Global ETF News Older than One Year
IMF Working Paper-Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates
May 2, 2019--Summary:
This paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries.
Globally, subsidies remained large at $4.7 trillion (6.3 percent of global GDP) in 2015 and are projected at $5.2 trillion (6.5 percent of GDP) in 2017. The largest subsidizers in 2015 were China ($1.4 trillion), United States ($649 billion), Russia ($551 billion), European Union ($289 billion), and India ($209 billion). About three quarters of global subsidies are due to domestic factors—energy pricing reform thus remains largely in countries' own national interest—while coal and petroleum together account for 85 percent of global subsidies. Efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28 percent and fossil fuel air pollution deaths by 46 percent, and increased government revenue by 3.8 percent of GDP.
Source: IMF
Millennials And Sophisticated Investors Driving ETF Adoption
May 2, 2019--New Vanguard research examines demographic and behavioral trends of ETF usage
New Vanguard research identified distinctive behavioral trends amongst exchange-traded fund (ETF) investors, concluding that age and investment experience are the foremost drivers of ETF usage.
Early ETF adoption among self-directed investors, published by Vanguard Center for Investor Research, examined the behavior of more than five million retail investor households and revealed that older, more established investors with relatively complex portfolios tend to use ETFs to supplement other investments.
At the other end of the spectrum, ETFs serve as the primary investment vehicle for millennials and new investors.
view moreview the Early ETF adoption among self-directed investors report
Source: Vanguard
World Gold Council-Gold Demand Trends Q1 2019-Central bank buying and ETF inflows lifted global gold demand
May 2, 2019--Highlights
This was the highest Q1 since 2013.
Robust Indian gold jewellery demand drove global gains.
Healthy wedding-related buying lifted Indian demand to 125.4t (+5% y-o-y).
ETFs and similar products added 40.3t in Q1.
Products listed in Western markets grew by a combined 46t.
Bars and coin investment diverged: bars lost 5% while coins grew 12%.
Japanese net disinvestment was a key driver of the fall in gold bar demand.
Gold used in technology contracted 3% to 79.3t.
Demand for consumer electronics faced headwinds from economic challenges.
Source: World Gold Council
New OCC Study: Listed Index and ETF Option Overlays May Improve Endowment Performance
May 1, 2019-- OCC, the world's largest equity derivatives clearing organization, today shared the results of a new study, Endowment Risk Management and Return Enhancement with Listed Index and ETF Options, that found that both buy-write and put spread collar overlays improved risk-adjusted performance within the study sample for small, mid-sized and very large endowments, with the small endowment portfolio seeing the largest benefits.
The research study, commissioned by The Options Industry Council (OIC), was conducted by Dr. Edward Szado, Associate Professor of Finance at Providence College School of Business.
Source: Options Clearing Corporation (OCC)
Moody's Research Warns Corporations That Private Blockchains Contain New Risks
April 30, 2019--United States credit rating agency Moody's Investor Service warned about the dangers of private versus public blockchains in new research issued on April 25.
Part of an investigation into the potential impact of blockchain technology on structured finance, the report highlights key differences between current market trends.
Specifically, corporations should be aware of the pluses and minuses involved in using private blockchains, which can run without a decentralized consensus or governance mechanism and thus become open to manipulation.
Source: cointelegraph.com
Introducing the FTSE Chinese Green Bond Index Series-FTSE Chinese Green Bond Index Series
April 30, 2019--The issuance of "green" bonds (conventional bonds with proceeds that are used to finance climate or environmental projects) has been growing at a rapid pace globally, and this progress is particularly evident in China.
Since it began in 2015, China's domestic green bond market has quickly evolved to become the second largest in the world.
In January 2019, FTSE Russell announced the launch of the FTSE Chinese (Onshore CNY) Green Bond Index Series, which includes a range of benchmarks designed to measure this quickly-growing market segment.
Source: FTSE Russell
IMF Working Paper-Enabling Deep Negative Rates to Fight Recessions: A Guide
April 29, 2019--Summary:
The experience of the Great Recession and its aftermath revealed that a lower bound on interest rates can be a serious obstacle for fighting recessions. However, the zero lower bound is not a law of nature; it is a policy choice.
The central message of this paper is that with readily available tools a central bank can enable deep negative rates whenever needed-thus maintaining the power of monetary policy in the future to end recessions within a short time. This paper demonstrates that a subset of these tools can have a big effect in enabling deep negative rates with administratively small actions on the part of the central bank.
To that end, we (i) survey approaches to enable deep negative rates discussed in the literature and present new approaches; (ii) establish how a subset of these approaches allows enabling negative rates while remaining at a minimum distance from the current paper currency policy and minimizing the political costs; (iii) discuss why standard transmission mechanisms from interest rates to aggregate demand are likely to remain unchanged in deep negative rate territory; and (iv) present communication tools that central banks can use both now and in the event to facilitate broader political acceptance of negative interest rate policy at the onset of the next serious recession.
view the IMF Working Paper-Enabling Deep Negative Rates to Fight Recessions: A Guide
Source: IMF
Five Things to Know About the Economic Outlook in the Caucasus and Central Asia
April 29, 2019--While growth is stable, countries in the Caucasus and Central Asia (CCA) face an array of longstanding challenges that, if unaddressed, threaten to hold back the region from reaching its potential.
Here are five key things to know from the latest IMF Regional Economic Outlook Update
The good news? Growth is stable, and inflation is low
In the years since the significant external shocks of 2014-16, growth in the region has stabilized, in part thanks to efforts to strengthen macroeconomic frameworks, such as tax code reform (implemented in Armenia, Georgia, and Uzbekistan) and the adoption of fiscal rules (implemented in Armenia, Azerbaijan, and Kyrgyz Republic).
Strengthening of monetary policy frameworks and efforts to make exchange rates more flexible in some countries have also helped manage external pressures and contain inflation. Overall, growth in the region is projected at 4.1 percent in 2019 and 2020, which is in line with the 4.2 percent growth seen in 2018.
view the IMF Regional Economic Outlook: Middle East and Central Asia Update
Source: IMF
The Economic Outlook of the Middle East, North Africa, Afghanistan, and Pakistan in Five Charts
April 29, 2019--In the best of times, countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region would face a formidable task of creating jobs for the millions of young people entering the workforce.
Now, they must tackle this challenge amid a slowing global economy, volatile oil prices, and uncertainty around trade tensions.
Below are five charts that help illustrate key findings from the IMF's Regional Economic Outlook Update:
Growth in oil exporters is projected to remain subdued relative to 2018. Although growth in the Gulf Cooperation Council (GCC) is projected to improve slightly to 2.1 percent in 2019 from 2 percent in 2018, a sharp decline in Iran’s economic activity (of 6 percent) amid sanctions results in a mere 0.4 percent rate of growth for 2019 for the region's oil-exporting countries.
Source: IMF
Bank Profitability: Consider the Source
April 30, 2019--The global financial crisis of 2007–2009 and the ensuing period of low interest rates have renewed interest among policy makers in the relationship between bank profitability and financial stability. Despite the subsequent recovery, the return on equity of many banks remains below the cost of equity.
Market valuations remain below the balance sheet value of banks, indicating the market's assessment of banks' ability to overcome profitability challenges is not optimistic.
In a recent IMF Working Paper, we look into how bank profitability affects financial stability from both theoretical and empirical perspectives. We developed a theoretical model of the relationship between bank profitability and financial stability by exploring the role of non-interest income and retail-oriented business models. We then analyzed data from 431 publicly traded banks to examine the determinants of bank risks and profitability, and how the level and the source of bank profitability affect risks. In this regard, we analyzed not only the link between the level of bank profitability and financial stability, but also the deeper question of how the source of bank profitability affects financial stability.
Source: IMF
