Global ETF News Older than One Year
IMF-Global Financial Stability Report, April 2021: Preempting a Legacy of Vulnerabilities
April 6, 2021--Summary:
Extraordinary policy measures have eased financial conditions and supported the economy, helping to contain financial stability risks. Chapter 1 warns that there is a pressing need to act to avoid a legacy of vulnerabilities while avoiding a broad tightening of financial conditions. Actions taken during the pandemic may have unintended consequences such as stretched valuations and rising financial vulnerabilities. The recovery is also expected to be asynchronous and divergent between advanced and emerging market economies.
Given large external financing needs, several emerging markets face challenges, especially if a persistent rise in US rates brings about a repricing of risk and tighter financial conditions. The corporate sector in many countries is emerging from the pandemic overindebted, with notable differences depending on firm size and sector. Concerns about the credit quality of hard-hit borrowers and profitability are likely to weigh on the risk appetite of banks. Chapter 2 studies leverage in the nonfinancial private sector before and during the COVID-19 crisis, pointing out that policymakers face a trade-off between boosting growth in the short term by facilitating an easing of financial conditions and containing future downside risks. This trade-off may be amplified by the existing high and rapidly building leverage, increasing downside risks to future growth. The appropriate timing for deployment of macroprudential tools should be country-specific, depending on the pace of recovery, vulnerabilities, and policy tools available. Chapter 3 turns to the impact of the COVID-19 crisis on the commercial real estate sector. While there is little evidence of large price misalignments at the onset of the pandemic, signs of overvaluation have now emerged in some economies. Misalignments in commercial real estate prices, especially if they interact with other vulnerabilities, increase downside risks to future growth due to the possibility of sharp price corrections.
Source: IMF.org
How Rising Interest Rates Could Affect Emerging Markets
March 5, 2021--Rapid vaccine rollout in the United States and passage of its $1.9 trillion fiscal stimulus package have boosted its expected economic recovery. In anticipation. longer-term US interest rates have risen rapidly. with the rate on 10-year Treasury securities going from under 1 percent at the start of the year to over 1.75 percent in mid-March.
A similar surge has occurred in the United Kingdom. In January and February. interest rates also rose somewhat in the euro area and Japan before central banks there stepped in with easier monetary policy.
Emerging and developing economies are viewing rising interest rates with trepidation. Most of them are facing a slower economic recovery than advanced economies because of longer waits for vaccines and limited space for their own fiscal stimulus. Now, capital inflows to emerging markets have shown signs of drying up.
Source: IMF
IMF-Fiscal Monitor April 2021 A Fair Shot
April 1, 2021--Full Report : A Fair Shot
This report overviews countries' fiscal actions in response to COVID-19 and discusses how governments' policies should adapt to get ahead of the pandemic and set the stage for a greener, fairer, and more durable recovery.
Global vaccination should be scaled up as it can save lives and will eventually pay for itself with stronger employment and economic activity. Until the pandemic is brought under control globally, fiscal policies must remain flexible and supportive, while keeping debt at a manageable level over the long term. Governments also need to adopt comprehensive policies, embedded in medium-term frameworks, to tackle inequalities-especially in access to basic public services-that were exacerbated by the COVID-19 pandemic and may cause income gaps to persist. Investing in education, healthcare, and early childhood development and strengthening social safety nets financed through improved tax capacity and higher progressivity, can strengthen lifetime opportunities,improve trust, and contribute to more social cohesion.
Source: IMF
Morningstar unleashes robots to write fund research
March 27, 2021--Robots were already being used to generate the analyst rating itself on thousands of smaller funds
Robots are being let loose to write investment reports for Morningstar, the research house that helps investors choose among thousands of mutual and exchange traded funds for saving and retirement.
At a time when the finance industry is debating the workloads of its staff during a boom in activity and a disruptive pandemic, Morningstar has found a way to increase its written research without further taxing its army of human analysts.
Source: luxtimes.lu
IMF-Global economy on firmer ground, but with divergent recoveries amid high uncertainty
March 27, 2021--Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines-it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.
Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.
Source: IMF
BlackRock faces being compelled to sell huge holdings in two ETFs
March 25, 2021--The iShares clean energy funds are braced for a major index rebalancing after amassing too much money in too few stocks
Two BlackRock ETFs face the prospect of having to sell as much stock of two energy companies as is typically traded in 40-50 days in order to comply with a dramatic index rebalancing.
The exchange traded funds might also need to offload more than 10 per cent of the free-float market capitalisation of some other companies if the shake-up proceeds as proposed next month, according to Socié té Générale, which revealed its views in a narrowly circulated report produced for clients.
"I bet every hedge fund is looking at that list to work out where they can buy these stocks so they can sell them short," said Peter Sleep, senior portfolio manager at 7 Investment Management.
Source: FT.com
Liquidity to solvency: transition cancelled or postponed?
March 25, 2021-Key takeaways
Since the start of the Covid-19 pandemic, a "bankruptcy gap" has emerged between measures of expected and realised bankruptcies globally.
The ample supply of credit to make up for short-term losses has been an important factor decoupling bankruptcies from the sharp reduction in firms' cash flows.
Firms' reliance on credit suggests that it may be too early to dismiss future solvency risk. Significant increases in leverage and weak earnings forecasts in some sectors suggest that for some firms, greater credit extension may have only postponed, rather than cancelled, their insolvency.
Source: BIS
Bitcoin mining boom adds to chip price inflation
March 22, 2021--Surging cryptocurrency demand worsens global shortages in semiconductors
As the price of bitcoin has surged, the hidden costs of the cryptocurrency boom are becoming clearer.
Awareness of the environmental consequences of using a vast array of computer equipment to produce bitcoins has been rising. Bill Gates has been among those to flag concerns, pointing out that so-called bitcoin mining uses more electricity per transaction than any other method known to mankind. Much less discussed, and yet perhaps more immediate, is mining’s impact on costs of chips-which go into everything from smartphones and TVs to cars.
Source: FT.com
ETFGI reports assets invested in Active ETFs reached a record of 318 billion US Dollars at the end of February 2021
March 17, 2021--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today that Active ETFs and ETPs gathered net inflows of US$16.90 billion during February, bringing year-to-date net inflows to a record US$33.80 billion.
Assets invested in actively managed ETFs and ETPs finished the month up to 4.9%, going from US$303 billion at the end of January to a record US$318 billion, according to ETFGI's February 2021 Active ETF and ETP 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
Assets invested in Active ETFs reached a record of $318 Bn at the end of February.
Monthly net inflows of $16.90 Bn during February are the second highest behind the $18.56 Bn in November 2020.
Record YTD net inflows of $33.80 Bn are much higher than the prior record of US$12.47 Bn set in February 2020.
Source: ETFGI
ETFGI reports a record 1.05 trillion US dollars invested in Smart Beta ETFs and ETPs listed globally at the end of February 2021
March 17, 2021--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reports Smart Beta ETFs and ETPs listed globally gathered a record US$18.39 billion in net inflows during February bringing year-to-date net inflows to a record US$29.45 billion.
Smart Beta Equity ETF/ETP assets have increased by 5.9% from US$994 billion to US$1.05 trillion, with a 5-year CAGR of 22.9%, according to ETFGI's February 2021 ETF and ETP Smart Beta industry landscape insights report, a monthly report which is part of an annual paid-for research subscription service. (report looks at equity focused Smart Beta products, All dollar vales in USD unless otherwise noted.)
Highlights
Assets in Smart Beta ETFs and ETPs listed globally reach a record $1.05 Tn at the end of February.
Record monthly net inflows of $18.39 Bn in February passing the prior record of $16.76 Bn in November 2020.
YTD net inflows are a record $29.45 Bn, higher than the $15.60 Bn gathered YTD in 2020 and beating the prior record of $25.86 Bn set in February 2018.
Source: ETFGI
