Global ETF News Older than One Year
Threat from climate change to financial stability bigger than Covid-19
June 7, 2020--Report urges capital requirement rules for banks lending to fossil fuel groups to be tightened
Climate change poses a bigger threat to financial stability than the coronavirus pandemic and the rules on bank lending to fossil fuel groups must be tightened to address it, a new report has warned.
In his latest research for the Finance Watch advocacy body, Thierry Philipponnat -a board member at the French financial regulator, and one of the EU's technical experts on sustainable finance- has recommended increasing the risk weightings banks must apply to their oil, gas and coal exposures. This would make them treat fossil fuel lending in the same way as other risky investments, increasing their capital requirements to insulate them against possible losses.
Source: FT.com
Covid-19 and emerging economies: What to expect in the short- and medium-term
June 3, 2020--This article was originally published in the Observer Research Foundation. As Brazil, Russia, India and Mexico record the fast spread of the Covid-19 contagion, a third wave of the pandemic is reaching the emerging world. As a result, business sentiment has decreased in March and April in the region.
As Brazil, Russia, India and Mexico record the fast spread of the Covid-19 contagion, a third wave of the pandemic is reaching the emerging world. As a result, business sentiment has decreased in March and April in the region. What’s more, as emerging economies gradually moved towards tighter mobility restrictions, the lack of mobility is set to weigh on the economic outlook. In fact, the International Monetary Fund (IMF) is expecting the emerging world to enter a recession of -1 percent in 2020, which could be worse than the aftermath of the global financial crisis in 2008.
Source: bruegel.org
BetaShares Market Trends: June 2020
June 3, 2020--Key global trends-equity rally continues
Global equities pushed higher in May, continuing the rebound of the previous month, reflecting ongoing hopes of a speedy return to economic normalcy as both new COVID-19 cases and social distancing restrictions eased further in most advanced economies.
Risk-on sentiment contributed to an easing in the U.S. Dollar, though bond yields held steady and gold prices rose further.
The MSCI All-Country World Equity Return Index rose by 4.3% in local currency terms, after a gain of 10.4% in April. As seen in the chart set below, global bond yields remain in a strong downtrend*, and gold prices in a strong uptrend. The previous uptrend in $US has levelled off into a choppy range over recent months. Global equities have effectively been in an extended choppy range since early 2018.
Source: Betashares
Does ESG investing really have an influence on companies?
June 2, 2020--Research questions integrated and score-based strategy on the risk of mixed message sent to companies
What motivates equity ESG investment strategies is the ability to influence the behaviour of companies through the portfolio decisions that they lead to. To this end, it is often argued that an investor who is dissatisfied with a company's ESG behaviour, and who wishes to remedy the situation, needs to stay on as its shareholder and engage with it.
Indeed it is believed that if the investor divests from the company, its influence over the company will cease.
Moreover, the act of divesting is often presented as a passive approach that has no bearing on the company's management, a capitulation rather than a form of action.
In a new publication entitled "ESG Engagement and Divestment: Mutually Exclusive or Mutually Reinforcing?" Scientific Beta argues that both divestment and engagement are actions that promote change and illustrates the empirical results of academic studies showing that both approaches can be effective.view more
Source: Scientific Beta
Hedge funds led by women outperformed their male rivals during the coronavirus market meltdown
June 1, 2020--Women-led hedge funds outperformed their male rivals in the first four months of 2020, data from HFR show.
Women-led hedge funds lost 3.5% in 2020 through the end of April, according to the HFR Women's Access index.
In the same time frame, the HFRI 500 Fund Weighted index, which tracks hedge funds led by both men and women, slipped 5.5%.
While there's no clear answer as to why women-led funds outperformed, it could be due to focus on protecting losses amid the coronavirus-induced market rout, according to The Financial Times.
Still, women are underrepresented in hedge funds, data show.
Source: Business Insider
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.
Source: FT.com
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.
Source: IMF
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.
Source: OECD
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.
Source: OECD
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.
Source: IMF
