Global ETF News Older than One Year
Markets rose despite subdued economic recovery: BIS Quarterly Review
September 14, 2020--Financial markets gained despite a weak economic outlook and evidence of deteriorating credit quality.
Monetary and fiscal policy underpinned high valuations, particularly in advanced economies.
Concerns emerged about a disconnection between some risky asset classes and economic prospects.
Financial markets largely recovered from March's acute stress, according to the third BIS Quarterly Review1 of 2020. This was supported by both monetary and fiscal policy, and investor sentiment arising from better than expected economic indicators in the initial aftermath of the lockdown phase of the pandemic.
However, the Review indicates that the economy's upturn has been uneven and corporate balance sheets remain fragile. The associated concern of stretched valuations being disconnected from underlying economic prospects, most notably in some segments of the equity and corporate credit markets, has since been reflected in the recent stock market sell-off.
Source: BIS
Private Sector Climate Finance After the Crisis
September 9, 2020--Climate investments in the emerging markets and developing economies (EMDEs) have so far fallen well short of what is required to meet targets set in the 2015 Paris Agreement. National commitments ahead of the 2021 UN climate summit will further underline the discrepancy.
Climate finance in the EMDEs has been dominated by public sources and development funds, while private investors, local capital markets, and green banking became significant only recently.
This paper surveys the incentives for the provision of dedicated green financial products by private investors and lenders in EMDEs, and the related challenges for regulators.
Source: cgdev.org
FSB extends implementation timelines for securities financing transactions
September 7, 2020--The Financial Stability Board (FSB) today announced extensions to the implementation timelines for minimum haircut standards for non-centrally cleared securities financing transactions (SFTs), to ease operational burdens on market participants and authorities, and thereby assist them in focusing on priorities from the impact of COVID-19.
SFTs such as securities lending and repurchase agreements (repos) play a crucial role in supporting price discovery and secondary market liquidity for a wide variety of securities. However, such transactions can also be used to take on leverage as well as maturity and liquidity mismatched exposures, and therefore can pose risks to financial stability.
Source: FSB
Specter of Currency Skirmishes Emerge With Central Bank Talk
September 3, 2020--The dollar this week slumped to its weakest level in two years
ECB, RBNZ and BOE are keeping door open for more policy easing
Growing unease among global central banks about the slumping U.S. dollar has ignited speculation that a fresh currency war might be on the horizon.
European Central Bank official Philip Lane this week fired a warning shot, explicitly drawing attention to the exchange rate as the euro topped $1.20 for the first time in two years. Reserve Bank of New Zealand boss Adrian Orr was more circumspect about exchange rates, but nevertheless signaled he would ease monetary policy as necessary to stimulate growth.
Source: bloomberg.com
ESG bond funds held back by fear of criticising US, research suggests
September 2, 2020--Fund managers' unwillingness to criticise western governments, particularly that of the US, is holding back the development of "sustainable" government bond funds, research suggests.
While corporate bonds can be scored using a similar ESG scoring system to that used for equities, "there are still question marks over how to best evaluate government debt, where there is a fine line between making an objective ESG assessment and straying into political territory", said Kenneth Lamont, research analyst for passive strategies at Morningstar.
Source: technocodex.com
BetaShares-Market Trends: September 2020
September 2. 2020--Key global trends-equity rally continues
Global equities continued their V-shaped recovery in August, while the $US continued its decline. In a counter-trend move, perhaps reflecting growing investor confidence in an economic recovery, there was a small uptick in global bond yields and an easing back in gold prices.
As seen in the chart set below, global bond yields and the $US remain in a downtrend, and gold prices in an uptrend*. On a total return basis, global equities have surpassed their previous peak at the end of last year, to be at the top end of a very wide and volatile range since early 2018.
Source: BetaShares
FIA addresses climate risk in derivatives market
September 1, 2020- FIA today published a new policy paper in consultation with its members across the cleared derivatives industry on climate-related risks for financial markets and the global economy.
The paper, "How derivatives markets are helping the world fight climate change," focuses on how the industry is already addressing this issue, and highlights potential partnerships with the public sector to help build a more sustainable economy in the long term.
Source: finextra.com
Financial turmoil gives investors good opportunity to challenge advisers' fees
September 1, 2020--Top wealth managers have been quick to declare that the Covid-19 pandemic has highlighted their strengths.
Source: ft.com
Carbon accounting should be a basic requirement for banks
August 30, 2020--Financial institutions and asset managers are impeding progress on climate action for lack of a simple rule.
Source: FT.com
Emerging market central banks and quantitative easing: high-risk advice
August 26, 2020--Central banks in emerging markets with weak currencies should not resort to unorthodox monetary tools such as quantitative easing as a response to the crisis triggered by COVID-19. Preferable alternatives include shifting public spending away from less pressing needs, moderately increasing public debt and falling back on official development assistance.
The idea that 'credible' emerging-market central banks (EMCBs) could embrace quantitative easing (QE) to tackle the consequences of the COVID-19 pandemic, as suggested by Benigno et al (2020), could cause more harm than good. Let us point out the main weaknesses and risks.
First: the different roles of core and peripheral currencies
The suggested approach largely disregards the different roles of 'core' and 'peripheral' currencies in international markets. While 'core' currencies, including the US dollar, the euro and, to lesser degree, the Japanese yen, British pound, Swiss franc and Chinese renminbi, play the role of international (global) money, in all its three functions, and are demanded by both domestic and foreign economic agents, 'peripheral' currencies are subject to only domestic demand.
Source: bruegel.org
