Global ETF News Older than One Year
Implications of financial market development for financial stability in emerging market economies
July 7, 2020--Note submitted to the G20 International Financial Architecture Working Group
Introduction
Over the past two decades, financial markets in emerging market economies (EMEs) have grown bigger, broader and more liquid. Their development has strengthened the financial system's overall resilience, not least by helping EMEs realise the benefits of capital flows while addressing the challenges associated with their volatility.
The expansion of local currency bond markets in particular has enabled governments to borrow in their own currency rather than foreign ones, thus reducing the currency mismatches that exacerbated earlier EME crises. That said, financial market development has altered rather than eliminated EMEs’ vulnerability to large swings in capital flows and exchange rates. The changed nature of EMEs' vulnerability was forcefully exposed in early 2020, when the Covid-19 outbreak sparked a global retreat from risk. Portfolio rebalancing by investors led to sharp currency depreciations, which amplified portfolio outflows and falls in EME asset prices.
Source: BIS
The Long Economic Hangover of Pandemics-History shows COVID-19's economic fallout may be with us for decades
July 7, 2020--The COVID-19 pandemic's toll on economic activity in recent months is only the beginning of the story. While the rapid and unprecedented collapse of production, trade, and employment may be reversed as the pandemic eases, historical data suggest that long-term economic consequences could persist for a generation or more.
Among these are a prolonged period of depressed real interest rates-akin to secular stagnation-that may linger for two decades or more. Still,one piece of good news is that these sustained periods of low borrowing costs are associated with higher real wages and create ample room for governments to finance stimulus measures to counteract economic damage caused by the pandemic.
Source: IMF
Cboe Global Markets Reports June 2020 Trading Volume
July 6, 2020--Options ADV up 50 percent, U.S. Equities ADV up 83 percent and Global FX up 5 percent over June 2019
Cboe's four options exchanges combined set a new single day volume record with more than 16 million contracts traded
Cboe EDGX Options Exchange monthly ADV of more than one million contracts a new all-time high
Cboe EDGX Equities Exchange new monthly ADV record with more than 431 million shares traded per day
Cboe Global Markets, Inc. (Cboe: CBOE), one of the world's largest exchange holding companies, today reported June monthly trading volume.
The data sheet contains an overview of June and year-to-date trading statistics and market share by business segment, volume in select index products, and RPC, which is reported on a one-month lag, across business lines.
Source: Cboe Global Markets, Inc.
Bassanese Bites: Range trade
Equities bounced and the $US weakened, though bond yields held remarkably steady and gold also held up well. In terms of data, June readings on U.S. manufacturing, consumer confidence and employment were all better than expected, and May existing home sales also surged back after sharp falls in March and April.
Source: betashares.com.au
Credible emerging market central banks could embrace quantitative easing to fight COVID-19
This column argues that credible emerging market central banks could rely on purchases of local currency government bonds to support the needed health and welfare expenditures and fiscal stimulus. In countries with flexible exchange rate regimes and well-anchored inflation expectations, such quantitative easing would help ease financial conditions, while minimising the risks of large depreciations and spiralling inflation.
Source: bruegel.org
Basel Committee reports on Basel III implementation progress
The Basel Committee on Banking Supervision has today issued the Eighteenth progress report on adoption of the Basel regulatory framework.
The progress report sets out the adoption status of Basel III standards for each Committee member jurisdiction as of end-May 2020. It includes the Basel III post-crisis reforms published by the Committee in December 2017 and the finalised minimum capital requirements for market risk in January 2019. According to the announcement made by Governors and Heads of Supervision in March 2020, these reforms will take effect from 1 January 2023.
Source: BIS
OECD annual inflation slowed to 0.7% in May 2020, driven by energy prices; food prices inflation continued to rise
Energy prices declined by a further (minus) 13.4% in May, following the contraction of (minus) 12.2% in April. By contrast, food price inflation picked up to 4.5%, compared with 4.2% in April, the largest annual increase since December 2011. Excluding food and energy, OECD inflation was stable at 1.6% in May 2020.
Source: OECD
Digital Financial Inclusion in the Times of COVID-19
Financial inclusion as a result of digital financial services can also boost economic growth. While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry's smaller players and highlighted unequal access to digital infrastructure. Several actions will need to be taken to ensure maximum inclusion going forward.
Source: IMF
IMF-The Promise of Fintech:Financial Inclusion in the Post COVID-19 Era
During the COVID-19 pandemic, technology has created new opportunities for digital financial services to accelerate and enhance financial inclusion, amid social distancing and containment measures. At the same time, the risks emerging prior to COVID-19, as digital financial services developed, are becoming even more relevant. view the IMF Departmental Papers-The Promise of Fintech:Financial Inclusion in the Post COVID-19 Era
Source: IMF
IEA-Sustainable Recovery
World Energy Outlook Special Report
As they design economic recovery plans, policy makers are having to make enormously consequential decisions in a very short space of time. These decisions will shape economic and energy infrastructure for decades to come and will almost certainly determine whether the world has a chance of meeting its long-term energy and climate goals.
Source: IEA (International Energy Agency)
July 6, 2020-Equities remain range bound as the virus spoils the re-opening party.
Global markets
Global equities managed to shrug off mounting U.S. virus concerns last week and instead focus on better than expected 're-opening' economic data. Of course, the Fed chipped in with further "whatever it takes" supportive comments, and another drug company announced early promising vaccine results.
July 6, 2020--Credible emerging market central banks could embrace quantitative easing to fight COVID-19
Emerging economies are fighting COVID-19 and the economic sudden stop imposed by the containment and lockdown policies, in the same way as advanced economies. However, emerging markets also face large and rapid capital outflows as a result of the pandemic.
July 6, 2020--Report sets out the adoption status of Basel III standards in member jurisdictions as of end-May 2020
Report shows further progress in implementing these standards since previous report in October 2019
Committee will continue to closely monitor the implementation of Basel III reforms.
July 2, 2020--May 2020 OECD annual inflation slowed to 0.7% in May 2020, driven by energy prices; food prices inflation continued to rise
Annual inflation in the OECD area slowed to 0.7% in May 2020, compared with 0.9% in April and 1.7% in March, on the back of the largest fall in energy prices since September 2009.
July 1, 2020--The COVID-19 pandemic could be a game changer for digital financial services. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking.
July 1, 2020--Summary:
Technology is changing the landscape of the financial sector, increasing access to financial services in profound ways. These changes have been in motion for several years, affecting nearly all countries in the world.
July 1, 2020--Since the scale of the economic crisis began to emerge, the IEA has been leading the calls for governments to make the recovery as sustainable and resilient as possible. This means immediately addressing the core issues of global recession and soaring unemployment -and doing so in a way that also takes into account the key challenge of building cleaner and more secure energy systems.
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