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Threat of negative rates hangs over $4.8tn US money fund
May 30, 2020--Thin margins and fee waivers to jeopardise profitability as part of coronavirus disruption.
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Equity Investors Must Pay More Attention to Climate Change Physical Risk
May 29, 2020--The damage from the 2011 floods in Thailand amounted to around 10 percent of Thailand's GDP, not even considering all the indirect costs through a loss in economic activity in the country and abroad.
By some estimates, the total costs of the 2018 wildfires in California were up to $350 billion, or 1.7 percent of U.S. GDP. Every year, climatic disasters cause human suffering as well as large economic and ecological damage. Over the past decade, direct damages of such disasters are estimated to add up to around US$ 1.3 trillion (or around 0.2% of world GDP) on average, per year.
As scientists warn that global warming will increase the frequency and severity of such extreme weather events, the IMF’s latest Global Financial Stability Report examines the impact of climate change physical risk (loss of life and property as well as disruptions to economic activity) on financial stability, and finds that equity investors might not be pricing these risks adequately.
OECD-International trade statistics: trends in first quarter 2020 Covid-19 hits G20 international merchandise trade in first quarter of 2020 as signs emerge of even sharper falls in Q2
May 26, 2020--Covid-19 containment measures introduced in many countries in March 2020 hit G20 merchandise trade hard in the first quarter of 2020. Compared with the fourth quarter of 2019, exports fell by 4.3% and imports by 3.9%, and now stand at their lowest levels since the second quarter of 2017.
Early indications for April point to more precipitous falls in the second quarter, with Korean and Japanese exports, for example, falling 21.5% and 10.6%, respectively, compared with March 2020.
The impact on international trade across G20 economies varied widely in the first quarter of 2020 due to differences in the rate of the spread of Covid-19, in containment strategies, and in the extent of their exposure to other countries affected by the lockdowns.
France, India, Italy and the United Kingdom, which all introduced nationwide lockdowns in March, saw their exports fall by 7.1%, 9.2%, 4.9% and 7.8% respectively while imports fell by 7.0%, 2.3%, 5.6% and 6.5% respectively. German trade fared slightly better than in other G20 European Union economies, with exports and imports falling by only 3.5% and 2.4% respectively.
GDP Growth-First quarter of 2020, OECD-OECD GDP falls by 1.8% in the first quarter of 2020
May 26, 2020--Following the introduction of COVID-19 containment measures across the world, real gross domestic product (GDP) in the OECD area fell by 1.8% in the first quarter of 2020, the largest drop since the 2.3% contraction in the first quarter of 2009 at the height of the financial crisis, according to provisional estimates.
Among the Major Seven, GDP dropped significantly in France and Italy, where lockdown measures were most stringent and implemented earliest (by minus 5.8% and minus 4.7% respectively, compared with minus 0.1% and minus 0.3%, in the previous quarter).
GDP also fell sharply in Canada, Germany and the United Kingdom (by minus 2.6%, minus 2.2% and minus 2.0% respectively, compared with 0.1%, minus 0.1% and 0.0% in the previous quarter).
In Japan, where containment measures have been less stringent, GDP contracted by minus 0.9% in the first quarter of 2020, compared with minus 1.9% in the previous quarter.
Dampening the Impact of Global Financial Shocks on Emerging Market Economies
May 19, 2020--The COVID-19 pandemic is impacting emerging markets through an unprecedented combination of domestic and external shocks.
Among the latter, the pandemic has led to a sharp increase in global risk aversion and an abrupt retrenchment in foreign capital flows.
Based on historical experience, these types of global financial shocks can significantly affect macroeconomic conditions in emerging markets, even if the exchange rate is flexible.
Our research in chapter 3 of the latest World Economic Outlook shows that emerging markets can enhance resilience to global financial shocks using macroprudential regulation.
IEA-Oil Market Report-May 2020
May 14, 2020--Highlights
Better than expected mobility in OECD countries and the gradual easing of lockdown measures led to an upward adjustment of 3.2 mb/d to our global 2Q20 demand number; but it is still sharply down on last year by 19.9 mb/d.
Although 2H20 will be slightly weaker than previously forecast, our outlook for 2020 as a whole shows a demand fall of 8.6 mb/d, 0.7 mb/d more than in our previous Report. A resurgence of Covid-19 is a major risk factor for demand.
Global oil supply is set to fall by a spectacular 12 mb/d in May to a nine-year low of 88 mb/d, as the OPEC+ agreement takes effect and production declines elsewhere.
The world's largest asset managers pay lip service to preventing human rights abuse
May 14, 2020--47% of asset managers, with over $45 trillion in assets in total, do not prohibit investments in controversial weapons banned by international arms treaties.
70% of the world's largest asset managers do not have a policy to exclude or engage with companies in line with international human rights frameworks.
US asset managers lag behind global peers on human rights approaches, with leaders all based in Europe.
The world's six largest asset managers are among the poorest performers on human rights, including Fidelity Investments (FMR), J.P. Morgan Asset Management, Vanguard, BlackRock State Street Global Advisors, and Capital Group.
COVID-19: Potential impact on the global economy and gold performance
May 14, 2020--The COVID-19 pandemic and ensuing economic lockdowns have slashed global growth forecasts for 2020.
With varied expectations around the speed of the economic recovery, we analyse the potential performance of gold across four hypothetical scenarios provided by Oxford Economics:1
1) swift recovery
2) US corporate crisis
3) emerging markets downturn
4) deep recession.
Our analysis shows that higher risk and uncertainty combined with lower opportunity cost will likely be supportive of gold investment demand in 2020. This could offset the negative effect of lower consumer demand on gold performance as economic activity contracts.
Are investors ready for the next systemic risk?
May 12, 2020--Emerging markets should be at the core of climate-focused investment strategies
The economic fallout from the coronavirus pandemic and the resulting market volatility are reminders to governments and investors that ignoring systemic risks is perilous.
Even as the world grapples with the immediate health and economic crises, it's clear this may not be the last time that public health is severely compromised, global supply chains are disrupted and trade paralyzed, as another existential threat looms over humanity-the climate crisis.
Unprecedented collapse in CLIs in most major economies
May 12, 2020--Composite leading indicators (CLIs) in most major economies collapsed by unprecedented levels in April as containment measures for Covid-19 continued to have a severe impact on production, consumption and confidence.
In China, however, where containment measures have already been eased, the CLI for the industrial sector is tentatively pointing towards a positive change in momentum, with April's CLI and a large upward revision for March both pushing the CLI upwards. Some care is needed in interpretation, as only partial information is currently available for China in April.