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IMF-Global Financial Stability Report October 2018: A Decade after the Global Financial Crisis: Are We Safer?
October 3, 2018--The October 2018 Global Financial Stability Report (GFSR) finds that global near-term risks to financial stability have increased somewhat, reflecting mounting pressures in emerging market economies and escalating trade tensions. These risks, while still moderate, could increase significantly.
An intensification of concerns about emerging markets, a broader rise in trade tensions, the realization of political and policy uncertainty, or a faster-than-expected tightening in monetary normalization could all lead to a sharp tightening in financial conditions. Medium-term financial stability risks remain elevated, driven by high non–financial sector leverage in advanced economies and rising external borrowing in emerging markets. Although the global banking system is stronger than before the crisis, it is exposed to highly indebted borrowers as well as to opaque and illiquid assets and foreign currency rollover risks.
Alternatives to Libor begin to make an impact
October 1, 2018--Large institutions have already issued bonds linked to new benchmarks such as Sofr and Sonia.
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Transaction fees swallow up a quarter of investment costs
September 30, 2018--Report on world's biggest asset owners sheds light on poorly understood charges
Transaction fees account for about a quarter of the total cost of investing for the world's biggest asset owners, according to research that sheds light on the size of the poorly understood charges. Basic fees paid to external fund managers, and performance fees if investments do better than expected, account for most of the total cost of investing.
IMF Working Paper-What Do Monetary Contractions Do? Evidence From An Algorithmic Identification Procedure
September 28, 2018--Summary:
As the "Volcker shock" is believed to have generated useful information on the effects of monetary policy, this paper develops a simple procedure to identify other unanticipated monetary contractions. The approach is applied to a panel data set spanning 162 countries (over the period 1970-2017), in which it identifies 147 large monetary contractions.
The procedure selects episodes where a protracted period of loose monetary policy was suddenly followed by sizeable nominal interest rate increases. Focusing on contractions of significant size increases the signal-to-noise ratio, while they are unlikely to be accompanied by confounding "information effects" (markets interpreting a rate hike as the Central Bank being optimistic about the real side of the economy). A subsequent panel VAR analysis suggests that a 100-basis point rate hike reduces real GDP by 0.5 percent. This reduction in output seems to be persistent, pointing to a certain degree of hysteresis. The price level falls by 1.5 percent, indicating that the medium-/long-run impact of contractionary monetary shocks is not characterized by a neo-Fisherian response. Advanced economies appear to display more price stickiness than emerging/developing countries, as the former combine a more muted price response with a larger effect on output.
FTSE Russell includes China stocks in boon to battered market
September 27, 2018--FTSE's China inclusion expected to trigger $10 bln passive inflows
FTSE Russell points to improved access for global investors
FTSE says will review inclusion of Chinese bonds in global indexes in March
MSCI considering boosting A-share weighting in its benchmarks (Adds March review of Chinese bonds inclusion; paragraphs 20, 21)
Global index provider FTSE Russell said it will start including mainland Chinese shares in its major benchmarks from June next year, in a move that it expects will draw initial net inflows of $10 billion from passive investors.
MSCI weighs boosting China exposure in key EM index
September 26, 2018--Index provider proposes 20% A-shares inclusion and addition of smaller tech stocks.
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Economic Freedom of the World: 2018 Annual Report
September 25, 2018--Hong Kong and Singapore retain the top two positions with a score of 8.97 and 8.84 out of 10, respectively. The rest of this year's top scores are New Zealand, Switzerland, Ireland, United States, Georgia, Mauritius, United Kingdom, Australia, and Canada.
It is worth noting that the United States returned to the top 10 in 2016 after an absence of several years. The rankings of other large economies in this year’s index are Germany (20th), Japan (41st), Italy (54th), France (57th), Mexico (82nd), Russia (87th), India (96th), China (108th), and Brazil (144th). The 10 lowest-rated countries are: Sudan, Guinea-Bissau, Angola, Central African Republic, Republic of Congo, Syria, Algeria, Argentina, Libya, and lastly Venezuela.
OPEC Monthly Oil Market Report September 2018
September 24, 2018--Oil Market Highlights
Crude Oil Price Movements
In August, the OPEC Reference Basket declined by $1.01 m-o-m, settling at $72.26/b. Crude oil futures were
also down for the month. Price declines were mainly due to worries that the ongoing global trade disputes
would lower oil demand, strengthening US dollar, US stock builds and reported supply increases.
ICE Brent was $1.11 lower at $73.84/b compared to the previous month, while NYMEX WTI was down $2.74 at
$67.85/b and DME Oman dropped 24¢ to $72.67/b. However, year-to-date (y-t-d) ICE Brent was still $19.86
higher at $72.00/b, while NYMEX WTI increased by $17.12 to $66.42/b and DME Oman was up $18.70 at
$69.55/b. The Brent-WTI spread widened to average $6.00/b. Speculative net long positions ended mixed,
with those of NYMEX WTI lower.
BIS Quarterly Review, September 2018
September 23, 2018--Emerging market economies (EMEs) came under pressure in recent months, pushing bond yields higher and domestic currencies lower. Asset prices in EMEs were shaken by the strong dollar, trade tensions, and signs of a slowdown in China. The impact differed across countries; some faced crises. But contagion was limited.
Advanced economy markets also diverged, reflecting differences in the pace of monetary policy normalisation as well as in the macroeconomic fortunes of Europe and the United States. US fiscal stimulus bolstered expectations of higher near-term economic growth but no doubt also of higher bond yields.
view the BIS Quarterly Review, September 2018
Investors ignore human rights at their peril
September 22, 2018--Investors ignore human rights at their peril. From land grabs to illegal labour, civil liberties issues should matter to investors.
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