Global ETF News Older than One Year
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
IMF Working Paper-The Global Economic Recovery 10 Years After the 2008 Financial Crisis
April 26, 2019--Summary:
This paper takes stock of the global economic recovery a decade after the 2008 financial crisis. Output losses after the crisis appear to be persistent, irrespective of whether a country suffered a banking crisis in 2007-08.
Sluggish investment was a key channel through which these losses registered, accompanied by long-lasting capital and total factor productivity shortfalls relative to precrisis trends. Policy choices preceding the crisis and in its immediate aftermath influenced postcrisis variation in output.
Underscoring the importance of macroprudential policies and effective supervision, countries with greater financial vulnerabilities in the precrisis years suffered larger output losses after the crisis. Countries with stronger precrisis fiscal positions and those with more flexible exchange rate regimes experienced smaller losses. Unprecedented and exceptional policy actions taken after the crisis helped mitigate countries' postcrisis output losses.
view the IMF Working Paper-The Global Economic Recovery 10 Years After the 2008 Financial Crisis
Source: IMF
IMF Working Paper-Global Declining Competition
April 26, 2019--Summary:
Using a new firm-level dataset on private and listed firms from 20 countries, we document five stylized facts on market power in global markets. First, competition has declined around the world, measured as a moderate increase in average firm markups during 2000-2015.
Second, the markup increase is driven by already high-markup firms (top decile of the markup distribution) that charge increasing markups. Third, markups increased mostly among advanced economies but not in emerging markets. Fourth, there is a non-monotonic relation between firm size and markups that is first decreasing and then increasing. Finally, the increase is mostly driven by increases within incumbents and also by market share reallocation towards high-markup entrants.
view the IMF Working Paper-Global Declining Competition
Source: IMF
Flow Traders releases March 2019 ETP market stistics
April 24, 2019--Flow Traders N.V. ("Flow Traders") (Euronext: FLOW), today releases the monthly ETP (Exchange Traded Products) market statistics for
March 2019. This refers to general market observations only.
Source: Flow Traders
Oil prices to be lower in 2019 on slower-than-expected global growth, rising non-OPEC supply
April 23, 2019--Metal, agriculture prices to stage partial recovery, momentum to pick up in 2020
Crude oil prices are expected to average $66 a barrel in 2019 and $65 a barrel in 2020, a downward revision from the October forecast due to the weaker-than-expected global growth outlook and greater-than-anticipated U.S. production, the World Bank said.
Metal prices are expected to continue a recovery in 2019 that follows a sharp drop in the second half of 2018, the World Bank said in its April Commodity Markets Outlook. The recovery has been spurred by stabilization of activity in China after weakness around the turn of the year, as well as various supply shortfalls. view more
view the World Bank April Commodity Markets Outlook
Source: World Bank
Did ETFs have a bad first quarter 2019?
April 23, 2019--Following the trade press in Germany and other European countries, I was quite surprised when I read the headline that net sales in ETFs were down dramatically over the course of the first quarter of 2019.
By reading the article, I found out that the numbers the respective analyst was looking at were a comparison of the global ETF flows within the first quarter of 2018 and the first quarter of 2019.
Even as the statement of the analyst could be judged generally correct by looking at the numbers, one shouldn't make these comparisons to simplify or overvalue the findings, since the markets do not think in quarters and, therefore, pay no attention to comparisons like the one above. Even as such a comparison takes into account that the different quarters of a year show different flow patterns.
Source: Refinitiv
Exchange-traded bond funds crash through $1tn in assets
April 23, 2019--The amount of assets held in exchange-traded bond funds has pushed past $1tn, capping a near fivefold increase since the financial crisis, and underscoring a radical reshaping of the world's debt markets.
Source: FT.com
Bonds to Save the Planet
April 23, 2019--Eco-friendly fixed-income funds can help create a stronger market for securities that back environmental projects.
Green bonds could be a key tool to finance the fight against climate change. But good luck getting your hands on one, or figuring out exactly what it's worth.
The securities are just like regular bonds, except their proceeds are earmarked to fund projects that have positive benefits for the environment or climate. Countries including Poland and France have issued them to support renewable energy. Companies may use bond proceeds on projects that reduce emissions or enable funding for electric vehicles.
Source: Bloomberg
IEA statement on global oil markets
April 23, 2019--The International Energy Agency is monitoring developments in global oil markets, and notes that markets are now adequately supplied, and that global spare production capacity remains at comfortable levels.
Further tightening of sanctions on Iran will have an impact on its export capacity. Iranian shipments of crude and condensates are running around 1.1 million barrels a day (mb/d) in April, 300 000 barrels a day lower than March, and 1.7 mb/d lower than May 2018.
As a result of OPEC's high compliance rate with the agreed supply cuts in the OPEC+ group, global spare production capacity has risen to 3.3 mb/d, with 2.2 mb/d held by Saudi Arabia and around 1 mb/d by the United Arab Emirates, Iraq and Kuwait.
Source: IEA (International Energy Agency)
First Bridge Data-ETF Worldwide Snapshot-Apr 2019
April 22, 2019--In the latest monthly report:
On April 8, 2019 the US SEC issued a notice that it intends to approve the application from Precidian Funds to launch non-transparent actively managed ETFs.
This is a significant industry development since ETFs listed in the US have always had to disclose their holdings daily.
Global ETF assets increased by 1.5% in March 2019 to $5.5T
There were 19 new ETF listings in the US and 105 outside the US (including crosslistings)
in March 2019.
China ‘A share’ small caps, marijuana and semiconductor stocks were among the best performing ETF categories this year through April 18, 2019. VIX, shipping and wheat futures were among the worst performing categories in the same time period. view more
Source: First Bridge
