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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
Investment managers predict impending booms in two high growth areas: SIX study
June 22, 2023--Global members of the buy-side community are bullish on digital assets and ESG investing amid widespread dialogue on both spaces, according to new research from SIX Group.
The study, 'Cornerstones for Growth' (a Future of Finance Report from SIX), surveyed 300 portfolio managers, asset allocators, and hedge fund managers, across Europe, Asia, and the United States.
There were strong indications from the respondents that there is a significant role to play for market infrastructure providers, data vendors, and technology providers if firms are to reach the levels of growth in each area that was broadly predicted.
The demand for extensive institutional experience was particularly felt in the digital assets arena, where confidence in the way digital assets are traded is being consistently cited as a gateway to greater adoption. Over 60% of respondents pointed to a safer trading environment as the key driver.
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Source: six-group.com
Europe's digital retail ETF market catches State Street's attention
June 22, 2023--SSGA is exploring digital distribution of exchange traded funds
Inflows to ETFs from retail investors without financial intermediaries have been rising, particularly in Germany, where savings plans have encouraged the use of low-cost products.
The number of ETF savings plans in Germany has grown from 160,000 in 2014 to about 3.76mn. Assets in the plans have grown from €194mn to €7.7bn over the same period, according to extraETF Research.
Source: ft.com
Official Statistics: Forecasts for the UK economy: June 2023
June 21, 2023--A comparison of independent forecasts for the UK economy in June 2023.
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Source: gov.uk
New Amundi ETF on Xetra: access to the global bond market for investment-grade corporate bonds
June 21, 2023--Since Wednesday, a new exchange-traded fund issued by Amundi Asset Management has been tradable on Xetra and via Börse Frankfurt.
The Amundi EUR Corporate Bond 1-5Y ESG UCITS ETF allows investors to invest in a global portfolio of investment-grade fixed income corporate bonds.
All bonds in the portfolio are denominated in euros and were issued by companies from developed and emerging markets. The remaining maturity of the underlying bonds ranges from one year to up to five years. All securities must have a rating of at least BBB.
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Source: Xetra
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