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IMF Working Paper-Firm Leverage and Boom-Bust Cycles
June 16, 2023--Summary:
This paper explores the dynamic relationship between firm debt and real outcomes using data from 24 European economies over the period of 2000-2018. Based on macro data, it shows that a rise in credit to firms is associated with an increase in employment growth in the short-term, but employment growth declines in the medium-term. This pattern remains similar, even when the changes in credit to households are accounted for.
Next, using data from a large sample of firms, it shows that firm leverage buildups predict similar boom-bust growth cycles in firm employment: Firms with a larger increase in leverage experience a boost in employment growth in the short-term, but employment growth decreases in the medium-term. Relatedly, the volatility of employment growth increases in the aftermath of firm leverage buildups. Finally, this paper provides suggestive evidence on the role of a financial channel in the relationship between firm leverage buildups and employment growth. The results show that a rise in firm leverage is associated with a persistently higher debt service ratio, pointing the drag on finances. Consistently, boom-bust growth cycles in the aftermath of firm leverage buildups are not limited to employment growth, but are also pronounced for investment. Moreover, the medium-term decline in firm employment growth as predicted by leverage buildups becomes even larger if aggregate financial conditions tighten. The findings are in favor of "lean against the wind" approach in policy making.
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Source: imf.org
ETFGI reports the ETFs industry in Europe gathered net inflows of US$7.93 billion during May
June 15, 2023 — ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs ecosystem, reported today that ETFs industry in Europe gathered net inflows of US$7.93 billion during May, bringing year-to-date net inflows to US$61.89 billion.
During the month, assets invested in the European ETF/ETP industry decreased by 1.4% from US$1.58 trillion at the end of April to US$1.56 trillion, according to ETFGI's May 2023 European ETFs and ETPs industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
ETFs industry in Europe gathered net inflows of $7.93 Bn in May.
YTD net inflows in 2023 of $61.89 Bn are third highest on record, after YTD net inflows of $95.18 Bn in 2021 and YTD net inflows of $68.77 in 2022.
8th month of consecutive net inflows.
Assets of $1.56 Tn invested in ETFs industry in Europe at the end of May.
Assets increased 9.9% YTD in 2023, going from $1.42 Tn at end of 2022 to $1.56 Tn.
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Source: etfgi.com
ECB raises rates to 22- year high and signals more to come
June 15, 2023--The European Central Bank raised interest rates for the eighth successive time as expected on Thursday and signalled further policy tightening, as it battles high inflation.
The ECB has now increased borrowing costs by a combined 4 percentage points in a year, its fastest pace on record, but a peak is now clearly in sight and the debate is slowly shifting to how long rates will need to be kept at current levels.
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Source: reuters.com
Deutsche Borse welcomes Valour as new crypto ETN issuer on Xetra
June 15, 2023--Since Thursday, the first crypto ETN of the issuer Valour Digital Securities Limited has been tradable on Xetra and via Börse Frankfurt.
With the 1Valour Bitcoin Physical Carbon Neutral, investors can invest in the performance of the cryptocurrency Bitcoin in a climate-friendly way.
The carbon footprint associated with Bitcoin is neutralised through certified carbon removal and offsetting initiatives.
The crypto ETN is physically backed by Bitcoin and is centrally cleared in trading by Deutsche Börse Group's central counterparty, Eurex Clearing AG.
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Source: Xetra
ESMA publishes latest edition of its newsletter
June 14, 2023--The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, has today published its latest edition of its Spotlight on Markets Newsletter.
Your one-stop-shop in the world of EU financial markets focused in May on various important topics such as the European Supervisory Authorities (ESAs) Progress Reports on Greenwashing and mainly on ESMA's key findings.
For the first time, the ESAs agreed on a high-level understanding of the phenomenon. The ESMA Progress Report helps to better understand greenwashing and provides market participants and regulators with a shared reference point in dealing with it. ESMA assesses which areas of the sustainable investment value chain are more exposed to the risk of greenwashing. Our work on Sustainable Finance is described in this video.
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Source: ESMA
Swiss Exchange Hit by Worst Market Outage in Decade on Tuesday
June 12, 2023--The SIX Swiss Exchange is investigating Tuesday's technical glitch that caused the country's worst stock market outage in more than decade.
The Zurich-based exchange said it will release findings from its investigation in a couple of days.
"It was a technical issue," said Juerg Schneider, the Swiss exchange's head of media relations, without giving details about the specific nature of the problem. We can "definitely rule out that it was a hack," he said, adding that it was the first such disruption since 2012.
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Source: bnnbloomberg.ca
New ETF from WisdomTree on Xetra: access to renewable energy companies
June 12, 2023--Since Monday, a new exchange-traded fund issued by WisdomTree has been tradable on Xetra and via Börse Frankfurt.
With the WisdomTree Renewable Energy UCITS ETF, investors can invest in a portfolio of companies that are primarily positioned within the renewable energy value chain.
Some of the areas in which the companies operate include wind and solar energy, hydrogen, other renewable technologies and solutions aimed at developing a renewable energy market.
Companies that do not meet WisdomTree's ESG criteria are excluded.
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Source: Xetra
New UBS ETF on Xetra: access to the global fixed income market for green bonds
June 9, 2023--Since Monday, a new exchange-traded fund issued by UBS Asset Management has been tradable on Xetra and via Börse Frankfurt.
The UBS ETF (LU) Global Green Bond ESG 1-10 UCITS ETF gives investors access to the global green bond market.
Green bonds have the special feature that they are used exclusively to finance sustainable projects or companies.
Only bonds that are denominated in USD, EUR, GBP, SEK, CAD or AUD, have a fixed coupon and a remaining maturity of one year to ten years are taken into account. In addition, they must have an MSCI ESG rating of at least BBB. The weighting of an issuer is limited to three per cent. GCC Economic Growth Expected to Slow to 2.5% in 2023
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Source: Xetra
New UBS ETF on Xetra: access to the commodity sector with roll optimisation while taking sustainability into account
June 9, 2023--June 9, 2023--Since Friday, a new exchange-traded fund issued by UBS Asset Management has been tradable on Xetra and via Börse Frankfurt.
The UBS ETF (Irl) CMCI Commodity Transition SF UCITS ETF (USD) offers sustainability-oriented investors an investment in a broadly diversified commodity portfolio, taking into account social and environmental aspects.
Access to the commodity sector is ensured via futures contracts. In order to minimise negative roll yields, investments are made in futures contracts across the entire maturity curve. In this way, constant maturities are covered.
The sustainability aspect is covered by the rfu rating model. This creates a sustainability rating for a raw material, taking into account social and ecological criteria, and also evaluates the life cycle of a raw material from extraction to processing.
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Source: xetra
UK official holdings of international reserves: May 2023
June 7, 2023--This release details movements in the international reserves of gold and assets held by the UK Government.
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Source: gov.uk
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