An executive of a tech company (middle) addresses queries from Industrial Bank employees on a project that was supported by the bank’s green financing product in Fuzhou, capital of Fujian province. [Photo/Xinhua]
Chinese investors jump on the global ESG bandwagon to rebuild economies with lessons learnt during COVID-19 pandemic
Clouds are said to have a silver lining, but could “ESG” prove to be the golden edge to the dark COVID-19 cloud, transmuting the pre-pandemic profit craze of investors into a heart-felt desire for socially responsible, environmentally conscious investing?
Yang Yuebin, associate director of Sino-French joint venture AXA SPDB Asset Managers, believes so. He manages a 1.9 billion yuan ($271.2 million) fund that prefers financial assets offering sustainable returns with focus on ESG.
For the uninitiated, ESG refers to environment, social and governance－three fields that are receiving intense attention of COVID-19-chastened investors and fund managers who have to make quick, sensible decisions in liquidity-flush, stimulus-happy economies worldwide.
“The COVID-19 pandemic shows ESG matters more than ever,” said Eric Usher, head of the UNEP Finance Initiative.
Agreed Yang. “Value investing” is the philosophy that informs his fund management now. In this regard, Yang is not alone. Value investing is a trend gathering momentum in China and the rest of the world.
Yang and his ilk believe investors have the power to influence equity issuers to value sustainable development.
Yang deeply believes that investors should “choose investment products that benefit ESG”. That approach, he said, helps mitigate market uncertainty and limits volatility in a world made turbulent by the economic fallout of the pandemic.
“Like a commander in an army, the fund manager should take responsibility for the valuation of returns and risks, and the ESG label is like an insurance to mitigate risks when we discount cash flows of the equities,” said Yang.
These days, he is busy preparing for new offers of funds that focus on ESG-labeled assets.
There is a good reason behind his preference. When global markets were disrupted by COVID-19, listed companies with higher ESG ratings outperformed their peers over the same period. For instance, stock indices such as the S&P 500 ESG index and the MSCI’s emerging markets ESG leaders index rose more than other well-known indices.
A BlackRock report said that in the first quarter of this year, investment flows into global sustainable open-ended funds were 41 percent higher from a year earlier.
Market data provider Morningstar reported that almost $10 billion flowed into sustainable open-end mutual funds and exchange-traded funds in the United States in the first three months, more than half the 2019 total.
Usher said investors and fund managers are underlining the significance of policies that can mitigate climate change impacts, reduce economic inequality in the post-pandemic era and improve the resilience of corporations through advanced governance.
In China, investments under the theme of “sustainability” gained momentum during the COVID-19 pandemic. Issuance of bonds with the “green” label had tripled in April compared with March, according to a report from the Climate Bonds Initiative (CBI), an international non-profit institute.
Chinese green bond issuers already topped the global green bond market in 2019, recording a total of $55.8 billion in offerings in both onshore and offshore bond markets, up by 33 percent from 2018, the report said.
A key issue for investors, however, is to figure out if the bonds or shares are really “green” or “ESG-related”, and whether their investment can support sustainable development of the companies and society, said analysts.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
