China Coronavirus fears hit equity markets

China Coronavirus Fears Hit Equity Markets

Christian Gattiker (Julius Baer) | Investors seeking protections may consider stocks in the healthcare and internet space, which are less exposed. However, more importantly, the recent outbreak does not change our medium- and long-term constructive view on Chinese equities. We are inclined to buy on weakness in the equity market at this stage.

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Further easing plans should remain parked in the next ECB communication

Olivia Álvarez (Monex Europe) |  The ECB will host its first 2020 monetary policy meeting next Thursday 23rd. The event is unlikely to bring any changes over policy tools after the accommodative package introduced in September, but rather, it could turn the attention towards any changes in the economic outlook facing the Eurozone and the strategic review vowed by new chief Christine Lagarde.

European Rates Watch: Three scenarios for 2020

BofA| We present three scenarios for the ECB’s balance sheet in 2020 based on TLTROs and APP projections. At the top end, we estimate the ECB’s balance sheet to reach a record high; at the bottom end, we estimate a small decline. Banks’ interest in TLTRO III would be crucial in determining the actual outcome.

2020 dividends: European companies will offer another record year for investors

CdM | Allianz Global Investors expects dividend payments of approximately 359 billion euros from European companies in 2020. This sum exceeds the 2019 record by 3.6% (12 bn euros). Dividends have contributed an average of 38% to the performance of European equities since 1974. On the contrary, 60% of government bonds in the euro zone have a negative nominal return.

Subprime risks are back

DWS | Once again, strange things begin to happen in the subprime (that is, higher risk) segment of the US consumer loan market. We can see it, without going any further, in the delinquency rates of credit card balances held by thousands of small US commercial banks. Since autumn 2016, the percentage of delinquent loans (defined as loans with overdue balances for thirty days or more that continue to accrue interest) among these banks has doubled to approximately 6%, a figure higher than the levels reached during the financial crisis 2008. On the contrary, the loan books linked to credit cards of the one hundred largest banks are much more healthy.