Global ETF News Older than One Year
Economic Outlook: Weak trade and investment threaten long-term growth
November 21, 2019--Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy and raising the risk of long-term stagnation, according to the OECD's latest Economic Outlook.
World GDP growth is expected to be 2.9% this year-its lowest annual rate since the financial crisis-and remain at 2.9%-3.0% in 2020 and 2021. Global GDP expanded 3.5% in 2018.
Bold action is needed to address both the high levels of uncertainty facing businesses as well as the fundamental changes taking place in the global economy. Policy-making must lead the transition to cleaner energy and to an increasingly digital world. Governments must work together urgently to boost investment and establish fair international rules on taxation and trade.
Source: OECD
World Bank-Emerging and Developing Economies Less Prepared Now for a Deeper Downturn than Prior to 2009 Global Recession: Study
November 20, 2019--Emerging and developing economies are less well positioned today to withstand a deeper global downturn, should it occur, than they were before the 2009 global recession, although they now have more resilient policy frameworks to respond, a new World Bank Group study of the global recession and its aftermath finds.
With multiple risks to global growth clouding the outlook, there is concern whether emerging and developing economies can effectively respond to a deeper economic slowdown as they were able to do during the 2009 global recession. The new study by the World Bank Group, A Decade after the Global Recession, compares emerging market and developing economies' preparedness then and now, and finds reason both for concern and for optimism.
Source: World Bank
The European Investment Bank is going to stop funding fossil fuel projects by the end of 2021
November 18, 2019--The European Investment Bank said on Thursday it would stop funding fossil fuel projects at the end of 2021, a landmark decision that potentially deals a blow to billions of dollars of gas projects in the pipeline.
The bank's new energy lending policy, which it said was approved with "overwhelming" support, will bar most fossil fuel projects, including traditional use of natural gas.
"This is an important first step-this is not the last step." EIB vice president, Andrew McDowell told reporters in a call.
Under the new policy, energy projects applying for EIB funding will need to show they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide, a move which bans traditional gas-burning power plants.
Source: WEF (World Economic Forum)
How does China fare on the Russian market? Implications for the European Union
November 18, 2019-China's economic ties with Russia are deepening. Meanwhile, Europe remains Russia's largest trading partner, lender and investor. An analysis of China's ties with Russia, indicate that China seems to have become more of a competitor to the European Union on Russia's market.
Competition over investment and lending is more limited, but the situation could change rapidly with China and Russia giving clear signs of a stronger than ever strategic partnership.
The last two decades have seen a very rapid increase in trade and lending between China and Russia. The investment relationship has remained more subdued. China dominates every aspect of the bilateral economic relationship, as a net exporter, net creditor and net investor, despite Russia long being a richer country than China.
Source: bruegel.org
Frontier Market Borrowing Binge
November 18, 2019--Rock bottom global interest rates have been a boon for so-called frontier-market countries, which have been able to borrow cheaply to finance their development needs. But there can be too much of a good thing: countries that don't put the money to good use may have trouble servicing their loans and find themselves at risk of default.
As the Chart of the Week shows, hard-currency bond sales by frontier issuers—countries such as Angola, Belarus, Ecuador, and Pakistan—are poised to rise to $38 billion this year, close to the record set in 2017. Over the five years to mid-2019, the total stock of frontier hard-currency debt tripled to $200 billion.
Source: IMF
IMF Working Paper-Designing Central Bank Digital Currencies
November 18, 2019--We study the optimal design of a central bank digital currency (CBDC) in an environment where agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security; and where network effects make the convenience of payment instruments dependent on the number of their users.
CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff.
view the IMF Working Paper-Designing Central Bank Digital Currencies
Source: IMF
Bassanese Bites: QE is coming
November 18, 2019--Global Markets
Global markets are currently enjoying a "no news is good news period"-ever hopeful that a US-China trade deal will get done, and no news to the contrary is encouraging as it suggests both parties are still at least talking.
What we don't want is President Trump flying off in a rage again-and jacking up tariffs-due to 11th hour haggling by the Chinese. But as I’ve discussed here previously, Trump seems less likely to do this now given growing signs that an extension of the trade dispute would put the US economy at risk as we head into the 2020 Presidential election year.
Source: BetaShares
Alarm sounds over heavy short selling of junk bond ETFs
November 17, 2019--Funds' holdings and 'design flaws' vulnerable to market downturn prompt concern
Junk bond exchange traded funds are being short sold in bulk.
Almost 40 per cent of the US's biggest junk bond ETFs available for borrowing are on mortgage...
Source: FT.com
NSE may set up derivatives desk in Riyadh
November 11, 2019--However, restrictions on future share sales mean an international IPO may be ruled out
The National Stock Exchange has signed a deal with Saudi Arabia's Tadawul stock exchange to collaborate, share information and technology, and facilitate joint assignments in both the countries in its first such deal, said two people with direct knowledge of the matter.
Source: economictimes.indiatimes.com
OTC derivatives statistics at end-June 2019
November 8, 2019--Notional amounts of OTC derivatives rose to $640 trillion at end-June 2019. This is up from $544 trillion at end-2018 and the highest level since 2014. It marks a continuation of the trend increase evident since end-2016.
The gross market value of OTC derivatives, summing positive and negative values, also rose, from $9.7 trillion to $12.1 trillion, led by increases in euro interest rate derivative contracts.
The lastest semiannual data benefit from the addition of more comprehensive information for smaller dealers collected as part of the BIS Triennial Survey.1 Dealers in emerging market economies (EMEs) accounted for 9% of the outstanding notional amounts of foreign exchange and commodity derivatives globally at end-June 2019, up from 7% at end-June 2016.
Source: BIS
