Comment EM and The Cover

A fall in equity markets last week reflected an automatic reaction to the possibility of a new global pandemic. But the more substantial effect of the coronavirus outbreak on equities may be reflected in economic performance, rather than the rate of contagion.

Some weird genetic mutations have been appearing in the hothouse of sustainable finance, where new green products are cultivated to beautify the grandees of the capital markets.

As head of BlackRock, the largest asset manager, Larry Fink’s pivot to responsible investing in recent years has been influential.

The stars have aligned for Banca Monte dei Paschi di Siena following its rescue by the Italian state. It is hard to see how other banks could be so fortunate.

The only thing missing from a stellar start to 2020 is a capital transaction from Italy’s Banca Monte dei Paschi di Siena.

European banks don’t believe they have a free option to extend the lives of their additional tier one (AT1) securities, despite the apparent success of Banco Santander’s call policy.

The sustainability-linked loan market is a glorious mess.

The noise about how capitalism is changing to a system in which social purpose is restored to the centre of companies' and investors' aims is now deafening. But look below the surface and the actual governance record of many companies and investors is dreadful. Most shareholders are too supine even to defend their own rights.

Capital markets went into 2020 in positive mood. That lasted for all of two working days until the US assassinated Iranian military commander, Qasem Soleimani, worrying investors that Middle East tensions were on the rise again. Nonetheless, the good feeling was not entirely soured. GlobalCapital highlights where the rest of the action will be in the year ahead.

Equity market participants were stunned last Friday after the US assassinated Iranian general Qasem Soleimani. It followed what had been a strong end to 2019 in the market with many hopeful the momentum would carry into this year. But banks and investors need to be prepared for shocks, especially as domestic pressure on US president Donald Trump increases in the run up to November's election.

GlobalCapital has penned an open letter to UK prime minister Boris Johnson ahead of his negotiations next year on the UK's future relationship with the European Union.

Equity markets, particularly European ones, are largely focusing on the UK election as the last opportunity for pre-Christmas volatility. But investors should remember that other shocks remain possible, including the scheduled imposition of US trade tariffs on China on Sunday.