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Global sell-off could be seen by investors as best buying opportunity
in a decade
The worst global market sell-off since the 2008 crash will become an important buying-opportunity for investors, affirms the chief executive of one of the world’s largest independent financial advisory and services organizations.
The prediction by Nigel Green, CEO and founder of deVere Group, comes after equities lost a tenth of their value this week as investors piled into havens on growing concerns the coronavirus outbreak will hit the world economy and impact corporate profits.
Mr Green notes: “Until this week, the markets had largely shrugged off the impact of the outbreak of coronavirus. We warned about complacency leaving many wide-open to nasty surprises.
“This has now changed. Investors have done a ‘one eighty’ – from a muted overly confident reaction to the serious and far-reaching global issue of coronavirus to running like headless chickens.
“Both extremes are worrying and could potentially wreak havoc on investors’ returns.”
He continues: “However, the worst global market sell-off since the 2008 crash will almost certainly become an important buying-opportunity for many investors.
“With markets on the brink of correction territory, panic-selling, mis-pricing of high quality equities, and lower entry points, this could turn out to be one of the key buying opportunities in the last 10 years.
“Some of the most successful investors will embrace volatility to create, maximise and protect their wealth.
“As ever in times of increased turbulence, there will be winners and losers. A professional fund manager will help investors take advantage of the opportunities that volatility presents and mitigate potential risks.
Earlier this week, Mr Green noted: “In the current volatile environment, investors - including myself - will be revising their portfolios and drip-feeding new money into the market to take advantage of the opportunities whilst reducing risk at the same time.”
The deVere CEO concludes: “Global investors should not be spooked by the return of volatility on stock markets but, where possible use it to their financial advantage.
“Of course, no–one knows for sure what will happen in the immediate future but, as stock markets typically rise over a longer-term period, now is the time to capitalise on the more favourable prices of decent stocks.
“It can be expected that in coming days, serious investors will be bargain-hunting.”
Germany set for first green bond with innovative structure but little scope for higher issuance
Germany (AAA/Stable) is set to enter the sovereign green bond market in the second half of 2020 as part of a longer-term strategy to shift debt towards green alternatives. Future issuance depends on the government’s willingness to move to a green economy.
The German debt agency (Finanzagentur) is planning to issue green bonds as so-called twin bonds. The agency will designate a portion of bonds sold in conventional debt auctions as green bonds with the same maturity and coupon as their conventional bond twin, though as separate securities with their own ISINs. The green security will comply with the Green Bond Principles as defined by the International Capital Market Association (ICMA) so will be comparable to green bond issues by France (EUR 7bn in January 2017), Belgium (EUR 4.5bn in February 2018), and the Netherlands (EUR 5.98bn in May 2019).
“As a sovereign issuer, Germany is entering the green bond market later than some peers, but with a new strategy. Tying green bonds to conventional bonds could help to enhance market liquidity compared to issuing green bonds independently,” says Bernhard Bartels, lead analyst for Germany’s sovereign rating.
It is worth noting that KfW (AAA/Stable), the German government development bank that is seen as a sovereign proxy by capital markets by virtue of a Federal Republic guarantee, has been a regular issuer of green bonds since 2014. By the end of 2019, KfW had a total of EUR 22.6bn in green bonds outstanding.
The Federal debt agency has communicated to market participants that the expected size of its first green bond will be in the high single-digit to low double-digit billion range and mentioned the government’s intention to offer green securities along the entire yield curve out to 30 years.
“The government’s intention to offer green bonds on a broad scale could help ensure its position as a benchmark issuer, especially at the longer end of the yield curve,” says Bartels. “However, as long as the government sticks to its “black-zero” commitment, we see little scope for large-scale green bond issuance. Moreover, the replacement of some conventional bonds by green bonds does not necessarily generate a higher volume of green projects if already-existing projects are simply re-labelled in accordance with the green bond principles,” Bartels adds.
The scope for German green bonds is limited since the federal government’s debt burden has declined by around EUR 64bn from end-2012 to 2018, specifically, from EUR 1.39trn to EUR 1.32trn in 2018. The central government debt-to-GDP ratio has declined by 10pp to 40% of GDP over the same period, driven by steady growth and balanced budgets, reducing the need for debt issuance. In the absence of a debt-increasing investment programme to finance plans to become carbon-neutral by 2050, the ability to issue sovereign green bonds could remain restricted. Current programmes focus on budget neutrality, for instance by refinancing investments with environmental tax revenues.
The Green Bond Principles leave ample room for policymakers to define the use of proceeds. While the ICMA lists a number of possible uses, this list is not exhaustive and allows issuers to provide their own definition of environmental sustainability. In addition, the ICMA recommends a second-party opinion or certification of green bond programmes. Typically, governments finance infrastructure projects, energy-efficient housing or renewable-energy projects.
“As of now, the established ICMA framework does not guarantee the use of proceeds from green bonds for green projects given that they only provide guidelines, which allow the use of many instruments to serve a general purpose,” Bartels says. The upcoming green bonds will refinance existing green projects as well as new ones. For instance, the government could use green issuance to finance projects via the public energy and climate fund (EKF), part of which is currently used to reimburse energy companies for premature closure of coal plants.
Investors in sovereign green bonds rely on the selection of projects by respective governments and ministries for green ends. At the same time, many highly-rated issuers can expect low if not negative interest rates on green bonds given heightened market demand for these products. This may incentivise issuers to invest mainly in the reporting of projects as being green rather than programming new green projects.
Bloomberg’s cryptocurrency policy puts him on the right side of financial history
Presidential candidate Michael Bloomberg’s proactive cryptocurrency plans place him on the right side of financial history, affirms the CEO of one of the world’s largest independent financial services and advisory organizations.
The chief executive and founder of deVere Group is speaking out after the New York-based billionaire presidential hopeful proposed creating a regulatory framework for cryptocurrencies in a new financial regulation plan.
The plan notes: “Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped.”
Mr Green comments: “Michael Bloomberg is, to date, the only candidate to become president of the world’s largest economy who has devised a coherent plan for cryptocurrencies.
“The staggering pace of the digitalization of economies and our professional and personal lives underlines that there will be – must be - growing demand for digital, global, borderless money.
“Indeed, digital currencies are now almost universally regarded as the future of money.
“This is why most central banks around the world – including the Federal Reserve - major financial institutions, tech giants, and multinationals are all getting involved.
“As such, Bloomberg’s proactive and progressive approach, which could be the first step to providing regulations to protect consumers and prevent illicit activity in the new age, must be championed.”
Nigel Green has long been a vocal advocate for cryptocurrency regulation.
He notes: “Digital currencies are already becoming mainstream and that means that they should adhere to the same standards as the rest of the financial system.
“Regulation is necessary as it will provide further protection for the growing number of people using cryptocurrencies, the less likely it will be that criminals will use these digital payment methods, the less potential risk there will be for the disruption of global financial stability, and the more potential opportunities there will be for higher economic growth and activity in those countries which introduce it.”
Last year, the deVere CEO criticised President Donald Trump who took to Twitter to say: “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”
In response, Mr Green blasted: “Does the President seriously think that traditional, fiat currencies are the way forward?”
Nigel Green concludes: “Cryptocurrencies are redefining and reshaping the financial system. The Leader of the Free World needs to be ahead of the curve and on the right side of history on such a fundamental issue.”
Responsible and sustainable investing the ‘new norm in less than five years’
Environmental, social and governance (ESG) investing will be “the new norm in less than five years”, affirms the CEO of one of the world’s largest independent financial services and advisory organizations.
The bold prediction from Nigel Green, chief executive and founder of deVere Group, which does business in 100 countries, comes as Amazon boss Jeff Bezos commits $10bn to fight climate change.
Mr Green notes: “Responsible and impactful investing is already fundamentally reshaping the global investment landscape.
“It is the trend that will define the 2020s – so much so that I’m confident that environmental, social and governance (ESG) investing will be the new norm in less than five years.”
He continues: “The growth in responsible investing will be driven by demand by both retail and institutional investors.
“Global awareness has skyrocketed about environmental, social and governance considerations over the last 12-18 months, in part due to the activism of the likes of Greta Thunberg, Extinction Rebellion and Jane Fonda, and due to the growing media coverage of climate change and its serious effects.
“As a result, these issues now sit at the heart of the investment decision-making process amongst eight out of 10 millennials, according to a recent deVere survey. Some argue this is likely to be even higher for Generation Z.”
This is of major consequence due to the Great Wealth Transfer. “This will see an estimated $68 trillion pass down from baby-boomers to millennials over the next couple of decades – and it could make them even richer than previous generations. It’s expected that this significant wealth transfer will begin in the next few years,” affirms the deVere CEO.
Currently, the U.S. and Europe lead the charge in ESG investment, with 80% of the responsible-investing market. Asia is currently lagging behind. But, says Mr Green, this could change and will further fuel demand.
“By 2025, Asia will be home to 33 of the world’s 49 megacities, according to Global Data. The rise in the number of megacities – cities in which there are more than 10 million permanent residents – will be fuelled by millennials who seem to be fully on board with ESG.”
“In addition, ESG investing will allow governments across Asia to realise some of their wider major policies. These include shrinking labour forces and weakening economic growth, migration, and global low-carbon transition threats.
“Demand for ESG-related strategies will go stratospheric when Asia goes full throttle into this direction, which it will do.”
Nigel Green goes on to say: “As the sector develops around the world, naturally, institutional investors will pile in, bringing with them their institutional capital and institutional expertise. This will act as a further catalyst for the ESG investment arena.”
He goes on to say: “One of the most compelling reasons why responsible investing will be the defining trend in less than five years is due to an increasing amount of evidence and ongoing research that ESG-related strategies can regularly outperform the market.
“It would not be unreasonable to assume that those companies that offer ESG-compliant investment could ultimately become some of the world’s most valuable companies. Could they take over from the current big tech firms? I would not be surprised.”
The deVere CEO concludes: “The investment world is evolving perhaps more rapidly than it has in decades due to the rise and rise of responsible and impactful investing.”
SRB launches public consultation on changes to its MREL policy under the 2019 Banking Package
The Single Resolution Board (SRB) today launches a public consultation on a number of substantial changes to its policy on the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). These changes bring the policy in line with the amendments introduced by the 2019 EU “Banking Package” to EU regulations and directives.
This document describes the proposals, provides the rationale and highlights several specific questions to which the SRB seeks responses. The SRB is eager to receive responses and suggestions from a full range of stakeholders.
The consultation is open until 12.00 Brussels time on 6 March 2020. The answers will support the SRB in preparing its final MREL Policy Statement, expected to be published by end April 2020.
The proposals cover the implementation of provisions related to, among others:
MREL requirements for Global Systemically Important institutions (G‑SIIs);
Changes to the calibration of MREL, including introducing MREL based on the leverage ratio;
Changes to the quality of MREL;
Dedicated rules for certain business models, such as cooperatives, and for resolution strategies, such as multiple point of entry (MPE);
How these changes will be phased in.
MREL decisions implementing the new framework will be taken based on this policy in the 2020 resolution planning cycle by Q1 2021.
This public consultation is part of the SRB’s commitment to listening to the views of industry and other stakeholders and being transparent about its approaches and decisions.
SRB announces the appointment of new Vice-Chair and Board Members
The Single Resolution Board (SRB) is pleased to announce the appointment of Jan Reinder De Carpentier as Vice-Chair and Pedro Machado and Jesús Saurina as Members of the Board and Directors of Resolution Planning and Decisions. They will take up their duties on 1 March 2020.
The European Commission, in consultation with the SRB, carried out a stringent recruitment process and proposed the appointees as candidates to the European Parliament. After the European Parliament approved the proposal on 30 January 2020, the Council, acting by qualified majority, adopted the appointments on 17 February 2020.
Meet the Vice-Chair
Jan Reinder De Carpentier joined the SRB in 2015 as General Counsel in charge of the Legal Service, SRB Secretariat and Compliance function, providing strategic legal advice across the organisation and to the Single Resolution Mechanism stakeholders. He joined the Dutch central bank in 2002 and held various management positions, with a focus on anti-money laundering supervision, legal advice, early intervention strategies and crisis management. A Dutch national, Jan Reinder started his career in 1995 as a lawyer in private practice in The Hague and Amsterdam and holds a master’s degree in civil and tax law from Erasmus University in Rotterdam.
Meet the Members of the Board and Directors of Resolution Planning and Decisions
Pedro Machado has worked in financial regulation and supervision for close to 20 years. He is the Director of Legal Services and Chief Legal Counsel at Banco de Portugal, where he has also previously served as Deputy Director of the Prudential Supervision Department. A Portuguese national, he was the Minister of Finance’s Chief of Staff between 2011 and 2013, and has worked in the European Central Bank and PwC. From 2012 to 2015, Pedro was a non-resident member of the European Investment Bank’s Board of Directors. He holds a law degree from the Lisbon School of Law and has done post-graduate studies in European Law at the European University Institute.
Jesús Saurina is currently Director-General at Banco de España, responsible for Financial Stability, Regulation and Resolution, as well as being a member of its Executive Board and Governing Council. He has developed his whole career in the Banco de España, starting in supervision and then setting up and leading the Financial Stability Department. A Spanish national, Jesús has also been a board member of the Spanish resolution authority, FROB, as well as of the Spanish Deposit Guarantee Fund. He is currently a member of the Basel Committee on Banking Supervision, as well as a board member of the SRB’s Plenary Session and of the European Banking Authority. Jesús holds a Ph.D. in Economics from the Universidad Complutense de Madrid, and did postgraduate studies at CEMFI.
The new appointments replace Vice-Chair Timo Löyttyniemi and Board Members Antonio Carrascosa and Dominique Laboureix.
“I am delighted to welcome Jan Reinder, Pedro and Jesús. They each bring vast experience and knowledge to the SRB. Jan Reinder has been instrumental in building up the organisation, while Pedro and Jesús have had impressive careers in their respective central banks with a deep engagement in financial stability, as well as bank resolution. Together we will focus on our mission to make all banks resolvable, which in turn protects financial stability and the taxpayer.”- Elke König, Chair of the Single Resolution Board
“It is an honour to be taking up the role of Vice-Chair of the SRB. I have been with the SRB as General Counsel for more than four years and this new position is a challenge I am looking forward to, as the SRB continues its important work to promote financial stability.” - Jan Reinder de Carpentier, newly appointed Vice-Chair
“I am very pleased to be joining the SRB in the coming weeks. Resolution has been part of my work in different periods of my career over the last decade. I feel very committed to bringing my experience to improving bank resolvability through sound planning. It will be an honour to serve at the SRB and contribute in a meaningful way to the Banking Union, a fundamental endeavour of the European project.” - Pedro Machado, newly appointed Member of the Board
“It is both inspiring and challenging to be part of the SRB, an institution that has already demonstrated that it is possible to resolve a bank protecting taxpayers’ money, depositors, financial stability and the critical functions of the bank.” - Jesús Saurina, newly appointed Member of the Board
Bitcoin’s price jumps to $10,300 – what’s the REAL driving force of the rally?
Bitcoin’s price has soared to $10,300 on comments made on Tuesday by the U.S. Federal Reserve Chair – but there are other major factors at play driving the price, which has jumped more than 40% since the beginning of 2020.
This is the warning from Nigel Green, deVere Group CEO and founder, as the world’s largest cryptocurrency jumped more than 4% on comments made by Jerome Powell that the Fed is investing a significant amount into digital currency development.
Mr Green states: “This is further evidence that not only all major banks, government agencies, plus most sectors including tech, entertainment and real estate, are piling into cryptocurrencies – but that central banks are too.
“The previously sceptical Fed has not, until now, admitted how rapidly digital currencies could become a systemic risk to the U.S. dollar’s status as global reserve currency.
“This is a major step in underscoring – especially to those backward-looking traditionalists – that, whether they like it or not, digital global currencies are not only the future of money, they are increasingly the present too.”
He continues: “The development from the Fed comes following news that China – a communist state and the U.S.’s main economic rival – is currently developing what has been described as an all-powerful cryptocurrency. It could be ready this year and be the world’s sovereign digital currency.”
Mr Green goes on to say: “Whilst there will be minor peaks and troughs – as in all markets - I predict the overall trajectory of Bitcoin to remain upward for the next few months.
“Besides increasing institutional awareness and development, other major factors driving its price advance will be coronavirus.
“Bitcoin’s price is likely to continue to jump until the coronavirus peaks because of the growing consensus that the digital currency is a safe-haven asset.
“Its status comes from the fact that it is a store of value, scarce, perceived as being resistant to inflation, and a hedge against turmoil in traditional markets.”
He adds: “Another major price driver will be the next halving event.
“The code for mining Bitcoin halves around every four years and the next one is set for May this year. When the code halves, miners receive 50% fewer coins every few minutes. History shows that there is typically a considerable Bitcoin surge resulting from halving events.”
The deVere CEO concludes: “The Fed’s public acknowledgement of cryptocurrencies was important, but most investors have already known that major central banks around the world are developing crypto.
“As such, the main drivers for Bitcoin price for the next few months will remain coronavirus and May’s having event.”
German cryptocurrency IOTA by 2035 - 100 times the value of today
Signs of IOTA breakthrough are evident: rising ratings, exchange rate explosion and bitcoin outperformance
IOTA share price increased by around 119% since January 1st
Highest ranking on Google in a year
According to the study, market capitalization could increase more than a hundredfold by 2035
IOTA is again in the top 20 most valuable cryptocurrencies
According to an infographic by Kryptoszene.de, 2020 began with a bang for the cryptocurrency IOTA: within a few weeks, the exchange rate increased by around 119%. The Demand has peaked, and, as the graph shows, experts even see it as realistic that the price of the cryptocurrency “Made in Germany” will rise hundredfold over the next few years.
On January 1, the Internet of Things currency was still trading at $0.16. Just over a month later, on February 3, the cryptocurrency broke the $0.35 mark. IOTA even developed far better than all the altcoins and bitcoin. BTC price climbed around 29.3% during this period. In a market capitalization ranking, IOTA is currently at the 17th place and is back in the top 20 after several months.
An evaluation by Kryptoszene.de based on data from Google Trends shows that IOTA has never ranked as high in the past 365 days as it did in the last week of January. The Google Trend Score was at 100, which stands for the highest possible search volume. It is also evident that the investors are not only greatly interested in IOTA, they are also extremely optimistic about it. On February 3, 94% were optimistic about the development of the cryptocurrency, only 6% expressed their skepticism.
Here is the detailed article with further interesting information and infographics:
Saudi investment rises despite controversies, says GlobalData
Following the news that foreign direct investment (FDI) inflows to Saudi Arabia grew 10.2% year-on-year (y-o-y) to reach $3.5bn in the first nine months of 2019 compared with January-September 2018, when the amount equaled $3.18bn;
Colin Foreman, Deputy Editor at GlobalData, a leading data and analytics company, offers his view:
“Saudi Arabia’s economic reforms and new construction projects continue to attract growing volumes of FDI into the Kingdom. However, while the latest FDI figures show that progress is being made towards its Vision 2030 economic goals, there are signs that the growth rate could be plateauing.
“In the January-September 2018 period, inflows to the Kingdom grew by more than 170% compared with the corresponding period in 2017, when inflows were valued at just $1.16bn.
“The simple explanation could be that after starting an initial jump from a low base, the rate of growth for FDI is now less spectacular. Another more challenging explanation may be that international controversies involving Riyadh have tempered Saudi Arabia’s ability to attract FDI.
“The 2019 FDI numbers came shortly after the murder of Jamal Khashoggi by Saudi government officials in Istanbul in October 2018. The incident had an impact on business, with the likes of the UK’s Richard Branson suspending his business activities in the Kingdom.
“In 2020, Saudi Arabia is looking to move forward. The raft of projects that it launched in 2017 is now moving into construction and requires investment.
“The government’s privatisation drive will also continue following the initial public offering of Saudi Aramco at the end of last year.
“While economic strides are being taken, the controversy will nevertheless persist. In mid-January, there were claims that Saudi Crown Prince Mohammed bin Salman bin Abdulaziz al-Saud had hacked a mobile phone owned by Amazon owner Jeff Bezos.
“Although the Saudi government quickly dismissed the allegations as ‘absurd’, it could, as with the Khashoggi murder, have a dampening effect on FDI.
“That said, the data for 2019 shows that the weight and scale of Riyadh’s economic reforms and new projects across the Kingdom are still an attractive proposition for investors, and as long as that continues the outlook for Saudi Arabia remains positive.”
Seed and Series A funding rounds registered highest share of global VC investment volume and value in Q4 2019, says GlobalData
Seed and Series A funding rounds accounted for a 38.3% and 24.4% share of global venture capital (VC) funding volume and value in the fourth quarter (Q4) of 2019, which is the highest among all funding rounds, according to GlobalData, a leading data and analytics company.
Early stage funding rounds (Seed and Series A funding rounds) continued to dominate VC investments with a 74.7% share of total investment volume during Q4 2019.
On the other hand, late stage funding rounds such as Series E, Series F, Series G and Series H were fewer in number compared to early stage deals but much larger in average deal value.
A total of 2,753 deals (with disclosed funding rounds) worth US$45.5bn were announced during Q4 2019 compared to 2,325 deals during Q4 2018 that were worth US$39.2bn.
The US accounted for 43.8% of total early stage funding volume and 42.4% of growth/expansion/late stage funding (comprising Series B, Series C, Series D, Series E, Series F, Series G and Series H). It was followed by China, which accounted for 14.7% of early stage funding volume and 23.5% of growth/expansion/late stage funding volume in Q4 2019.
Other key countries that attracted a significant number of early stage funding during Q4 2019 included the UK, India, Germany, Canada, France, Japan, Israel and South Korea.
Growth/expansion/late stage funding accounted for around 70% of funding value in Q4 2019. China’s share of the capital raised through these rounds accounted for approximately 64%, followed by India with approximately 26%.
Other key countries that raised notable funding during Q4 2019 included Japan, Hong Kong, Indonesia, Australia and South Korea.