Global ETF News Older than One Year
Soaring global debt and hiked interest rates are creating a big issue for developing countries. Here’s why
July 3, 2023-- It is becoming increasingly expensive for developing countries to service external debt.
The issue is threatening development goals as governments are increasingly forced to divert money away from other priorities.
Experts are calling for better coordination and communication between major economies to mitigate the debt crisis.
Rising interest and depreciating exchange rates are driving capital back to developed nations-and closing doors to credit for developing countries. The situation, experts say, is forcing developing countries to borrow at higher interest rates, further exacerbating the ballooning level of global debt.
Global debt-which hit $305 trillion in recent months-has been increasing in recent years as the global economy endures compounding shocks such as COVID-19 and the war in Ukraine. Developing countries in particular saw external debt levels grow by over 15% last year compared to pre-pandemic levels, according to the United Nations.
Source: weforum.org
Util-In the spotlight: Fashion's existential dilemma
June 30, 2023--One sector, in particular, is scrambling to prove progress and plug its sustainability data gap. Surveyed by Vogue, 45 leading fashion and beauty houses overwhelmingly cited supply-chain data as the greatest challenge to meeting regulatory and reporting requirements.
Those supply chains are sprawling and destructive, yielding concerns about water consumption and chemical use, human labour, greenhouse gas (GHG) emissions, and vast textile waste. Just 1% of clothes are recycled. Globally, the sector is responsible for 10% of GHG emissions; synthetic textiles, for 35% of microplastic releases.
Source: util.co
IMF Working Paper-Decomposing Climate Risks in Stock Markets
June 30, 2023--Summary:
Climate change poses an unprecedented challenge to the world economy and the global financial system. This paper sets out to understand and quantify the impact of climate mitigation, with a focus on climate-related news, which represents an important information source that investors use to revise their subjective assessments of climate risks.
Using full-text data from Financial Times from January 2005 to March 2022, we develop machine learning-based indicators to measure risks from climate mitigation, and the direction of the risk is identified through manual labels.
The documented risk premium indicates that climate mitigation news has been partially priced in the Canadian stock market. More specifically, stock prices react positively to market-wide climate-favorable news but they do not react negatively to climate-unfavorable news. The results are robust to different model specifications and across equity markets.
Source: IMF
IMF Working Paper-Is High Debt Constraining Monetary Policy? Evidence from Inflation Expectations
June 30, 2023--Summary:
This paper examines whether high government debt levels pose a challenge to containing inflation. It does so by assessing the impact of government debt surprises on inflation expectations in advanced- and emerging market economies.
It finds that debt surprises raise long-term inflation expectations in emerging market economies in a persistent way, but not in advanced economies. The effects are stronger when initial debt levels are already high, when inflation levels are initially high, and when debt dollarization is significant. By contrast, debt surprises have only modest effects in economies with inflation targeting regimes. Increased debt levels may complicate the fight against inflation in emerging market economies with high and dollarized debt levels, and weaker monetary policy frameworks.
Source: IMF.org
A Note of Caution on the Relation Between Money Growth and Inflation
A Note of Caution on the Relation Between Money Growth and Inflation
June 30, 2023--Summary:
We assess the bivariate relation between money growth and inflation in the euro area and the United States using hybrid time-varying parameter Bayesian VAR models.
Model selection based on marginal likelihoods suggests that the relation is statistically unstable across time in both regions. The effect of money growth on inflation weakened notably after the 1980s before strengthening after 2020.
There is evidence that this time variation is related to the pace of price changes, as we find that the maximum impact of money growth on inflation is increasing in the trend level of inflation. These results caution against asserting a simple, time-invariant relationship when modeling the joint dynamics of monetary aggregates and consumer prices.
Source: imf.org
IMF Working Paper-Is High Debt Constraining Monetary Policy? Evidence from Inflation Expectations
June 30, 2023--Summary:
This paper examines whether high government debt levels pose a challenge to containing inflation. It does so by assessing the impact of government debt surprises on inflation expectations in advanced- and emerging market economies. It finds that debt surprises raise long-term inflation expectations in emerging market economies in a persistent way, but not in advanced economies.
The effects are stronger when initial debt levels are already high, when inflation levels are initially high, and when debt dollarization is significant. By contrast, debt surprises have only modest effects in economies with inflation targeting regimes. Increased debt levels may complicate the fight against inflation in emerging market economies with high and dollarized debt levels, and weaker monetary policy frameworks.
Source: IMF
ETFGI reports actively managed ETFs listed globally gathered net inflows of US$15.23 billion during May
June 22, 2023--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs ecosystem, reported today that actively managed ETFs listed globally gathered net inflows of US$15.23 billion during May, bringing year-to-date net inflows to US$58.77 billion.
Assets invested in actively managed ETFs increased by 1.3%, from US$547 billion at the end of April 2023 to US$554 billion, according to ETFGI's May 2023 Active ETF and ETP industry landscape insights report, an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Actively managed ETFs gathered net inflows of $15.23 Bn during May.
Year-to-date net inflows of $58.77 Bn in 2023 are the third highest on record, after year-to-date net inflows of $73.38 Bn in 2021 and year-to-date net inflows of $54.97Bn in 2022.
38th month of consecutive net inflows.
Assets of $554 Bn invested in actively managed ETFs and ETPs industry at the end of May 2023.
Assets increased 13.7% year-to-date in 2023, going from $487 Bn at the end of 2022 to $554 Bn.
Source: etfgi
Trackinsight ETP Flows Report for May 2023
June 21, 2023--The ETP market experienced significant growth in May, with the addition of 40 new products. The total number of funds available now stands at 9,084, providing investors with a wide array of investment options. While this trend may not be surprising, the split between new active-and passively-managed strategies certainly deserves to be recognized.
The launch of 56 actively-managed products and the removal of 16 passively-managed strategies highlight the growing investor appetite for active ETPs.
Fixed Income and Active Equity ETPs led the way in inflows in May. These categories, representing less than 25% of total assets, garnered substantial investor interest, accounting for more than 75% of the total inflows for the month.
Source: trackinsight.com
Assets invested in global exchange traded funds hit record $10.32tn
June 19, 2023--Industry at new peak while most other asset classes are still below their previous highs
Assets invested in global exchange traded funds have hit a record of $10.32tn off the back of rallying stock markets and resilient inflows.
The figure exceeds the $10.26tn mark set at the end of 2021 when markets peaked before Russia's invasion of Ukraine and a global surge in inflation, according to data from ETFGI, a consultancy.
Source: ft.com
IMF Working Paper-The Rise of the Walking Dead: Zombie Firms Around the World
June 16, 2023--Summary:
We build a new dataset of listed and private nonfinancial zombie firms for a large set of Advanced Economies and Emerging Markets over the last two decades. We find that the share of these unproductive and unviable firms has been rising worldwide, especially since the GFC and the Covid-19 pandemic.
We show that, perhaps surprisingly, the incidence of zombification is lower among private firms.
Lower average survival rates of private firms may explain this phenomenon. We find important negative macrofinancial spillovers from zombie firms: nonzombies' financial performance is persistently reduced in industries populated with a greater number of zombies. To mitigate these effects, we document that countries with stronger banks, and tighter macroprudential policies tend to have fewer zombies and stronger nonzombies. Strengthening the banking sector may, however, not be sufficient if insolvency frameworks are not well-prepared to deal with the restructuring or insolvency of firms.
Source: imf.org