Global ETF News Older than One Year
Global Wave of Debt Is Largest, Fastest in 50 Years
December 19, 2019--Debt in emerging and developing economies (EMDEs) climbed to a record US$55 trillion in 2018, marking an eight-year surge that has been the largest, fastest, and most broad-based in nearly five decades, according to a new World Bank Group study that urges policymakers to act promptly to strengthen their economic policies and make them less vulnerable to financial shocks.
The analysis is contained in Global Waves of Debt, a comprehensive study of the four major episodes of debt accumulation that have occurred in more than 100 countries since 1970. It found that the debt-to-GDP ratio of developing countries has climbed 54 percentage points to 168 percent since the debt buildup began in 2010. On average, that ratio has risen by about seven percentage points a year-nearly three times as fast it did during the Latin America debt crisis of the 1970s. The increase, moreover, has been exceptionally broad-based—involving government as well as private debt, and observable in virtually all regions across the world.
Source: World Bank
FSB report assesses vulnerabilities of leveraged loans and CLOs
December 19, 2019-The Financial Stability Board (FSB) today published a report on Vulnerabilities associated with leveraged loans and collateralised loan obligations (CLOs). The report assesses the financial stability implications of developments in the leveraged loan and CLO markets.
It provides a global perspective by combining available data and analyses from FSB members.
Markets for leveraged loans and CLOs have grown significantly in recent years, with the majority of issuance concentrated in the US and to a lesser extent the European Union. The securitisation of leveraged loans through CLO issuance, which had come to a halt almost entirely between 2009 and 2010, exceeded pre-crisis levels in 2014 and has remained strong since then.
Source: FSB
New Data on World Debt: A Dive into Country Numbers
December 17, 2019--The new update of the IMF's Global Debt Database shows that total global debt (public plus private) reached US$188 trillion at the end of 2018, up by US$3 trillion when compared to 2017. The global average debt-to-GDP ratio (weighted by each country's GDP) edged up to 226 percent in 2018, 1½ percentage points above the previous year.
Although this was the smallest annual increase in the global debt ratio since 2004, a closer look at the country-by-country data reveals rising vulnerabilities, suggesting that many countries may be ill-prepared for the next downturn.
Global debt reached $188 trillion in 2018.
In advanced economies the average debt ratio declined, but there is no clear sign of a significant push to reduce debt. In emerging market economies and low-income developing countries, the average debt ratios rose further. Notably, China's total debt ratio reached 258 percent of GDP at end-2018-the same as the United States and nearing the average for advanced economies, which was 265 percent.
Source: IMF
IOSCO consults on measures to reduce conflict of interests in debt capital raising
December 16, 2019--The Board of the International Organization of Securities Commissions (IOSCO) is requesting feedback on proposed guidance to help IOSCO members address potential conflicts of interest and associated conduct risks arising from the role of market intermediaries in the debt capital raising process.
Conflicts of interest and associated conduct risks can weaken investor confidence and undermine debt capital markets as an effective vehicle for issuers to raise funding. To help regulators identify and address these risks, IOSCO today published the consultation report Conflicts of interest and associated conduct risks during the debt capital raising process.
Source: IOSCO
ESG controversies wipe $500bn off value of US companies
December 14, 2019--Environmental, social and governance funds hit the $1tn asset mark last year
Quarrels involving environmental, social and governance issues have wiped more than $500bn off the value of large US companies over the...
Source: FT.com
Basel Committee invites comments on the design of a prudential treatment for crypto-assets
December 12, 2019--Today the Basel Committee on Banking Supervision is publishing a discussion paper on the design of a prudential treatment for crypto-assets.
The past few years have seen rapid growth in crypto-assets. While the crypto-asset market is still small relative to the size of the global financial system, and banks' exposures to crypto-assets are currently limited, the absolute size of the market is meaningful and there continue to be rapid developments, with increased attention from a broad range of stakeholders.
As previously indicated, the Committee is of the view that the growth of crypto-assets and related services has the potential to raise financial stability concerns and increase risks faced by banks. Crypto-assets are an immature asset class given the lack of standardisation and constant evolution. Certain crypto-assets have exhibited a high degree of volatility, and present risks for banks, including liquidity, credit, market, operational (including fraud and cyber), money laundering and terrorist financing, and legal and reputation risks.
Source: BIS
Cboe buys EuroCCP to bolster Dutch EU base after Brexit
December 10, 2019--Cboe Global Markets (CBOE.Z) said on Tuesday it would take full control of EuroCCP, Europe's largest clearing house for stock trades, to bolster its post-Brexit base in Amsterdam and diversify into derivatives
It is the latest deal in a rapidly consolidating market where the Swiss Exchange has bid for its Madrid counterpart and the London Stock Exchange (LSE.L) is buying financial market data company Refinitiv.
Source: Reuters
Treating stablecoins like ETFs
December 9, 2019--We've often argued that a stablecoin is nothing more than a glorified exchange traded fund (ETF).
So when it comes to the fuss about how to regulate stablecoins like Libra, is it possible that most of the hard work has already been done on account of the regulatory environment that governs ETFs?
That's an idea being proposed by Luciano Somoza and Tammaro Terracciano, PhD candidates from the University of Lausanne and the University of Geneva respectively.
Source: FT.com
Easing trade tensions lift sentiment: BIS Quarterly Review
December 8, 2019--Easing trade tensions in mid-October triggered a risk-on phase in global financial markets. Equity prices rallied, reaching new highs in the United States in November. At the same time, credit spreads tightened, and yields on safe sovereign bonds edged higher. Nevertheless, the economic outlook remained tepid and inflation low, leading central banks to ease further.
The renewed risk appetite, coupled with loose financial conditions, sparked questions about the sustainability of asset valuations. Investors' compensation for bearing risk seems to hinge on the term premium; to the extent that the premium is unusually low, it may flatter valuations.
Source: BIS
DIY stock indices pose challenge to investment heavyweights
December 5, 2019--In April the German exchange group bought Axioma, a New York-based analytics company, and merged it with its existing data and index business.
The new company, Qontigo-which owns some of the biggest European equity benchmarks such as Germany's Dax -has since rolled out a "do-it-yourself" platform that allows clients to design their own indices, and outsource the maintenance.
Source: FT.com
