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Pressure from ETFs forecast to lead to more active fund fee cuts
July 1, 2030--Average charges for European passive funds have declined faster than their active counterparts
Active funds in Europe are forecast to further lower their fees as they try to "secure their future" in the face of rising demand for low-cost passive funds, experts say.
Fabrizio Zumbo, director of European asset and wealth management research at Cerulli, said active funds had been suffering "downward pressure" on costs as they struggled to outperform their benchmarks.
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Source: ft.com
New ETNs from Leverage Shares on Xetra: access to equity companies, US government bonds and tech stocks with vola hedge component
June 30, 2023--Since Friday, 14 exchange-traded notes issued by Leverage Shares are tradable on Xetra and via the trading venue B*ouml;rse Frankfurt.
Leverage Shares complements its existing range of collateralised exchange traded notes (ETNs) and offers investors access to the long and short performance of equity companies, US government bonds as well as an active investment strategy of tech stocks in combination with a hedge component with up to a 5x leverage factor.
The LS FAANG+ ETP tracks the performance of a basket of ten equally weighted, highly liquid, globally known US technology companies. These include, for example, Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Netflix and Tesla. Access to the Indian equity market in the triple long and short variant is offered by the Leverage Shares India ETP.
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Source: Xetra
ESMA finds adequate setup of measures to reduce volatility in trading of energy derivatives
June 30, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its Report on the implementation and functioning of the Intra-day Volatility Management Mechanism (IVM).
Following an assessment of the IVMs introduced by trading venues and identification of differences in the approaches taken in their implementation and calibration, ESMA finds that they have been adequately set up. ESMA however also highlights some practical challenges.
The IVM aims at limiting extreme volatility of prices in energy derivatives markets within one day. ESMA finds them adequately calibrated, with the caveat of the assessment having been done in a period with no evidence of protracted volatility episodes affecting energy commodity derivatives trading.
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Source: ESMA
Euro zone inflation falls again in June as energy prices tumble
June 30, 2023-- Inflation in the euro zone extended its decline in June as the cost of fuel tumbled, more than offsetting an acceleration in prices for services, a preliminary reading showed on Friday.
The data, pointing to only the smallest drop in underlying inflation, was unlikely to sway the European Central Bank, which has pencilled in a ninth consecutive rate hike for July and is eyeing one in September too.
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Source: reuters.com
ESMA finds adequate setup of measures to reduce volatility in trading of energy derivatives
June 30, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its Report on the implementation and functioning of the Intra-day Volatility Management Mechanism (IVM).
Following an assessment of the IVMs introduced by trading venues and identification of differences in the approaches taken in their implementation and calibration, ESMA finds that they have been adequately set up. ESMA however also highlights some practical challenges.
The IVM aims at limiting extreme volatility of prices in energy derivatives markets within one day. ESMA finds them adequately calibrated, with the caveat of the assessment having been done in a period with no evidence of protracted volatility episodes affecting energy commodity derivatives trading.
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Source: ESMA
IMF Working Paper-The Impact of Climate Policy on Oil and Gas Investment: Evidence from Firm-Level Data
June 30, 2023--Summary:
Using a text-based firm-level measure of climate policy exposure, we show that climate policies have led to a global decline of 6.5 percent in investment among publicly traded oil and gas companies between 2015 and 2019, with European companies experiencing the most significant impact.
Similarly, climate policy uncertainty has also had a negative impact. Results support the Neoclassical investment model, which predicts a pre-emptive cut in investment in reaction to downward shifts in prospective demand, in contrast with the "green paradox" that predicts an increase in current investment to shift production toward the present.
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Source: imf.org
ECB-Monetary developments in the euro area: May 2023
July 28, 2023--Annual growth rate of broad monetary aggregate M3 decreased to 1.4% in May 2023 from 1.9% in April
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was -6.4% in May, compared with -5.2% in April
Annual growth rate of adjusted loans to households decreased to 2.1% in May from 2.5% in April
Annual growth rate of adjusted loans to non-financial corporations decreased to 4.0% in May from 4.6% in April
Components of the broad monetary aggregate M3
The annual growth rate of the broad monetary aggregate M3 decreased to 1.4% in May 2023 from 1.9% in April, averaging 1.9% in the three months up to May. 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 -6.4% in May, compared with -5.2% in April. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 22.5% in May from 21.0% in April. The annual growth rate of marketable instruments (M3-M2) increased to 24.2% in May from 21.5% in April.
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Source: ECB
New BNP Paribas Easy equity ETFs on Xetra: access to sustainable US companies from the S&P 500 index with a best-in-class approach
June 27, 2023--Since Tuesday, two new exchange-traded funds issued by BNP Paribas Easy have been tradable on Xetra and via Börse Frankfurt.
The two BNP Paribas Easy S&P 500 ESG UCITS ETFs offer investors access to the largest US companies in the S&P 500 index by market capitalisation, which have a particularly high ESG rating in the areas of environmental protection, social responsibility and corporate governance compared to their peers.
The best-in-class approach is used in the selection process in order to achieve a similar sector group weighting as in the parent index.
Companies involved in business activities such as weapons, thermal coal or tobacco, as well as those that violate the principles of the United Nations Global Compact or are involved in ESG controversies, are excluded.
There are two share classe available to investors: While the BNP Paribas Easy S&P 500 ESG UCITS ETF-Capitalisation can be traded in US dollars, the BNP Paribas Easy S&P 500 ESG UCITS ETF- EUR Capitalisation minimises exchange rate fluctuations against the trading currency euro.
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Source: Xetra
IMF-Europe's Inflation Outlook Depends on How Corporate Profits Absorb Wage Gains
June 26, 2023-- Rising corporate profits account for almost half the increase in Europe's inflation over the past two years as companies increased prices by more than spiking costs of imported energy.
Now that workers are pushing for pay rises to recoup lost purchasing power, companies may have to accept a smaller profit share if inflation is to remain on track to reach the European Central Bank's 2-percent target in 2025, as projected in our most recent World Economic Outlook.
Inflation in the euro area peaked at 10.6 percent in October 2022 as import costs surged after Russia's invasion of Ukraine and companies passed on more than this direct increase in costs to consumers. Inflation has since retreated to 6.1 percent in May, but core inflation-a more reliable measure of underlying price pressures-has proven more persistent. This is keeping the pressure on the ECB to add to recent interest-rate rises even though the euro area slipped into recession at the start of the year. Policymakers raised rates to a 22-year high of 3.5 percent in June.
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Source: IMF.org
IMF Working Paper-Euro Area Inflation after the Pandemic and Energy Shock: Import Prices, Profits and Wages
June 23, 2023--Summary:
We document the importance of import prices and domestic profits as a counterpart to the recent increase in euro area inflation. Through a novel consumption deflator decomposition, we show that import prices account for 40 percent of the average change in the consumption deflator over 2022Q1-2023Q1, while domestic profits account for 45 percent.
The increase in nominal profits was largest in sectors benefiting from increasing international commodity prices and those exposed to recent supply-demand mismatches.
While the results show that firms have passed on more than the nominal cost shock, and have fared relatively better than workers, the limited available data does not point to a widespread increase in markups. Looking ahead, assuming nominal wage growth of around 4.5 percent over 2023-24-slightly below the level seen in Q1 2023 – and broadly unchanged productivity, a normalization of the profit share to the average level over 2015-19 will be necessary to achieve a convergence of inflation to target over the next two years. Monetary policy will thus need to remain restrictive to anchor expectations and maintain subdued demand such that workers and firms settle on relative price setting that is consistent with disinflation.
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Source: IMF.org
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