Helsinki2018: Talks about trade & China

The  Helsinki2018 meeting has started with presidents Donald Trump and Vladimir Putin in the Helsinki Presidential Palace with the Finnish president Sauli Niinistö. According to the US President Donald Trump,  the discussions will range from trade to China.

– Getting along with Russia, is a good thing. And when we have 90 percent of the world´s nuclear power, we might talk about this as well, he said before the meeting.

 

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Finance

Stock markets steady in spite of trade wars

Financial markets stayed steady during the Monday morning  trading in the European Stock Exchanges. For example the London FTSE 100 – was down about 0,09 percent, DAX in Frankfurt was up 0,07 percent and Paris CAC 40- index was up 0,01 percent.

The markets in Japan were closed on Monday, but Hang Seng was up 0,05 percent in HongKong and Shanghai A-index was down 0,61 percent.

The dollar was trading 1,17 against euro, up 0,07 percent.

The trade tensions between the US, China, Russia and EU are tiggering and the companies are facing growing unease with the situation. This will have its own impact in investment decisions, timings, places and financing. For example this will have big impact in tech companies and their locations in the future.

The markets will be expecting more information from the world leaders, the US president Donald Trump and Russian president Vladimir Putin in Helsinki today. The leaders are having their press conference during the late afternoon EET.

Finance

Helsinki2018: How the markets will open on Monday?

 

helsinki2018-logoThe big question in the financial markets will be the market reactions on Monday. What have we heard so far? The first thing is that trade wars are real at the moment and the markets are waiting for more information from the meeting in Helsinki on Monday. Will the US president Donald Trump or Russian president Vladimir Putin say something regarding the trade wars, economics or sanctions? Last week the markets closed mixed globally.

The trade wars are affecting primarily auto, steel and aluminum industries globally. So far the auto industries have developed very differently. For example the Swedish car manufacturer´s Volvo stock price  (VOLVB) has increased by nearly 2 % annually, but for example the luxury car manufactuer Ferrari (Ferrari) by over 50 % in New York, On the other hand Tesla´s  (TSLA) stock price has declined by over 2,5 % and the German company Daimler´s  (DAI) by over 6 % and Volkswagen´s (VOW) with 0,5 % during the same period.

The autoindustry is important to the EU, while the German auto production is about 20 % of the global passanger car production. The turnover is about 404 billion euros according to the German Trade & Invest. And the industry sector is having otherwise very good future outlook with energy efficient cars, growth estimates are nearly 30 procent annually by 2020.

In the US, the autoindustry has seen signs of declining sales during the summer time – General Motors and Ford  have been reporting. The city of Detroit is facing lay offs.

Last year totally 17 million passanger cars were built in the EU and EU was the second largest producer of passanger cars. The US production declined by 11,5 percent and the production totalled 8 million cars.  China maintained its leading position among global passanger car producers – totally 29 percent of all cars were produced  in China according to ACEA.

So, one can understand that Tesla decided to build a new car plant in China.  The company announced last week that they will open a plant in Shanghai delivering 500 000 vehicles a year. The project time for the plant is about five years, but the size of the investment was not published.

The autoindustry is having big changes and for example the OEM production is also one part of it. So far, the EU has been the place for premium cars, but for how long? Also the UK Brexit-talks will have their own impact on the autoindustry development,

 

 

 

 

 

 

 

 

Business Finance

Helsinki2018: How about the investments?

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The tradewars between the US, China and the EU are escalating in all frontiers. The world economies are already suffering of the lack of confidence and stability. It really needs a crystal ball to see behind the unexpected and C-level executives are trying to navigate in the day-to-day  ever changing economic environment. It is clear that the tradewars  and sanctions will be one of the top questions in the #Helsinki2018 meeting with presidents Donald Trump and Vladimir Putin.

The world economy is mixed up. The discussion in the NATO meeting in Brussels this week also showed the power of the US. The defence budget of 2 procent of the NATO-country´s GDP is one of the questions but also the questions of next investments and taxes. Which country will be the next growth country to invite international investments and money? And what will happen to institutions, are they ready to renew their way to operate and engage? It seems clear that Nato in not the only one, there might also be the UN and for example IMF and World Bank in the financial markets.

It is no wonder that the space will be the next generation growth area. At the moment there are no internationally and generally accepted laws and rules how to proceed with the new technology and investments. It offers taxfree for everybody who could have the access to ride to the moon. And that is why it is important for countries to have as much co-operation and network as possible in order to be along in the process. Like for Finland, which is a small, but quite innovative country, to be part of the technology development.

The number two is also important for the European Central Bank (ECB). This is the inflation target of the EU area. The bank´s monetary policy says that the main target for the central bank is to keep price stability and the inflation below, but close the 2 % over the medium term. This is the mechanism how the EU area will have growth and jobs, but also how to keep the value of euro.

One can say that this is also the same what president Donald Trump is doing with “corporate America and America first”. And so far it seems working – the earnings of listed companies have risen by 22 % compared to year ago and investments are up 19 procent. The relaxation of banking rules and corporate taxes have fueled the economy.

The new inflation numbers from the US show the trend – inflation is on rise and it has strengthen the dollar.  The figure 2,9 % is a clear sign for the Federal Reserve to rise the interest rates- it is estimated that there will be at least two increases this year.

The euro has fallen to 1,17 dollars. And naturally the ECB is worried about the overall economic situation in the Eurozone. Tradewars and sanctions are not helping the economic growth and rising inflation on the other hand will increase the pressures to rise the interest rates.

It seems clear that old rules are not working any more. In order to avoid the global economic and financial crisis, action, co-operation and readyness is needed from cabinets. Maybe we see something about this on Monday in #Helsinki2018?

Päivi Härkönen

 

Business Finance

Banker: City is the wholesale hub of the EU

Discussion about UK´s Brexit impact on the City is active. Yesterday Mr Philip Lane, governor of the Central Bank of Ireland and member of the ECB´s governing council, told Financial Times that he thinks the City of London is the wholesale hub of the EU highlightning the importance of the financial hub to the rest of the EU.

– The City of London is the wholesale headquarters of the EU. If there is a genuine shock and we have a Brexit without a transition period, then that is a financial stability risk, he said to the newspaper.

Leading persons from the financial markets have lately raised this issue to the agenda, while there is only one year left for the negotiations.  On Monday ComteamPUB+ wrote a story about the same topic and the possibility of having separate agreement for the City´s financial services.

You can read the story here: https://pubplus.club/2018/01/15/city-getting-special-arrangements-in-the-brexit-talks/

Finance

Green Bonds to foster the economic growth

Green Bonds are financial instruments to foster the economic growth globally, but how the markets are really working? Last year was a record year for the over 100 billion dollars green bonds markets and for this year 2018 the expectations are about 130 billion dollars according to Climate Bond Initiative.

EU made a study of this market a year ago. The study identified key bottlenecks that hampered the further growth of the green bond market in the EU area. The biggest challenge is the lack of green bonds and green project pipelines.

The findings show that Green Bonds would be a great instrument to lead the climate mitigation and to fulfill the Paris Climate Agreement. The growth of these instruments have been mainly in China so far, but also big, listed companies and institutional investors have issued this kind of bonds.

The study also highlighted the measures of policy makers to develop the markets further- to raise the awareness on the benefits of green bonds, and thus increase supply support capacity building and knowledge sharing.

According to EarthRate, an ESG company, green bonds are new financial tools that require more climate-related information and targets from companies but at the same time they give the possibility to enlarge the investor base of a company towards more long-term base.

According to Financial Times (2.1.2018) the annual investment need for Europe, to keep the temperature rise below 2 degree Celcius, is 180 billion euros. The EU Commission is also planning to ease the capital rules for the banks in order to boost their green investments. This should be part of the new sustainable finance action plan, which should be released in March 2018.

Green Bonds are modern way of acting in the financial markets. But they also foster the underlying economic growth for further climate friendly investments.

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Finance

TaskForce: Four key areas related to climate change and financial disclosures

Financial Stability Board and its working group, the Task Force, has published its recommendations for companies related to climate change and financial disclosures. This working group was established in December 2015  to set a voluntary, consistent disclosure for companies.

The 32 industry members of the Task Force, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations after extensive public engagement and consultation, including public consultation on a draft of the recommendations in December 2016.

The TCFD developed four recommendations on climate-related financial disclosures that are applicable to organisations across sectors and jurisdictions. The recommendations are structured around four thematic areas:

  • Governance: The organisation’s governance around climate-related risks and opportunities
  • Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
  • Risk Management: The processes used by the organisation to identify, assess and manage climate-related risks
  • Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities

In a joint statement, the TaskForce leaders say: “We encourage other business leaders to join us in this united effort to improve disclosure across sectors and regions. The Task Force’s recommendations will catalyze more consistent, comparable, and reliable disclosure of climate-related information that will facilitate more informed business and investment decision-making. These disclosures are an important step forward in enabling market forces to drive efficient allocation of capital and support a smooth transition to a low-carbon economy.” This private-sector TaskForce was chaired by Michael R. Bloomberg.

The signatories include for example companies like Aviva, Bank of America, Barclays, BNP Paribas, Borsa Italiana, London Stock Exchange, Calpers, Citigroup, Deloitte, EY, KPMG, PWC, ING Group, Moody´s, S&P and UBS Group.

The recommendations are backed by over 100 companies with market capitalisations of over 3,3 trillion US dollars and financial firms responsible for assets of more than 24 trillion US dollars.

The Financial Stability Board promotes international financial stability; it does so by coordinating national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory and other financial sector policies.

Business Finance