Global ETF News Older than One Year
Is FinTech Eating the Bank's Lunch?
November 17, 2023--This paper examines how the growing presence of FinTech firms affects the performance of traditional financial institutions. The findings point to a negative impact on profitability, primarily due to a reduction in interest income and a rise in operational costs.
Although established financial institutions have tried to diversify their revenue streams, these efforts have proven inadequate to offset the losses associated with increased competition from FinTech firms.
Our study also reveals that various FinTech business models, such as Peer-to-Peer (P2P) lending and Balance Sheet lending, have varying effects on financial institutions. Cooperative banks experience more significant profit deterioration under both models, whereas (larger) commercial banks appear to benefit from partnerships with P2P platforms, as evidenced by an increase in non-interest income. Furthermore, the findings suggest that FinTech presence has a disproportionately larger adverse effect on banks in countries with more competitive, profitable, and developed financial systems. Interestingly, however, traditional financial institutions in countries with stronger regulatory frameworks appear to benefit from the expanding influence of FinTech firms.
Source: imf.org
Report finds strong expansion of global value chains but warns of increased vulnerability
November 16, 2023--Global value chains (GVCs) continued to expand in 2022, as indicated by the growing share of foreign inputs in exports and the increasing participation rates of economies worldwide. This bodes well for spreading the benefits of trade to more firms, workers and developing economies, according to the GVC Development Report 2023 issued on 16 November.
However, the report also flags increasing risks from the dependence on a small number of economies for certain products and highlights the vulnerability of GVCs to rising trade tensions and global crises.
Source: World Trade Organization (WTO)
Climate Change is Disrupting Global Trade
November 15, 2023--Panama's drought shows how trade disruptions from climate extremes can reverberate around the world
Around 1,000 ships pass through the Panama Canal each month carrying a total of over 40 million tons of goods-about 5 percent of global maritime trade volumes.
But water levels in this vital link between the Atlantic and Pacific oceans have fallen to critical lows because of the worst drought in the canal’s 143-year history.
Drought restrictions imposed amid insufficient rainfall at the Gatun Lake, which feeds the canal, have reduced throughput by some 15 million tons so far this year. Ships have faced an additional six days in transit. The authorities are exploring strategic options to boost the water supply in the canal.
As the Chart of the Week shows, ports in Panama, Nicaragua, Ecuador, Peru, El Salvador and Jamaica are suffering most from these delays, with 10 percent to 25 percent of their total maritime trade flows affected.
Source: imf.org
Investors miss out on sugar rush as they flee commodities ETFs
November 13, 2023--WisdomTree's director of macroeconomic research, Aneeka Gupta, acknowledged that investors seemed to have lost out on the rise in the price of sugar and may not buy back in.
Energy ETFs have been a recent bright spot while funds for precious metals like gold have suffered outflows, according to data provided by Invesco.
When it comes to sugar-specific investment vehicles, investors do not appear to have chased performance over the second half of the year, despite prices that rose beyond spring's highs.
Source: beamstart.com
Conflict in Middle East Could Bring 'Dual Shock' to Global Commodity Markets
October 30, 2023--October 30, 2023--Impact limited so far but energy-market turmoil could intensify food insecurity
Although the global economy is in a much better position than it was in the 1970s to cope with a major oil-price shock, an escalation of the latest conflict in the Middle East-which comes on top of disruptions caused by the Russian invasion of Ukraine-could push global commodity markets into uncharted waters, according to the World Bank's latest Commodity Markets Outlook.
The report provides a preliminary assessment of the potential near-term implications of the conflict for commodity markets. It finds that the effects should be limited if the conflict doesn’t widen. Under the Bank's baseline forecast, oil prices are expected to average $90 a barrel in the current quarter before declining to an average of $81 a barrel next year as global economic growth slows.
Overall commodity prices are projected to fall 4.1% next year. Prices of agricultural commodities are expected to decline next year as supplies rise. Prices of base metals are also projected to drop 5% in 2024. Commodity prices are expected to stabilize in 2025.
Source: worldbank.org
ETFGI reports year-to-date net inflows into the Global ETFs industry of US$596.75 billion are the 2nd highest on record
October 17, 2023--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs ecosystem, reported today year-to-date net inflows of US$596.75 billion are the 2nd highest on record. The global ETFs industry gathered US$67.70 Bn in net inflows in September, bringing year to date net inflows to US$596.75 Bn.
Assets invested in the global ETFs industry have increased 11.3% year-to-date in 2023, going from US$9.26 trillion at end of 2022 to $10.31 trillion, according to ETFGI's September 2023 global ETFs and ETPs industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted)
Highlights
Net inflows of $67.70 Bn during September.
YTD net inflows of $ 596.75 Bn are the second highest on record, after YTD net inflows of $923.16 Bn in 2021.
52nd month of consecutive net inflows.
Assets of $10.31 Tn invested in the global ETFs industry at the end of September.
Assets have increased 11.3% YTD in 2023, going from $9.26 Tn at end of 2022 to $10.31 Tn.
Source: ETFGI
IMF-Climate Crossroads: FISCAL POLICIES IN A WARMING WORLD
October 10, 2023--For all countries, it is becoming hard to balance public finances. The difficulties originate in ever-growing demand for public spending,
associated with high expectations about what the state can and should do, elevated debts, and high-for-long interest rates and political red lines on
taxes.
But the way the government budget constraint binds varies widely across countries.
In some cases, it is binding with the government having insufficient resources to pay urgent bills and no access to market financing.
These countries are often small and poor.
For example, in many low-income countries interest expenses represent a large and growing fraction of tax revenues. In other cases, while immediate financial pressures are absent, the perpetuation of current policies entails an unsustainable fiscal path. These countries are, in general, large and rich. In addition, there is another important consideration when pondering budgetary policies. In most countries, tighter fiscal policies are needed, not only to reconstitute buffers and contain public finance risks, but also to contribute to central banks' efforts in favor of a timely return to inflation targets.
Source: imf.org
Higher-for-Longer Interest Rate Environment is Squeezing More Borrowers
October 10, 2023--Elevated inflation means central banks may have to keep policy rates higher in a way that stretches the capacity of borrowers to repay debt
The world's central banks have unleashed the steepest series of interest-rate increases in decades during their two-year drive to tame inflation-and they may not be done yet. Policymakers have raised rates by about 400 basis points on average in advanced economies since late 2021, and around 650 basis points in emerging market economies.
Most economies are absorbing this aggressive policy tightening, showing resilience over the past year, but core inflation remains elevated in several of them, especially the United States and parts of Europe. Major central banks therefore may need to keep interest rates higher for longer.
In this environment, risks to the world economy remain skewed to the downside, as we detail in in our < a href="https://www.imf.org/en/Publications/GFSR/Issues/2023/10/10/global-financial-stability-report-october-2023?cid=pr-com-AM2023-GFSREA2023002" TARGET="_blank">Global Financial Stability Report. Though this latest assessment of vulnerabilities is similar to what we noted in April, the acute stress we saw in some banking systems has since subsided. However, we now see indications of trouble elsewhere. view more
Source: imf.org
IMF Working Paper-Monetary Policy Transmission through Commodity Prices
October 10, 2023--Summary:
Monetary policy influences inflation dynamics by exerting impact on a diverse array of commodity prices. At high frequencies, we show that a 10 basis points increase in US monetary policy rate reduces commodity prices between 0.5% and 2.5%, after 18 to 24 business days. Beyond the dollar appreciation channel, the effects are larger for highly storable and industrial commodities, consistent with the cost of carry and the expected demand channel.
We then study the quantitative importance of the commodity-price channel of monetary policy on domestic and international inflation at longer horizons (6-36 months). The results indicate that the response of commodity prices-oil, base metals, and food prices-to monetary policy accounts for 47% of the total effect of US monetary policy on US headline inflation, and 57% of the effect of US monetary policy on other countries' headline inflation. The commodity price channel on core inflation is smaller and mainly driven by base metal prices. Finally, the commodity-price channel of ECB monetary policy is smaller, and it mainly operates through its effect on energy prices.
IMF World Economic Outlook-Navigating Global Divergences-October 2023
October 10, 2023--Global recovery remains slow, with growing regional divergences and little margin for policy error
The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000-19) average of 3.8 percent. Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite.
The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000-19) average of 3.8 percent. Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite. Emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024. Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices. Core inflation is generally projected to decline more gradually, and inflation is not expected to return to target until 2025 in most cases.
Source: imf.org