Global ETF News Older than One Year
Soaring Inflation Puts Central Banks on a Difficult Journey
August 1, 2022--Upside risks to the inflation outlook remain large, and more aggressive tightening may be needed if these risks materialize.
Central banks in major economies expected as recently as a few months ago that they could tighten monetary policy very gradually.
Inflation seemed to be driven by an unusual mix of supply shocks associated with the pandemic and later Russia's invasion of Ukraine, and it was expected to decline rapidly once these pressures eased.
Now, with inflation climbing to multi-decade highs and price pressures broadening to housing and other services, central banks recognize the need to move more urgently to avoid an unmooring of inflation expectations and damaging their credibility. Policymakers should heed the lessons of the past and be resolute to avoid potentially more painful and disruptive adjustments later.
Source: imf.org
IMF Working Paper-Economic Growth After Debt Surges
July 29, 2022--Summary:
Debt levels, both private and public, were already at record highs before the Covid-19 pandemic, and surged further in 2020. The high indebteness raises concerns whether it will undermine future growth prospects. This paper contributes to the ongoing debate by examining what happens to economic growth after debt surges. We apply a local projection method to a new dataset of debt surges in 190 countries between 1970 and 2020.
Our results show that the relationship between debt surges and economic growth are complex. Debt surges tend to be followed by weaker economic growth and persistently lower output. However, this negative relationship does not always hold. Surges in public debt tend to have the most negative impact on future growth prospects. This is particularly the case if the economy is already operating with a large positive output gap. Debt surges also tend to be followed by weaker economic growth if the initial debt levels are high, especially for private debt surges. Our results also show how debt surges impact future growth. Public debt surges are associated with especially weaker private and public investment, although both private and public consumption are also negatively affected. Surges in corporate debt are followed by lower private and public investment.
Source: imf.org
Fund investors didn't head for the exits despite market turmoil, report shows
July 28, 2022--Investors withdrew US$136 billion globally from mutual funds and ETFs in the first half of this year
Despite a brutal first half of the year for most asset classes, investors largely stayed the course rather than trying to time markets or drastically adjust allocations, a report from Morningstar says.
"Investors were wild for risk assets in 2021, but 2022 has not been a complete reversal despite market conditions," said the report on global mutual fund and ETF flows during the first six months of the year.
"There have been no signs of 'capitulation' in any asset class."
Source: investmentexecutive.com
Global Economic Growth Slows Amid Gloomy and More Uncertain Outlook
July 26, 2022--The world's three largest economies are stalling, with important consequences for the global outlook. Inflation is a major concern.
The global economy, still reeling from the pandemic and Russia's invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. Many of the downside risks flagged in our April World Economic Outlook have begun to materialize.
Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China's slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year.
Source: imf.org
More Countries Are Pricing Carbon, but Emissions Are Still Too Cheap
July 22, 2022--As the world gears up to avoid a climate catastrophe by limiting global warming to 1.5 to 2 degrees Celsius, more countries are putting carbon pricing at the center of their mitigation strategies. Yet designing ways to put a price on carbon can be complicated and countries face multiple choices.
Globally, ETSs and carbon taxes cover 30 percent of emissions, with prices rising as high as $90 per ton (in the European Union).
Despite the proliferation of carbon pricing schemes, policymakers should do more. To limit global warming, coverage must expand while prices rise from a global average of $6 per ton of CO2 today to $75 by 2030.
Just 10 financial actors hold the key to climate change
July 21, 2022--Summary:
A new report has identified the 10 financial actors with the most influence on the fossil fuel economy and outlines the decisive role they can play in helping de-carbonize our future.
The study found that the top 10 most influential actors, including investment advisors, governments, and sovereign wealth funds from around the world, own 49.5 per cent of potential emissions from the world's largest energy firms.
Source: sciencedaily.com
The New York Stock Exchange and SGX Group Announce Wide-Ranging Collaboration including Dual Listing of Companies
July 21, 2022--The New York Stock Exchange, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, and Singapore Exchange (SGX Group), Asia's leading and most international multi-asset exchange, announced today the signing of a new agreement to collaborate on the dual listing of companies on both exchanges and work together in a number of other key areas focused on the capital markets.
This collaboration represents an important initiative for both markets. In a virtual ceremony today, NYSE President Lynn Martin and SGX Group Chief Executive Officer Loh Boon Chye signed a memorandum of understanding outlining the terms of the agreement.
Source: Intercontinental Exchange, Inc
Global market tumult slows growth in ETF industry
July 20, 2022--Net inflows decline 30 per cent in the first half of 2022 to $464bn
New business for exchange traded fund providers dropped by almost 30 per cent in the first six months of the year as equity and bond markets both fell sharply in response to soaring inflation and rising interest rates.
Global net inflows into ETFs reached $463.8bn in the first half of 2022, down 29.6 per cent from the same period last year, according to ETFGI, a London-based consultancy.
Source: ft.com
Slow Moving Regulatory Decision Making for Cryptocurrency not Economically Favourable, New World Economic Forum Study Finds
July 20, 2022-New white paper says continuing the current indecisive regulatory approach for digital currencies is the least effective and sustainable option for supporting monetary and financial stability
Allowing cryptocurrencies and stablecoins to play a regulated role in the economy was found to be the most effective option
The Macroeconomic Impact of Cryptocurrency and Stablecoins examines the macroeconomic benefit of regulatory options for digital currencies through interviews with 15 expert macroeconomists globally
Read more on the Macroeconomic Impact of Cryptocurrency and Stablecoins here
A new study by the World Economic Forum suggests that the current, indecisive regulatory approach for both crypto and stablecoins poses the greatest risk to financial and monetary stability while also hindering innovation.
Source: weforum.org
IMF-Hall of Mirrors: How Consumers Think about Inflation
July 19, 2022--July 19, 2022--A deeper understanding of how consumers think about the economy would help policymakers control inflation
Their answers may help them make important personal financial decisions. Should they go ahead and buy that new refrigerator, rather than wait until later and risk seeing the price go up? Should they ask their boss for a raise to make up for the loss of purchasing power?
The answers won't affect just individual households but the economy as a whole. The reason: central bankers and academic economists view inflation partly as a self-fulfilling prophecy. If consumers believe prices will rise at a faster pace, they may behave in ways-buying a refrigerator or asking for a raise-that will fuel more inflation.
Source: imf.org
