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Business News & Financial News | Reuters
Athletic apparel maker Under Armour Inc on Monday reported a 23% fall in quarterly revenue, as retailers across the world remained shut due to the COVID-19 pandemic.
Chinese direct investment in the United States dropped to the lowest level since 2009 last year amid bilateral tensions, and the COVID-19 pandemic will continue to weigh on investment flows between the world’s two biggest economies, according to a report.
U.S. hotel operator Marriott missed already lowered estimates for first-quarter profit by a huge margin on Monday, as bookings plunged due to coronavirus-led lockdowns that kept a quarter of its hotels closed.
Toyota Motor Corp plans to slash North American production by nearly a third through October and expects it will take some time for output to return to normal, according to a person familiar with the matter.
British Airways owner IAG has exhausted every avenue to shore up its finances and is burning through cash, its CEO said on Monday, as the aviation industry warned of the fresh damage it would suffer if Britain quarantines international arrivals.
The Trump administration is in talks with semiconductor companies about building chip factories in the United States, representatives from two chipmakers said on Sunday.
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Source: www.reuters.com
Author: Reuters Editorial
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Author: FE Online
Have investment funds avoided a liquidity crisis?
The large exit of investors from these funds jeopardized the liquidity of fund managers. But that fear did not materialize due to the intervention of the US Federal Reserve. The rest of the sector, with a size of 55 trillion dollars, also had the same problems, but is largely intact.
Although many funds have resorted to emergency liquidity management instruments, few have been unable to fulfill redemption requests immediately or have been forced to suspend operations. Only 80 funds out of the nearly 35,000 operating in Europe were suspended in March, despite record-high cash outflows and large falls in asset prices, according to the ratings agency Fitch.
This correct evolution indicates that the regulation of investment funds is working as it should. But many believe that the real danger has not yet come. Fixed income funds also had major problems in March, due to large falls in the price of corporate debt. But these problems could have been much greater if the central banks had not intervened.
According to Fitch, central banks have allocated $ 93.8 billion to support investment funds since the coronavirus crisis began.
But if the crisis lingers and more companies sink, the funds are likely to be hit harder, triggering a new wave of investor redemptions. The IMF is concerned with how fund managers will cope when their cash reserves run out. In addition, the fact that interest rates are very low has led some managers to invest in higher risk and less liquid assets to obtain a higher return.
One way that funds can keep these issues at bay is by using liquidity risk management tools, such as deferring redemptions or having costs reimburse investors who have taken money out. These instruments can cause investors to maintain their positions and give managers time to reposition their portfolios and avoid a massive sale of assets. However, they cannot change the liquidity profile of their funds.
On the other hand, there are liquidity stress tests. The EU is expected to apply new standards to these tests later this year. But these rules were formulated before the coronavirus crisis and should be modified in the current situation.
For its part, the IMF recommends that the repayment terms of the funds be adjusted to the liquidity of the underlying assets and that managers must meet the eligibility criteria based on their credit quality and liquidity before being able to add assets to their portfolios. .
But before taking these steps, politicians will want to see how investment funds resist the crisis. What is unclear is whether vulnerable funds will sink in an orderly fashion or if they will trigger a widespread crisis across the fund sector and infect the entire global financial system.
What happens will determine how the asset management sector will be regulated in the years to come.
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Source: www.web24.news
