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European exchange landscape: too fragmented

May 2, 2016
In September 2015, the European Commission set out its action plan to establish a Capital Markets Union in order to push for stronger and more integrated capital markets in the EU to better complement bank finance. Creating deeper and more liquid stock markets is crucial in this respect, and also a precondition for European financial centres to regain their position in a global context. Indeed, the total number of stock exchanges operating independently in the EU is astonishingly high, especially in eastern and south-eastern European countries. In addition, market capitalisation is highly concentrated in only a handful of exchanges, and in smaller markets also tends to be lower relative to economic size. [more]

More documents contained in "Talking Point"

152 (49-60)
March 19, 2018
The major European banks have seen their revenues stabilise in 2017, and through further cost-cutting and improvements in asset quality, their profitability rebounded strongly to the second-best figure in the past decade. However, banks continued to shrink, and both total assets and risk-weighted assets fell substantially. This helped capital and leverage ratios to reach new record highs, finally laying questions about the sector’s capitalisation levels to rest, at least on aggregate. Large European banks lost ground versus smaller competitors and also remained far behind their US peers, although they were able to catch up somewhat on this front. [more]
March 16, 2018
Nitrogen oxides emissions (NOx) in Germany plunged by 44% between 1995 and 2016. Road traffic recorded the sharpest decline (-62%). After the decision of the Federal Administrative Court in Leipzig, however, certain diesel vehicles can be banned from inner cities. Apparently, there is a conflict of interests between the human right to clean ambient air and the protection of diesel car owners against an erosion of their vehicles‘ value. In our view, this conflict could be resolved over time. To this end, policymakers could, for instance, introduce a Blue Badge for low-emission diesel passenger cars, which is tied to a transitional period for older vehicles. [more]
February 12, 2018
German manufacturing industry ought to be at the peak in the current cycle. Domestic production in 2017 edged up by 3% in price-adjusted terms, which marks the strongest increase since 2011. At the same time, producer prices (+2.3%) also recorded the sharpest increase since 2011. Although industrial order intake continues to be very dynamic, several factors, including the strong euro and the recent slight dip in business expectations, suggest that growth momentum is likely to slow in the course of 2018. Against this backdrop, German industrial production looks set to rise by 2.5% in 2018. In the face of high wage settlements and plans to lower the limit on fixed-term contracts, German companies are likely to create fewer new jobs. [more]
December 21, 2017
House prices and rents have risen considerably during the current house price cycle. Rents are the component of the consumer price basket which has the biggest impact on overall inflation. While recent newspaper reports and market figures reflect the uptrend in rents, the official statistics are suspiciously free of it. This holds especially for Berlin. Consequently, official figures for the capital – and probably for Germany as a whole, if to a smaller extent – probably underestimate actual inflation. [more]
December 15, 2017
The Basel Committee’s recent agreement on final capital rules for global banks is set to have only limited effect on overall capital requirements, but will impact EU banks more strongly than their peers. In recent quarters, European banks have already strengthened their capital ratios substantially and have become more profitable, thanks to moderately better revenues, lower costs and lower loan losses. Balance sheet size and risk-weighted assets have declined, underscoring the continuing lack of growth momentum in the industry. This might change somewhat next year, as European banks could benefit from the strong performance of the economy via a pickup in lending, which so far has remained sluggish. Further tailwinds from declining loss provisions and falling expense levels are less likely though. [more]
December 5, 2017
The EU Commission proposed new mandatory CO₂ targets for passenger cars. These targets cannot be achieved with combustion engines alone. Stricter regulation thus enforces the electrification of the power train. However, the average car buyer currently does not play to the tune of regulatory policy and turns a cold shoulder on most alternative fuels. There are other climate policy instruments that outperform the CO₂ targets for passenger cars in terms of meeting the environmental targets and economic efficiency. [more]
November 15, 2017
The euro’s second place among the world’s most important reserve currencies has remained so far undisputed. The single currency’s share of allocated foreign exchange reserves stabilised at 19.9% in Q2, according to IMF data. The US dollar easily defended its position as the dominant currency in the international monetary system. But both the euro and the dollar gradually gave some way to other reserve currencies. Regardless of whether this observation reflects structural developments or rather (temporary) shifts in reserve allocation - it certainly fuels the discussion about the 21st century’s leading reserve currency (or currencies). [more]
October 2, 2017
The German retail sector has visibly lifted its sales forecast for 2017, up from 2% to 3%. The key driver is online retail, along with the currently very consumer-friendly economic environment in Germany, which strengthens consumers‘ purchasing power. The digitisation of the retail sector has in many respects become a challenge for the established stationary stores. But at the same time, it creates new opportunities for retailers to respond to changing consumer demands. The supermarket is, per se, not necessarily the loser, as is illustrated by the current success of multi-channel retail, which allows greater flexibility for the customers, thereby creating an entirely new shopping experience. [more]
September 22, 2017
German carmakers have recently lost market share in Western Europe and the USA, also – but not exclusively – due to the diesel debate. In China, the market share of German carmakers picked up again in the first half of 2017 vis-à-vis the preceding two years. Overall, chances are good the German automotive industry can in future at least maintain its position in the key global auto markets. [more]
August 4, 2017
The results of the “diesel summit” are an interim solution at best. In view of the current negative sentiment towards diesel engines, diesel cars will stand a chance in the medium to long term only if the auto industry credibly demonstrates that it can keep emissions below the legal thresholds in real driving situations and in (almost) all weather conditions. If carmakers do not succeed in this endeavour, customers will increasingly turn away from diesel cars, as they fear excessive residual value losses or stricter regulation. [more]
July 10, 2017
The German mechanical engineering sector recently tripled its growth forecast for 2017, from 1% to 3% (both in real terms). Robotics and automation is an important growth driver; this sub-segment is likely to increase output by 7%, i.e. double the rate of the segment as a whole. The mega issue “Industry 4.0” plays a key role for this development. As this trend is gaining importance both in Germany and around the world, the medium-term outlook for the sub-segment remains excellent as well. [more]
May 26, 2017
European banks have enjoyed a good start to the year. Revenues have risen, much more than costs. Loan loss provisions have remained low. Bottom-line profit has jumped by more than 40% compared with 12 months ago. However, the rebound has followed what was a weak period in the previous year – in fact, the industry is in many ways just back where it was in Q1 2015. What is more, judging only by the P&L, there has been relatively little change since the European debt crisis erupted in Greece seven years ago. The industry has more or less been treading water ever since, a frustrating experience after decades of strong growth and massive recent restructuring efforts. However, other performance indicators clearly show major improvements, not least with regard to banks’ de-risking and buildup of capital. [more]