Foreign retailers respond to Russians' modest spending

Subject Foreign brands in the Russian retail sector. Significance Last year fewer foreign retail 'names' entered the Russian market than any year since 2012. Poor GDP growth prospects and diminishing consumer purchasing power continue to deter expansion of foreign retailers. New entrants are often retailers targeting high-end consumers, who are more immune to falling real income, inflation and ruble depreciation. Impacts Economic uncertainty and Western sanctions will discourage further European and US retail expansion. Far Eastern retailers will try to move into the clothing market, mainly sports and urban youthwear. In the medium to long term, the ageing of Russia's population will discourage foreign retailers.

Significance The negotiations with Greece's creditors revealed fundamental disagreements in lenders' views on the sustainability of Greece's debt and failed to address the drivers of future economic growth, once again concentrating almost exclusively on fiscal discipline. In the short term, the deal helps lift economic uncertainty and gains room to manoeuvre. The fact that debt relief measures were put on the table handed a domestic political victory to the ruling Syriza party. Impacts The IMF's drastic reassessment of debt sustainability and downward revision of Greece's growth prospects will deter foreign investors. Additional austerity measures will discourage already weak Greek 'ownership' of the programme, hindering reform progress. Polls suggest Greeks are slowly becoming more sceptical about participation in the euro-area.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhenyu Su ◽  
Paloma Taltavull

Purpose This paper aims to analyse the risk and excess returns of the Spanish real estate investment trusts (S-REITs) using various methods, though focusing primarily on the Fama-French three-factor (FF3) model, over the period from 2007Q3 to 2017Q2. Design/methodology/approach The autoregressive distributed lag model is used for the empirical analysis to test long-term stable relationships between variables. Findings The findings indicate that the FF3 model is suitable for the S-REITs market, better explaining the S-REITs’ returns variation than the traditional single-index capital asset pricing model (CAPM) and the Carhart four-factor model. The empirical evidence is reasonably consistent with the FF3 model; the values for the market, size and value are highly statistically significant over the analysis period, with 68.7% variation in S-REITs’ returns explained by the model. In the long run, the market factor has less explanatory power than the size and value factors; the positive long-term multiplier of the size factor indicates that small S-REIT companies have higher returns, along with higher risk, while the negative multiplier of the value indicator suggests that S-REITs portfolios prefer to allocate growth REITs with low book-to-market ratios. The empirical findings from a modified FF3 model, which additionally incorporates Spain’s gross domestic product (GDP) growth rate, two consumer price index (CPI) macro-factors and three dummy variables, indicates that GDP growth rate and CPI also affect S-REITs’ yields, while investment funds with capital calls have a small influence on S-REITs’ returns. Practical implications The regression results of the standard and extended FF3 model can help researchers understand S-REITs’ risk and return through a general stock pattern. Potential investors are given more information to consider the new Spanish investment vehicle before making a decision. Originality/value The paper uses standard techniques but applies them for the first time to the S-REIT market.


Significance An examination of the factors behind the expansion indicates that outsized balance sheets will persist and will pose a number of macroeconomic risks. Impacts Slower workforce growth will pressure GDP growth, trade growth and long-term interest rates, unless productivity gains can offset this. A record number of US business deaths and births in 2020 will affect productivity and have unpredictable impacts on the economy. Lower growth makes it harder to stabilise debt-to-GDP ratios, just as pension and health costs rise as populations age in major economies.


Subject 2015 economic outlook. Significance According to the Ministry of Finance's Fiscal Policy Office, GDP growth slowed to between 1.2% and 1.7% in 2014 from 2.9% in 2013. Data released by the Bank of Thailand on December 30 suggest that the final figure is likely to be at the lower end of the range. Recovery in the fourth quarter was modest (at an estimated 1.0%) against 0.6% in the third. The military-backed government forecasts 4.1% GDP growth this year, assuming more tourists, higher domestic demand, export growth and rapid implementation of infrastructure plans. Impacts Sluggish growth will intensify calls for elections, but the junta will not relent, especially until the royal transition has been secured. The 2014 coup may not be the last; this will maintain the long-term contractual risks for investors. Political instability could return by end-2015, dampening household consumption.


Significance Sirisena's victory is a potential game-changer: instead of entrenching the autocratic tendencies of his predecessor Mahinda Rajapaksa's administration, the election results hold out the promise of democratic consolidation under a new government with a robust mandate for constitutional and policy reform. However, the diversity of the coalition backing Sirisena and the sharing of power with newly appointed Prime Minister Ranil Wickremasinghe augur a period of volatility. Impacts If Tamil parties emerge as 'kingmakers' in April, governance of war-torn Northern and Western provinces is likely to be overhauled. Delhi, Washington and Brussels will welcome the political transition. Long-term growth prospects will turn on the precise rebalancing of budgetary allocations.


Subject Prospects for the Swiss economy after the SNB move. Significance De-linking from the euro has uncorked a pent-up surge in the Swiss franc that will challenge the domestic economy. However, its effects on competitiveness will take time to emerge. The Swiss economy has been relatively robust compared with its neighbours and can absorb immediate impacts with limited damage. What will matter most for Swiss competitiveness and the economy will be the medium-to-long term, after the currency stabilises at around an expected 5-10% gain against the dollar compared with a year ago. If the Swiss franc strengthens more, this will put additional pressure on vulnerable sectors and companies that have already had to grapple with high costs and past bouts of currency appreciation. Impacts GDP growth will slow modestly in 2015, probably in the 1.0-1.5% range. The unemployment rate could rise further, having edged up recently -- 3.2% in December. Competitiveness effects will encourage cross-border shopping and the trend towards workers commuting from neighbouring countries. High net-worth investors and residents in the 'safe haven' of Switzerland, along with high-end tourism, will not be impacted significantly. An electoral backlash could follow.


Significance After protracted negotiations, Croatia, at last, has a government, comprising the conservative Patriotic Coalition -- the Croatian Democratic Union (HDZ), plus a few small parties -- and the centre-right Bridge ('Most') of Independent Lists. The government is unusual because it is led by a non-partisan figure, Tihomir Oreskovic, a businessman who grew up in Canada and has only a shaky grasp of the Croatian language. In a best-case scenario, the government could deliver important and necessary reforms. Impacts Efforts to cut public spending will reduce the risk of a damaging financing crisis. A programme of economic restructuring will boost Croatia's long-term growth prospects. The election of two right-wing parties will consolidate the drift towards social conservatism. Tensions in the coalition will perpetuate political instability and could precipitate new elections.


Subject Finland's economy. Significance The Finnish economy contracted from 2012 to 2014 and grew by only 0.5% last year. It has been facing both structural and cyclical headwinds and since 2010 three different governments have been unable to jump-start it. However, the current one-year-old Finnish government has staked much of its political capital on various reforms which are expected to lead to a resumption of growth and a slower increase in public debt. Impacts Due to demographic trends, Finland's long-term growth potential is estimated to be below 2%. Prolonged economic stagnation in the EU and Russia is likely to depress export and GDP growth. The pension age in Finland will increase automatically as life expectancy rises, which may be a model for other European countries.


Significance The population is set to shrink until at least 2036. To support labour productivity as a factor for GDP growth, President Vladimir Putin has set out plans to encourage families and reduce premature death that may realistically slow but not reverse the trend. Impacts Opposition groups will try to capitalise on popular discontent provoked by impending increases in retirement age. New individual financial savings products are needed to help working people plan for future. Permanent immigration from Central Asia and the Caucasus will deplete those countries' labour forces, harming growth prospects.


Subject Financing sources for Russian companies. Significance Low investment rates in the last three years have led to substantial fixed asset deterioration. Russian companies are trying to make better use of existing assets instead of renewing productive capacity, and the main source of investment is their own funds. Impacts As EU and US sanctions persist, Russia will strive to boost domestic capital markets. Prolonged low investment will restrict economic growth prospects for the medium-to-long term. Insufficient investment will limit productivity and undermine product competitiveness. Signs of economic recovery may boost mergers and acquisitions.


Sign in / Sign up

Export Citation Format

Share Document