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How the Coronavirus Will Reshape World Trade
June 19, 2020--In the post-pandemic world, more economic activity will be designated vital to national security, accelerating pressures on globalization
When the global economy finally gets beyond the pandemic, expect it to be less globalized than before.
Governments, including many longtime advocates of global trade, are using the crisis to erect barriers to commerce and bring manufacturing home. Japan now pays companies to relocate factories from China. French President Emmanuel Macron pledges "full independence" in crucial medical supplies by year-end. In Washington, Republicans and Democrats alike back new "Buy American" requirements for government health spending.
Trade credit, trade finance, and the Covid-19 Crisis
June 19, 2020--June 19, 2020--Key takeaways
As the Covid-19 pandemic hits economic activity, the vulnerabilities of longer and more geographically extended trade credit chains are coming to the fore, especially those related to international trade.
While risk mitigation is available from financial intermediaries, the bulk of the exposures associated with supply chains is borne by the participating firms themselves, through inter-firm credit.
Given the prevalence of the US dollar in trade financing, measures such as central bank swap lines that ease global dollar credit conditions may cushion the impact of the pandemic on global value chains.
US dollar still dominates international funding markets
June 18, 2020--Dollar remains the pre-eminent international funding currency even as market structure shifts
To preserve the benefits of this shift, the strength of the intermediation chain must be ensured
Better data collection needed to improve assessment and stronger regulation could mitigate risks.
The US dollar remains the pre-eminent international funding currency, even amid significant shifts in market structure, according to a new report by the Committee on the Global Financial System.
US dollar funding: an international perspective finds that US dollar funding is below its peak of a decade ago relative to the size of the global economy, although the US dollar's share of international funding has returned to the dominant position it held around the turn of the century. The widespread use of the US dollar has benefited participants, but the resulting interconnectedness of the market can also create vulnerabilities.
HSBC Revives Plan To Cut 35,000 Jobs After Coronavirus Pause
June 17, 2020--In March, HSBC had postponed the job cuts, part of a wider restructuring to cut $4.5 billion in costs
HSBC is resuming plans to cut around 35,000 jobs which it put on ice after the coronavirus outbreak, as Europe's biggest bank grapples with the impact on its already falling profits.
It will also maintain a freeze on almost all external hiring, chief executive Noel Quinn said in a memo sent to HSBC's 235,000 staff worldwide on Wednesday and seen by Reuters.
Climate-related passive funds fail to win over top pension plans
June 17, 2020--More than half of the world's largest pension schemes have made no allocation to climate-related passive funds in spite of mounting pressure on institutional investors to step up the fight against global warming.
Urgent action is required by companies and investors worldwide to prevent catastrophic...
The IEA warns global oil demand will drop by $324 million a day in 2020, the biggest decline in history, before a rapid rebound in 2021
June 16, 2020--The International Energy Agency, in its closely-watched oil market report, predicted that global oil demand will drop by 8.1 million barrels a day this year, the biggest decline in history.
Demand is expected to rebound by a record 5.7 million barrels a day in 2021, IEA said.
The agency adjusted its previous forecast of global Brent demand falling by 9.1 million barrels a day as better-than-expected deliveries took place amid easing lockdowns.
Hedging in a time of crisis
June 16, 2020--Hedge funds have traditionally been sceptical about their ability to embrace responsible investment practices. However, since the 2008 financial crisis, when hedge funds played an important role as providers of liquidity, with strategies focused on private or distressed debt or event-driven and special situations, helping to restructure and rescue companies, the importance of investing sustainably is now more firmly on their radar, with many strengthening their governance structures in the face of increased scrutiny from regulators.
The hedge fund industry is also at the forefront of data sourcing, using new sources of alternative unstructured data derived from artificial intelligence, in a bid to generate new insights before competitors. This applies across all data sourcing, using ESG-specific data as well as data in more standard areas.
Why Crypto Options: Explaining Growth and Anticipating Trillions
June 16, 2020---As we near the end of the first half of 2020, the explosive growth in crypto options trading on venues such as Deribit has continued its torrid pace.
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IMF sees 'profound uncertainty' about global recovery
June 16, 2020--Chief economist warns the Covid crisis was more global and playing out differently than past crises
The International Monetary Fund will likely forecast a worse contraction in the global economy than previously estimated for 2020 and sees "profound uncertainty" about the path of recovery, IMF chief economist Gita Gopinath said in a new blog.
Ms Gopinath said the economic crisis triggered by the novel coronavirus pandemic was more global and playing out differently than past crises, with the services sector hit harder than manufacturing in both advanced and emerging market economies, and inflation low across the board.
IMF Working paper-Who will Bear the Brunt of Lockdown Policies? Evidence from Tele-workability Measures Across Countries
June 12, 2020--Summary:
Lockdowns imposed around the world to contain the spread of the COVID-19 pandemic are having a differential impact on economic activity and jobs.
This paper presents a new index of the feasibility to work from home to investigate what types of jobs are most at risk.
We estimate that over 97.3 million workers, equivalent to about 15 percent of the workforce, are at high risk of layoffs and furlough across the 35 advanced and emerging countries in our sample. Workers least likely to work remotely tend to be young, without a college education, working for non-standard contracts, employed in smaller firms, and those at the bottom of the earnings distribution, suggesting that the pandemic could exacerbate inequality. Crosscountry heterogeneity in the ability to work remotely reflects differential access to and use of technology, sectoral mix, and labor market selection. Policies should account for demographic and distributional considerations both during the crisis and in its aftermath.