volume to €11.8 billion.
Trading volume on Börse Frankfurt was €8.4 billion (previous year: €2.9 billion) and on Tradegate Exchange €32.7 billion (previous year: €9.6 billion).
By type of asset class, equities accounted for around €256.8 billion in the entire cash market. Trading in ETFs/ETCs/ETNs generated a turnover of €39.0 billion. Turnover in bonds was €1.0 billion, in certificates €3.3 billion and in funds €0.6 billion.
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Source: Deutsche Börse Cash Market
Will the economic strategy work?
April 1, 2020--Because even thriving companies can be killed in a matter of weeks by a recession of the magnitude now confronting the world, advanced-economy governments have reacted in a remarkably similar fashion to the COVID-19 crisis. But extending liquidity lifelines to private businesses and supporting idled workers assumes a short crisis.
With the COVID-19 crisis bringing France to a halt, Insee, the French statistical institute, puts the drop in economic activity relative to normal at 35%. It reckons that the fall in household consumption is of a similar magnitude.
These numbers imply that each additional month of lockdown reduces annual GDP by three percentage points. And sectoral situations are obviously worse: business output is down 40%, manufacturing output down 50%, and some services sectors have come to a complete standstill. Ex ante estimates for Germany and the United Kingdom are similar, and, if anything, corresponding numbers may be larger in economies with a smaller public sector.
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Source: bruegel.org
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