Global ETF News Older than One Year
What can commercial property performance reveal about bank valuations?
November 9, 2020--Summary
Focus
We ask whether commercial property markets affect bank equity prices. For this purpose, we use the prices of real estate investment trusts (REITs) as a proxy for the performance of commercial property markets. Our study is based on data from the euro area, Japan and the United States, focusing on the 2003-20 period.
The study includes the effects of the Great Financial Crisis and the Covid-19 pandemic.
Contribution
We test the hypothesis that REIT prices affect bank equity prices, particularly during downturns. We have three reasons to consider this hypothesis valid. First, banks are exposed to commercial property. Second, REIT prices are likely to reflect commercial property valuations more promptly than publicly disclosed financial information. Third, as lenders, banks are more exposed to the downside than to the upside of real estate risk.
Source: BIS
Inside the regulatory sandbox: effects on fintech funding
November 9, 2020--Summary
Focus
The rise of fintechs promises to spur competition in the financial sector. This could lead to sizeable efficiency gains, more choice for consumers, and enhanced financial inclusion. However, the potentially disruptive growth of firms offering novel products and services poses new challenges for financial stability and consumer protection.
In response, policymakers around the world are creating "regulatory sandboxes" to foster innovation in the financial sector while keeping alert to emerging risks. One key objective of sandboxes is to facilitate start-ups' access to capital. The UK Financial Conduct Authority pioneered the world's first regulatory sandbox in 2015. To date, more than 50 countries have adopted sandboxes, but little evidence exists on whether they actually help innovative fintechs raise funding. And if so, why/how.
Source: BIS
Doubling back and doubling down: G20 scorecard on fossil fuel funding
November 9, 2020--Despite various commitments since 2009 to end government support for fossil fuels and make 'finance flows consistent with a pathway toward low greenhouse gas emissions and climate resilient development', G20 governments continued to provide significant support to fossil fuels in 2017-2019.
Recent estimates of public money commitments for fossil fuels in response to the Covid-19 crisis indicate that G20 countries are moving in the wrong direction and are not likely to meet their phase-out commitments.
view the Doubling Back and Doubling Down: G20 scorecard on fossil fuel funding report
Source: odi.org
World Bank Releases Guide for Sovereign Issuers to Engage with Investors on Environmental, Social and Governance (ESG) Issues
November 9, 2020 – The World Bank today published a guide to help public debt managers improve their engagement with investors on ESG topics. Titled "Engaging with Investors on Environmental, Social and Governance (ESG) Issues -A World Bank Guide for Sovereign Debt Managers," it helps bridge the communication gap on ESG issues between sovereign issuers and investors.
The guide outlines how sovereign debt investors use ESG information in their investment strategies, how debt managers are engaging with them, and how engagement can be improved.
Sovereign issuers, who represent 50 percent of the fixed income market by volume, are facing increasing interest on ESG issues from investors. Rating agencies and investors have long considered governance-related information while assessing sovereign risk, the macro-fiscal outlook, and debt-default risk.
Source: World Bank
Funds cut cash holdings to pre-pandemic levels
November 8, 2020--Fund managers cut their cash stockpiles to record lows as they piled in to buoyant stock markets in the second and third quarters, prompting concerns over how they would cope with a fresh surge of investor redemptions.
Many investment funds built up cash buffers after being hit by large redemption requests when the coronavirus pandemic exploded in March. However, new research by data provider eVestment shows cash positions have sunk back to their pre-coronavirus levels.
Source: FT.com
OECD Pension Markets in Focus 2020
November 6, 2020--Retirement savings in pension funds, pension insurance contracts and in other vehicles exceeded the USD 50 trillion mark worldwide for the first time at the end of 2019, with USD 49.2 trillion in the OECD area and USD 1.7 trillion in other reporting jurisdictions.
Countries around the globe are engaged in intense pension reform efforts, often involving an increased use of funded pension programmes managed by the private sector.
There is a growing need among policy makers and the regulatory community, as well as among private sector participants, to compare programme developments and experiences to those of other countries. Because funded pension arrangements are likely to play an increasingly important role in delivering retirement income security in many countries, and because the investment of pension assets will increasingly affect securities markets in future years, the availability of an accurate, comprehensive, comparable and up-to-date body of international statistics is a necessary tool for policy makers, regulators and market participants.
Source: OECD
Climate finance for developing countries rose to USD 78.9 billion in 2018
November 6, 2020--Climate finance provided and mobilised by developed countries for developing countries totalled USD 78.9 billion in 2018, up 11% from 71.2 billion in 2017. The increase was driven by a rise in public climate finance, while private climate finance was flat, according to new figures from the OECD.
Climate Finance Provided and Mobilised by Developed Countries in 2013-18 is the OECD's third assessment of progress towards the UNFCCC goal of mobilising USD 100 billion per year by 2020 to help developing countries tackle and adapt to climate change. This latest report deepens the analysis of aggregate figures by providing more insights on the characteristics and recipients of climate finance over the period studied.
view the OECD Climate Finance Provided and Mobilised by Developed Countries in 2013-18 report
Source: OECD
4 lessons from nature to build a circular economy
November 6, 2020--The circular economy is a way of building a world with no waste.
Circular business models are a $4.5 trillion in opportunity over the next decade.
The natural world offers powerful lessons on building a circular economy.
The circular economy is one of the few disruptive concepts with universal appeal-with business leaders, investors, activists, economists and environmentalists.
While gaining in populatity, the concepts of circularity have been around for centuries-from regenerative agriculture and bartering, to repair and reuse, to renewable energy and plant-based meat alternatives.
The benefits to the planet are clearer than ever: by decoupling economic growth from the use of scarce, natural resources, we can consume without exhausting our planet. The business opportunities are massive: $4.5 trillion in opportunity over the next decade. And the benefits to society - by re-coupling growth with social progress-can be found in new jobs, access to products and services, and better health.
Source: World Economic Forum (WEF)
Regulators speed up fintech plans as Covid spreads
November 3, 2020--Regulators around the world have reacted to the spread of coronavirus by speeding up the pace of fintech rulemaking, according to new research from the World Bank and the Cambridge Centre for Alternative Finance.
As people started to access more of their financial services digitally, regulators were forced to take a fresh look at their fintech plans.
The research looked at 118 authorities in 114 different jurisdictions. Almost three-quarters of them said they had accelerated or introduced new initiatives on digital infrastructure, while 58 per cent said they had accelerated or introduced new measures to support "RegTech" and supervisory technology, or "SupTech".
Source: technocodex.com
The Crisis is Not Over, Keep Spending (Wisely)
November 2, 2020--The pandemic-induced economic crisis is set to leave deep scars. Human capital erosion from prolonged high unemployment and school closures, value destruction from bankruptcies, and constraints on future fiscal policy from elevated public debt top the list. Groups that were already poor and vulnerable are set to see the largest setbacks.
Swift and unprecedented action by policymakers, including among the Group of Twenty (G20) advanced and emerging market economies, helped avert an even worse economic crisis in the wake of COVID-19 than what has been witnessed. The G20 has provided around US$11 trillion in necessary support to individuals, businesses, and the healthcare sector since the start of the pandemic.
Source: IMF
