Friday 6th March 2015
NEWS TICKER, FRIDAY, MARCH 6TH 2015: —BNY Mellon has been appointed by Accor, the hotel operator based in France, as depositary bank for its sponsored American depositary receipt (ADR) program. Accor previously traded in the US as an unsponsored DR. Each sponsored ADR represents one-fifth of an ordinary share and trades on the OTC Markets under the symbol ‘ACCYY.’ Accor’s ordinary shares trade on Euronext Paris under the code ‘AC’— The US Inland Revenue Service (IRS) says the FATCA IDES User Guide has been updated for March 2015 and includes user enhancements and additional instructions. Copies can be downloaded from the IRS websiteimage003.pngThe Federal Reserve Bank of New York has reported gross purchases from February 26th through March 4th of $4,737m worth of agency MBS transactionsimage003.png More than 100 members of European Parliament (MEPs) have signed an open letter to the European Union’s Telecoms Council, urging it to adopt a more relaxed stance towards roaming charges. The Council is looking to extend the “phasing out” of charges until mid-2018, more than two and a half years later than initially laid out in the Roaming III regulation established in 2012. Roaming III, one of Neelie Kroes’ flagship motions in the move towards a single digital market, had previously required the abolishment of all roaming fees by the end of this year. “The Council stance sets up a new pricing mechanism, which will make it much cheaper to use your mobile phone when travelling abroad in the EU,” it said. “Within certain limits to be determined, consumers could make and receive calls, send SMSs and use data services without paying anything extra on top of the domestic fee.” It also suggests limitations under which operators will be able to levy charges against roamers. “Without a strong Telecoms Single Market, the much needed Digital Single Market cannot flourish,” they said, in an open letter to the Council of the European Union. “The European Parliament urged an end to roaming charges by the end of this year (2015). We consider proposed delays by three years (2018), or a suggestion to allow for 5MB without charges per day, to lack ambition. Such outcomes will undoubtedly seriously disappoint citizens. The gap between ending roaming charges, and 5MB per day is immeasurably large.” The open letter to the Telecoms Council concluded with a plea to put an end to roaming charges and clearly define net neutrality, stressing its significance for the future of Europe’s digital economies—Danish dedicated wind company Vestas has placed a seven year €500m eurobond with an interest rate of 2.75%, which the firm says will broaden the firm’s funding structure. The bonds, which will be listed in Luxembourg, will be repaid on March 11th 2022. According to Vestas CFO Marika Fredriksson, this is the first time a "green bond" had been issued by a dedicated wind company—An Taoiseach, Enda Kenny TD; the Minister for Jobs, Enterprise and Innovation, and Clive Bellows, Country Head Ireland at Northern Trust say the bank will expand its operations in Limerick by creating up to 300 new jobs over the next three years. The expansion is supported by the Department of Jobs through IDA Ireland —Despite reduced market volatility in February, total traded volume on the Tradeweb European-listed ETF platform amounted to €7.7bn in the month. This was the platform’s third best performance since launch, only beaten by last October’s €7.9bn and January’s record-breaking €10.7bn volume. According to the firm, there was a clear buying trend across all asset classes on the platform, with “buys” outstripping “sells” by 26 percentage points as a proportion of the overall traded volume. “Buy” requests for equity-based ETFs climbed to 42%, while “sell” requests fell 8 percentage points to 31 per cent compared to the past 12 months. Three of February’s ten most heavily traded ETFs invest in fixed income, offering exposure to government debt and USD-denominated high yield bonds—Global business advisory firm FTI Consulting, Inc says Mark Hunt has joined as senior managing director in the firm’s Forensic & Litigation Consulting practice. Mark will be based in London. As a Senior Forensic Partner with over thirty years’ experience, Mark specialises in financial and regulatory investigations, audit and accounting negligence, expert determinations and accounting disputes. His work has included a number of complex international disputes for both claimants and defendants, as well as acting as an expert on issues relating to complex financial instruments. Mark joins FTI Consulting from BDO, where he led their Financial Services practice, which included conducting FCA/PRA Skilled Persons Reviews. Prior to joining BDO in 2007, Mark was a Partner at KPMG, and he is also a Fellow of the Institute of Chartered Accountants in England and Wales. In his new role, Mark will join the EMEA Financial Advisory Services leadership group, working with Jeannette Lichner, Stephen Kingsley, Andrew Durant and Nick Hourigan to continue building FTI Consulting’s practice— The Straits Times Index (STI) ended +22.24 points higher or +0.66% to 3417.51, taking the year-to-date performance to +1.56%. The FTSE ST Mid Cap Index gained +0.21% while the FTSE ST Small Cap Index declined -0.38%. The top active stocks were SingTel (+1.70%), DBS (+0.98%), Noble (+4.98%), Keppel Land (-0.22%) and Genting Singapore (-2.63). The outperforming sectors today were represented by the FTSE ST Telecommunications Index (+1.52%). The two biggest stocks of the FTSE ST Telecommunications Index are SingTel (+1.70%) and StarHub (unchanged). The underperforming sector was the FTSE ST Health Care Index, which declined -0.55% with Raffles Medical Group’s share price declining -0.51% and Biosensors International Group’s share price declining -0.77%. The three most active Exchange Traded Funds (ETFs) by value today were the STI ETF (+0.59%), iShares USD Asia HY Bond ETF (-0.85%), SPDR Gold Shares (-0.42%). The three most active Real Estate Investment Trusts (REITs) by value were CapitaMall Trust (-0.94%), Ascendas REIT (-0.40%), CapitaCom Trust (+0.28%). The most active index warrants by value today were HSI25000MBeCW150429 (-4.12%), HSI24200MBePW150429 (+0.60%), HSI24400MBeCW150429 (-2.99%). The most active stock warrants by value today were DBS MB eCW150420 (+8.65%), OCBC Bk MBeCW150803 (unchanged), UOB MB eCW150701 (+2.10%).

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The European Review

By Patrick Artus, chief economist at Natixis

The likelihood of another global recession

Monday, 20 August 2012 Written by 
The likelihood of another global recession There is real concern over the present state of the global economy, due to a slowdown in global trade and dwindling production prospects. Indeed, it is not out of the question that another global recession is looming. Economic crises can be found in both the eurozone and the United Kingdom, there is also a marked slowdown in the US economy and continuing stagnation in Japan. There is a justified fear that the crises could spread to open economies via global trade. And although emerging countries could implement expansionary fiscal and monetary policies to allay concerns about their growth models, these policies might not benefit the global economy because of the structural nature of the countries’ problems. The question remains, does the world have the economic policy weapons to combat a new global recession? http://www.ftseglobalmarkets.com/

There is real concern over the present state of the global economy, due to a slowdown in global trade and dwindling production prospects. Indeed, it is not out of the question that another global recession is looming. Economic crises can be found in both the eurozone and the United Kingdom, there is also a marked slowdown in the US economy and continuing stagnation in Japan.

There is a justified fear that the crises could spread to open economies via global trade. And although emerging countries could implement expansionary fiscal and monetary policies to allay concerns about their growth models, these policies might not benefit the global economy because of the structural nature of the countries’ problems. The question remains, does the world have the economic policy weapons to combat a new global recession?

The slowdown in emerging countries’ growth

We would argue that another global recession is a possibility, because – as previously mentioned – the global economy is being hit simultaneously by a number of events.



Since early 2010, in particular, there has been a marked slowdown of growth in large emerging countries, mainly due to these countries’ problematic growth models. For instance: 

  • There has been a loss of competitiveness and profitability in China, due to sharp wage increases since 2010;
  • India has seen a stagnation in its industrial production capacity, partly due to hiring difficulties but also issues to do with its education and labour mobility;
  • Brazil’s exchange rate still has a lasting overvaluation despite the recent depreciation, which has not gone far enough;
  • And there is also the dominating concern that any of the crises could spread to open economies (such as Singapore, Taiwan, South Korea, Sweden and Central European countries) via global trade.

All things considered, the fact that practically all regions are affected means there is a serious threat for global growth.

Fundamentally, we believe the problems are down to:

  • OECD countries continuing to deleverage in public and private sectors;
  • China halting a growth model that was driven by low-end production, exports and migration;
  • the delayed growth in Brazil’s and India’s industry.

Faced with this risk of recession, does the world have the capacity to react with its economic policies?

In OECD countries, there is no longer any room for manoeuvre in monetary policies. This is because interest rates are already very low, and liquidity is already extremely abundant. These countries cannot necessarily implement further fiscal policies because of very high fiscal deficits and public debts. Of course, other options are conceivable, such as quantitative easing in the United States, further VLTROs or asset purchase policies in the eurozone, another extension to the Gilt purchase programme in the United Kingdom, and the creation of liquidity in Japan. But there is a possibility these expansionary monetary policies would have very little effect on the economy.

In emerging countries, interest rates can be lowered. And as the debt ratio is much lower than in OECD countries, in addition to lower fiscal deficits and public debts, monetary policy ought to be more efficient.

The issue is therefore not whether emerging countries are able to conduct more expansionary economic policies, but whether these policies could restore global growth:

(a) If emerging countries have structural economic problems, counter-cyclical policies will not resolve them. Boosting credit and investment in construction by state-owned companies in China would improve neither the sophistication of the product range nor cost-competitiveness. Running fiscal deficits or lowering interest rates in India would not resolve their issues in the education sector. Likewise in Brazil, it would not be able to fix its overvaluation, nor the fall in investment and employment in its industry.

(b) If additional expansionary monetary policies in emerging countries lead to a depreciation of their currencies – which we can see happening now – the situation would improve in emerging countries but deteriorate in OECD countries. Viewed as a whole, there would be no improvement in the situation of the global economy. It is striking to see that even the Chinese RMB has depreciated against the dollar; the Brazilian real and the Indian rupee have depreciated sharply since 2011.

Global growth in 2012-2013 should cause more concern

Current forecasts continue to point to a recovery in global growth between 2012 and 2013 and then in 2014. But we believe there is cause to be more concerned. The reasons for such an outlook lie in the slowdown in growth that affects all regions and has structural causes. Also, OECD countries no longer have the room for manoeuvre to conduct counter-cyclical economic policies. And although emerging countries still have the room to manoeuvre and conduct such policies, the fact remains they could still prove ineffective, regardless.

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

Website: cib.natixis.com/research/economic.aspx

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