alexandros marios kotsonis

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Date A STRONGER EUROPE WITH CAPITAL MARKETS UNION FINANCE IN FOOTBALL There is no doubt, the face of football has evolved and changed. The changes off the pitch have had a major effect on the proceedings on the pitch. CURRENT ECON OM I C AFFAIRS All across the globe markets are falling, 19 of the major 21 stock markets are down on the period as last year. There are many economic reasons behind this bearish sentiment. "THIS YEA R HA S BEEN A GREA T YEA R FOR THE SOCIETY." DR. KEVIN EVANS INNOVATION AND INVESTMENT IN THE UK?S BICYCLE MARKET In recent history the UK?s bicycle market has flourished. Increasingly people are coming to see cycling as an excellent way to maintain health and fitness and as a viable commuting option sentiment. ISSUE #1, MARCH 2016

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  • Date

    A STRONGER EUROPE WITH CA PITA L M A RK ETS UNION

    FINA NCE IN FOOTBA LL

    There is no doubt, the face of football has evolved and changed.

    The changes off the pitch have had a major effect on the proceedings on

    the pitch.

    CURRENT ECONOM IC

    A FFA IRSAll across the globe markets are falling, 19 of the major 21 stock markets are down on the period

    as last year. There are many economic reasons behind this

    bearish sent iment.

    " THIS YEA R HA S BEEN A GREA T YEA R FOR THE SOCIETY."

    DR. KEVIN EVANS

    INNOVA TION A ND

    INVESTM ENT IN THE UK ?S

    BICYCLE M A RK ET

    In recent history the UK?s bicycle market has flourished. Increasingly people are coming to see cycling as an excellent way to maintain health

    and fitness and as a viable commuting opt ion sent iment.

    ISSUE #1, MARCH 2016

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    CONTENTSA st ronger

    Europe with capital markets

    union

    Current Economic

    Affairs

    Dj Blues: Are we at risk of a repeat recession?

    Finance in Football

    All across the globe markets are falling, 19 of the major 21 stock markets are down on the period as last year. There are many economic reasons behind this bearish sent iment.

    PAGE 4

    Yellen, the chairwoman of the Federal Reserve, America's central bank, said that the global economy was "less support ive" of US growth. This has prompted fears of bearish trends throughout the year.

    PAGE 7

    Soros recent ly suggested that some of the features of the current environment remind him of 2008 when the long shadow of what many call the ?Great Recession? was cast upon us.

    PAGE 9

    There is no doubt, the face of football has evolved and changed. The changes off the pitch have had a major effect on the proceedings on the pitch.

    PAGE 14

    INNOVATION AND INVESTMENT IN THE UK?S BICYCLE MARKET

    GROWTH AND PITFALLS IN THE UK MORTGAGE MARKET

    ON THE COVERQ&A WITH DR. KEVIN EVANS

    TRADING ACADEMY

    EQUITY TRADING TEAM

    STOCK PITCH NIGHT 1

    HOW THE ECONOMIC TURMOIL HAS AFFECTED COMMODITY MARKETS

    OSTC FOREIGN EXCHANGE WARNS FIRM?S TO HEDGE RISK OF FLUCTUATING CURRENCY RATES

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    A STRONGER EUROPE WITH CA PITA L M A RK ETS UNIONby Alexandros Marios Kotsonis

    EUROPEAN UNION

    2nd Year, B.Sc. Economics

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    Indeed, the fact that US equity and debt markets are bigger than the markets of each European country, together with the lack of integrat ion of Europe?s capital markets and the limited opt ions of attract ive interest generat ion opt ions for savers, is one of the biggest motivat ions for the creat ion of Capital Markets Union (CMU) as an Investment Plan for Europe. Moreover, the lack of new sources of funding for Small and Medium-sized Enterprises (SME) combined with the underdeveloped and fragmented European capital markets make for the need to build a true single market for capital ? a Capital market union for all 28 Member states.

    More specifically, the CMU aims to increase the advantages that non-bank financial intermediaries and capital markets can offer to the economy and fill the gap of Economic and Monetary Union. Thus, CMU will provide greater diversificat ion in terms of funding and lower the cost of raising capital, especially for SME; also, it will increase economic growth and recovery due to the minimizat ion of shortcomings of the European Union (EU), which consisted one of the main barriers of economic growth during the financial crisis. Indeed, this will solve the problem

    of over dependence on banking which worked as a barrier for growth during the financial and sovereign debt crisis.

    The CMU sets three main object ives in terms of the reinforcement of financial reforms, such as close supervision and regulat ion of financial sector and Banking union, in order to protect and heighten financial stability. First ly, CMU is aiming to diversify the source of funding through non-bank financing and widen the number of possible financial instruments. Secondly, CMU will boost and support a deeper, more competit ive and more liquid market, so that companies have a better access to funds. It will lower capital costs due to increased competit ion between investors and, on the investors? side, it will provide a wider choice of financial products, an easier management and a larger spread of the risk of their investments. Overall, equity markets will assist risk-taking act ivit ies and will encourage stronger economic growth. Thirdly, large and well-incorporated capital markets across Europe will target to aid financial stability, job creat ion and growth. More specifically, the investors across Europe will have more investment and diversificat ion opportunit ies while borrowers will have a better

    access to risk capital combined with a greater degree of competit ion.

    Therefore, all the above will improve allocat ive efficiency, lower costs, encourage product ivity gains, financial innovat ion and freedom of choices. The larger degree of integrat ion of capital markets across borders, combined with bigger and more liquid financial markets, will contribute to better choices for port folio diversificat ion and share risks with economies. Thus, diversifying the risks, will help enterprises, part icularly SMEs, to be less reliant on bank lending and will benefit from the creat ion of a more secure system with more funding by the intermediaries in the economy.

    The Act ion Plan provides a plan of short-term and long-term act ions that will take place over the next years. The short-term act ions focus on more legislat ive proposals such as the concept of securit isat ion and addit ional consultat ions in terms of venture capital funds and covered bonds. The long-term act ions emphasize on the need of support ing access to finance, increasing investment and removing barriers to cross border investment.

    The Act ion Plan on Building a Capital Market Union of 2015 involves the integrat ion of the European Capital Markets in order to reinforce Europe?s economy.

    CARDIFF F&T JOURNAL, MARCH 2016

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    However, the Act ion Plan of CMU contains some omissions and drawbacks with respect to its object ives. More specifically, there are certain aspects regarding financial stability and macro-prudential policies that were not emphasized in this plan.

    The CMU init iat ive is aimed to build a t rue single market across all 28 EU member states

    First ly, the CMU should aid financial stability by promoting more varied funding channels to the European economy. Furthermore, the CMU plan should ensure that the development of integrated capital markets would not allow other systematic vulnerabilit ies to gather uncontrollably.

    Indeed, a market based financial system could be more liable to becoming uncontrolled due to volat ility. For example, a sudden repricing of risk may contaminate market and financial inst itut ions due to balance sheets and collateral channels.

    Furthermore, it may increase the cost of capital for companies and may cause financial losses for households. The present CMU plan does not deal with such a development, which is an omission.

    Moreover, the CMU plan does not address possible macro-prudential risks that can be caused from market-based financial systems. The fact that there exist strong interrelations within market-based finance systems, which is a possible way to avoid macro-economic problems, is twofold. On the one hand, one has to ident ify the potent ial weaknesses in the structure and the cyclical dynamics of the system. On the other hand, these problems should be approached using the appropriate policy act ions. As far as this CMU plan goes, such an approach is not evident.

    Finally, a well-funct ioning CMU plan requires rules that will protect consumers and investors. A market-based financial system works with inst itut ional and individual investors. This makes it necessary for the risk bearers to be well-equipped to evaluate price risk. This is part icularly true for

    individual investors, given the cost that such risk analysis involves. Thus, appropriate individual investors? protect ion is needed. Although that already exists, such a body of legislature is not sufficient and it needs reinforcing.

    The City of London is an already well-developed market that makes use of the open US and Asian markets. This means it already operates in open markets that are not regulated by any specific state. EU commissioners may use this experience in order to obtain a well- developed funct ioning CMU plan. Indeed, English financiers working in the City can be used as advisors for the EU Commission in this undertaking. On the other hand, the development of an integrated European market will open many opportunit ies for the City of London. Since the United Kingdom is a member of the EU, such an integrated financial market will exponentially enhance the act ivit ies of the City of London. Consequently, there is a two-way interact ion between the integrated European financial market and the City of London. Traversing this two-way road may prove to be beneficial to both sides.

    EUROPEAN UNION

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    CA RDIFF F&T JOURNA LCardi ff Universi ty

    Cardi ff, W ales CF10 3AT UKjournal@cardi ff-f inance.co.uk

    www.cardi ff-f inance.co.uk