Riding the Global Debt Rollercoaster
December 12, 2022--The weaker growth outlook and tighter monetary policy call for prudence in managing debt and conducting fiscal policy
Global debt remained above pre-pandemic levels in 2021 even after posting the steepest decline in 70 years, underscoring the challenges for policymakers.
Total public and private debt decreased in 2021 to the equivalent of 247 percent of global gross domestic product, falling by 10 percentage points from its peak level in 2020, according to the latest update of the IMF's Global Debt Database. Expressed in dollar terms, however, global debt continued to rise, although at a much slower rate, reaching a record $235 trillion last year.
Source: imf.org
Can financial markets make a difference to natural assets?
December 12, 2022--The challenge
Three decades on from the Rio Earth Summit, almost two decades since the coinage of the term ESG (environment, social, and governance issues), and seven years on from the dual launch of the Paris Climate Agreement and UN Sustainable Development Goals (SDGs), mainstream economic and financial systems can no longer ignore their dependence and impact on the planet's ecological systems.
Business models need to change to better account for the full range of costs and benefits that they generate. The sheer scale of that change requires a pivotal role of private enterprise and private capital, complementing and multiplying public sector efforts at national and international levels.
The challenge is one of execution. How do we create and deepen markets for ecological solutions when the origin of the problem lies in externalities and market failure? How do we create financial markets where previously--unbankable projects can be securitised into investable assets?
Source: LSE Business Review
Global Food Prices to Remain Elevated Amid War, Costly Energy, La Niña
December 9, 2022--Interest-rate hikes have eased price pressures, but the weather, war and material costs could keep food prices elevated for longer
Food prices, which reached a record earlier this year, have increased food insecurity and raised social tensions.
They have also strained the budgets of governments struggling with rising food import bills and diminished capacity to fund extra social protection for the most vulnerable.
To better understand the scale of these unprecedented challenges for global policymakers, we quantify in new research the typical impact of four historically important drivers of food commodity prices.
Source: imf.org
BIS-Markets swayed by inflation and growth prospects
December 5, 2022--Changes in the anticipated monetary stance and in the economic outlook continued to shape financial markets in the review period.1 The interplay of shifting inflation dynamics and deteriorating growth gave rise to two phases.
In the first, from mid-September to mid-October, inflation readings came in stronger than anticipated, pushing up expectations of policy rates in the near future. In the second, through November, lower than expected inflation and weakening economic activity led markets to reassess downward the extent of policy tightening ultimately needed to contain inflation. These developments kept asset price volatility elevated in the context of poor liquidity conditions across market segments, contributing to swings in global financial conditions.
Source: BIS
Goldman makes 'white-label' bet on white-hot ETF market
December 1, 2022--Decision to launch platform for other managers endorses view that ETFs will continue to seize market share
Goldman Sachs' decision to become the first big-name institution to launch a "white label" exchange traded fund business is being seen as a large bet that ETFs will continue to seize market share from mutual funds.
The arrangement allows smaller fund managers and new entrants to launch ETFs more quickly and cheaply, with the white labeller providing services such as distribution, marketing, capital market support, custody, compliance, seed funding and administration.
Source: ft.com
CPMI and IOSCO report on financial market infrastructures' cyber resilience finds reasonably high adoption of cyber guidance but highlights one serious issue of concern and four issues of concern
November 29, 2022-The report finds reasonably high adoption of the Guidance on cyber resilience for financial market infrastructures ("Cyber Guidance") by FMIs.
The report finds one serious issue of concern and four issues of concern. The serious issue of concern relates to a small number of FMIs not fully meeting expectations regarding the development of cyber response and recovery plans to meet the two-hour recovery time objective (2hRTO).
The four additional issues of concern relate to shortcomings in established response and recovery plans to meet the 2hRTO under extreme cyber-attack scenarios; lack of cyber resilience testing after major system changes; lack of comprehensive scenario-based testing; and inadequate involvement of relevant stakeholders in testing.
Source: IOSCO
What did COP27 accomplish and what actions can we expect as a result?
November 23, 2022--Held in Egypt, COP27 was dubbed the Africa COP, providing an important opportunity to table issues critical to the continent; and the COP of implementation, where pledges would be translated into action on the ground.
The most talked about achievement of COP27 was that an agreement was finally reached to establish and operationalise a new loss and damage fund.
Beyond this, progress was underwhelming, but while there were disappointments, there were significant gains, too.
Antonia Gawel, Head of Climate Change, and Nathan Cooper, Lead Partnerships & Engagement Strategy at the World Economic Forum, look back at the highlights of COP27 and show which wheels it has put in motion.
COP27 was dubbed the Africa COP and the implementation COP. It provided an opportunity to table issues critical to the continent and a chance to turn the words, drawn up at COP26, into action. Confronted with a global food and energy crisis, increasing extreme weather events and record greenhouse gas concentrations, COP27 was a key milestone to instill renewed solidarity between countries and deliver on the landmark Paris Agreement.
Source: weforum.org
Alliancebernstein and Societe Generale Announce Plan To Form Joint Venture To Accelerate Growth in Cash Equities
November 22, 2022--The joint venture would combine Bernstein Research Services' premier global equity research and execution platform with Societe Generale's equity research and execution capabilities to form a leading global cash equities and equity research business.
AllianceBernstein (NYSE: AB), a leading global investment management and research firm, and Societe Generale (EURONEXT: GLE), a leading European bank, announced today their plans to form a joint venture combining their cash equities and equity research businesses.
Source: AllianceBernstein
OECD Economic Outlook-Confronting the Crisis
November 22, 2022--The global economy is facing mounting challenges amidst the largest energy market shock since the 1970s and the cost-of-living crisis for many households from rising inflation pressures.
The OECD Economic Outlook, Volume 2022 Issue 2 highlights the unusually imbalanced and fragile outlook, the significant downside risks associated with energy market developments and rising financial vulnerabilities as interest rates are raised, and the associated policy challenges. Well-designed and timely policy actions are required to maintain economic stability, enhance energy security and strengthen the prospects for future growth.
This issue includes a general assessment of the macroeconomic situation, and a chapter summarising developments and providing projections for each individual country. Coverage is provided for all OECD members as well as for selected partner economies.
Source: OECD.org
Finance pivots from risks to the opportunities of energy transition and decarbonization at COP27
November 18, 2022--COP27 focused on actioning key financial commitments.
Energy security, enhanced data and voluntary carbon markets will all feed into actioning financial strategies discussed at COP27.
Investors and financial institutions need to find the opportunities and navigate the risks a complex energy transition and changing world presents.
The mood at COP27 was subdued. The Ukrainian war, the energy crisis, rampant inflation, summer droughts and the sharp increase in the costs of capital for projects all weighed on investors' and business leaders' expectations. Underlying this was concern that the ambition to limit global warming to 1.5 degrees Celsius is at risk.
Source: weforum.org/