There have not been any major changes in the global economy since the monthly report "Placeringsnytt" (Placement News) last week. China's growth is still below trend. A positive labour market trend in the US inspires confidence and Europe may be nearing the bottom of the business cycle.
China reported mixed figures last week, with a downward trend, which confirms that China’s economic growth remains below trend.
The magazine The Covered Bond Report has awarded institutions and deals that have demonstrated the best of the covered bond market in the past year, from April 2012 to March 2013. Swedbank was awarded for its investor relations work.
Reduced political uncertainty in Europe's crisis countries, surprisingly positive order intakes and consumption in the US, and continued monetary policy stimulus mean that the improved global business cycle scenario remains.
Italy has a new government, a broad coalition between different parties and with Enrico Letta as Prime Minister. A weak dollar and a large domestic market is boosting the U.S. economy. In Sweden, new orders in industry increase, albeit slowly.
Growth prospects are gradually brightening, but at the same time the forecast is that it will now take longer before inflation attains the target of 2 per cent. The repo rate needs to remain at a low level for a longer period of time to support the recovery to ensure that inflation rises towards the target. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 1 per cent and to make a downward adjustment to the repo-rate path. Increases in the repo rate are not expected to begin until the second half of 2014.
The situation in Cyprus created significant concern last week and most markets tumbled. Cyprus is now getting its emergency loan of EUR 10 billion from the troika (EU, ECB and IMF) but with a pistol pointed to its head. The solution in Brussels was reached in the early hours of Monday and just hours before the European Central Bank’s deadline of stopping the flow of money to Cypriot banks.
There are primarily three areas that the Investment Center closely monitors: developments in the eurozone, with high unemployment and fundamental differences between countries; the US government debt and how it should be managed in the long term; and reduced growth in China.
“The results of the Italian elections will impact the recovery in Europe given that Italy, Europe’s third largest economy, will remain in an uncertain political situation for a long time to come. The election results will probably entail higher volatility and lower risk sentiment in the European markets,” says Martin Bolander, market strategist at Swedbank Investment Center.
The Board of the Swedish Bankers' Association has decided that the Swedish Bankers' Association will assume overall responsibility and become the principal for Stibor.
Swedbank´s Cecilia Skingsley writes a guest column for Svenska Dagbladet. The Swedish government is currently conducting innovative work to bring together the understanding of the interaction between the financial and real economies. Just like a boxer, states need to be good at predicting problems and being resilient when the blows come.
Recommended food basket for a four-person family per month in Latvia costs around 14% more than in Lithuania, and around 5% more than in Estonia. These results were revealed by Baltic Institutes for Private Finances, Swedbank, in a study of food prices in Baltic countries.
On 18 February, Nils Ušakovs, Riga City Council Chairperson, and Māris Mančinskis, CEO at Swedbank Latvia, signed an agreement to continue the implementation of the grant programme “ATSPĒRIENS” (TAKEOFF) in 2013. The competition for new entrepreneurs will take place for the fifth year, and the total amount of grants under the programme for the year 2013 will be LVL 98,000. The size of grant available per one business idea under the programme is up to LVL 8,000. New entrepreneurs are invited to apply for the programme till March 20.
The global recovery continues led by the US and China. Growth in Europe is slower, but in Sweden there are now clear signs of an economic upturn. This was one of the reasons why the repo rate was not lowered last week.
Growth in the Swedish economy is still weak and inflationary pressures are low. But there are some positive signs pointing towards stabilisation and strengthening in economic activity over the year. Developments are in line with the assessment made by the Riksbank in December. The repo rate needs to remain low to support the economy and to ensure inflation rises to the target of 2 per cent. The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at 1.0 per cent. The repo rate is expected to remain at this low level over the coming year.
In January, stockmarkets benefited from US politicians’ agreement on the so-called fiscal cliff. Both the US and European stockmarkets rose more than those in emerging markets. We believe that the Swedish krona will continue to strengthen even if the Riksbank lowers interest rates in the spring.
The Latvian charity campaign Angels Over Latvia resulted in donations of EUR 428 317. The money was donated on 16 December during a gala event organised by Swedbank, LNT, Rimi and Ziedot.lv. The campaign is seeking aid for children who require specific and long-term treatment or rehabilitation because of inborn disorders or tragic accidents. The result will enable aid for 62 children.
Angels over Latvia
The Executive Board of the Riksbank has decided to cut the repo rate by 0.25 percentage points to 1.0 per cent, to support the Swedish economy so that inflation rises towards the target of 2 per cent.
Investors and issuers that are active in the Swedish bond market have a strong interest in bonds, but the appetite has somewhat decreased in the last quarter. Furthermore, investors are unhappy with the current yield levels and expect an increase, while issuers are optimistic and expect a decrease. This is all according to the latest Credit Market Barometer conducted by Swedbank. Read the full survey in the document attached.
Swedbank in Estonia has granted 29,438.80 Euros to seven different projects in the twelfth young entrepreneurs’ competition Shining Stars. Before presenting the ideas for an audience, the finalists had to present their ideas for a jury.
The Shining Stars Projects
The stockmarket is deemed to have done well so far, as we look back on 2012. The global index has risen by about 10 per cent; Europe - with its weak demand, weak currency and poor government finances in several countries - has risen 13 percent; Sweden - with its strong currency and sound government finances - has risen by no less than 14 percent.