Fund managers around the world are scrutinising human rights and environmental concerns in their investment decisions. BlackRock—which last year committed to selling stakes in fossil fuel companies—has signalled that it now plans to press companies about their policies related to human rights, as well as biodiversity, deforestation and water.
Economists forecast that a failure to cut pollution could cost governments around the world billions, according to University of Cambridge economists who used artificial intelligence to forecast climate change’s effect on sovereign credit ratings. The European Union, meanwhile, is facing off with China about its human rights record as well as mulling sanctions against Chinese officials over alleged human rights abuses.
Yet it remains to be seen if all the talk about human rights and climate change translates into investor action against nations and organisations with poor social and environmental track records in the short term. Certainly, investors climbed into Chinese assets last year, undeterred by human rights controversies such as the crackdown in Hong Kong and suppression of the Uighur minority.
“A healthy ecology is the basis for a healthy economy.”
– Claudine Schneider, U.S. Representative, The Green Lifestyle Handbook, 1990
“To deny people their human rights is to challenge their very humanity.”
– Nelson Mandela
- Now that the $1.9 trillion American Rescue Plan has been passed by the House of Representatives, the total fiscal response to the coronavirus pandemic has climbed to $5.1 trillion over the past year, representing 25% of total US GDP. Thoughts are turning to how this will be paid for, with indications that an increase in both the corporate tax rate and the individual rate for high earners is on the cards.
- Following our recent look at Taper Tantrum fears, it is worth noting that Federal Reserve Chair Jerome Powell stressed this week that the Fed won’t raise interest rates until the U.S. economy shows tangible evidence it has fully healed from Covid-19. Stocks and futures rose after Powell’s comments.
- Major US airlines have received more than $50 billion in grants in multiple rounds of taxpayer-funded bailouts during the pandemic. As travel begins to rebound, observers are asking whether the cost was justified. On the upside, the bailouts probably saved as many as 75,000 jobs and kept the airlines from declaring bankruptcy. Yet the biggest beneficiaries were airline shareholders.
- Donald Trump’s net worth has declined to $2.3 billion from $3 billion when he became president, according to the Bloomberg Billionaires Index. Trump’s brand has been wounded by the pandemic he promised would disappear and the riot that got him impeached for a second time.
- The US has signalled a tough stance ahead of a trade meeting with China, indicating that the trade tensions that characterised Trump’s presidency are not likely to fade in the near term. The Economist meanwhile explores how China’s capital markets are becoming more professional and more interwoven with global finance than before.
- Alarm bells are starting to ring about emerging market debt as countries brace for a new era of rising interest rates. After an unprecedented period of rate cuts to prop up economies shattered by Covid-19, Brazil is expected to raise rates this week and Nigeria and South Africa could follow soon, according to Bloomberg Economics.
- European Union countries continue to take fire for slow rollouts of Covid-19 jabs, compounded by a decision from several member states to suspend use of the AstraZeneca vaccine due to safety concerns. Chinese embassies in a growing number of countries, meanwhile, have begun requiring foreigners entering China to be fully inoculated with a Chinese-made coronavirus vaccine to avoid extensive paperwork.
- The MSCI World index could register its largest 12 month return in 50 years later this month, if it holds up for the next few weeks. To find a period when equities outperformed bonds by more than the range seen in the past year, you would have to go back to the 1930s.
- The ECB has restated its policy of bond purchases and has significantly increased the pace of buying bonds in the market in an attempt to control spill over from rising US bond yields.
- Apple is looking to launch new iPad models after remote working boosted tablet sales over the past year.
- National Treasury has published its updated ‘Operation Vulindlela’ plan, detailing the government’s strategy to boost the economy after the Covid-19 pandemic. Its aim is to fast-track the implementation of high-impact reforms, addressing obstacles or delays to ensure execution on policy commitments. Urgent implementation will be needed to persuade a cynical market that the government is, at last, taking economic reform seriously.
- ANC legislators toed the party line in parliament on Tuesday and pushed public protector Busisiwe Mkhwebane a step closer to the exit door, in what is seen as a victory for the Ramaphosa faction of the ANC. Here’s an analysis of what the development might mean.
- Daily Maverick has begun to outline the circumstances that led to the R1 billion damages claim brought by conservationist Fred Daniel against the Mpumalanga Tourism and Parks Agency and a host of government entities in 2010. The name of South Africa’s deputy president, David Mabuza, is all over the plaintiff’s papers.
- Retail trade sales data from Stats SA paints a gloomy picture for the South African economy ahead of next week’s interest rate decision by the central bank. The 3.5% year-on-year fall in retail sales was the 10th straight month of year-on-year decline, which began in April of last year, the first full month of ultra-hard lockdown.
- Claims and benefit payments to life cover policyholders rose 6.5% to R522.7 billion in 2020, up from the previous year’s R491 billion, according to Association for Savings & Investment SA.
- Following our recent notes on Taper Tantrum, here’s an interesting read about the appeal of emerging markets and South African assets as inflation fears subsided based on US data, and risk appetite returned. However, the latest data shows that the scale of outflows at the height of last year’s crisis approached the peak of the 2013 taper tantrum – a forewarning of what might be yet to come.
Sources: Dynasty, Bloomberg, The New York Times, The Wall Street Journal, Daily Maverick, BizNews, Business Day, Moneyweb, etc.