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Global Real Estate Investment Plunges Amid Covid Pandemic
Author: ValentinaMarriot
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Global Real Estate Investment Plunges Amid Covid Pandemic
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Kiwi and Euro Fell After Elections
The exciting weekend was dominated by two political events – the New Zealand and German Elections. NZDUSD plunged to a 1-week low while the EURUSD is modestly lower. The biggest parties in both elections failed to secure the majority of seats. As such, they are unable to form a government without entering coalition with other parties. For New Zealand election, the National Party has won 58, down 1 from the previous term, out of 120 seats. The Labor Party won 45 seats, surging from 32 in the last term. The third biggest party comes the right-wing, populist NZ First Party. Although the seats it won has dropped to 9, from 12 previously. It would be the kingmaker for either the Nationals (more likely) or Labors to form a government.
German Election
The biggest surprises in the German election outcome are the pounding of SPD and the surge of AfD. Based on the votes counted so far, Angela Merkel’s CDU and its sister party CSU have secured 33% of votes, down -8.6% from the previous term. While Merkel would no doubt be the Chancellor for a fourth term, it would be a challenge for her to form a coalition government. Back in 2013, the CDU/CSU formed a coalition government- the Grand Coalition, with SPD as its junior partner. This time, with SPD’s vote sharply declining to 20.5% (down -5.2% from 2013), the party has pledged that it would head into opposition this time. Indeed the SPD during the election period has been complaining about the loss of popularity after forming coalition with CDU/CSU. Yet, Merkel has asked Martin Schulz, SPD’s leader, to re-think. The Grand Coalition is expected to be the best for the financial markets, providing the least uncertainty and most favorable for deeper EU integration.
The far-right AfD has gained 12.6% of votes, up +7.9% from the previous term, while the FDP, Merkel’s preferred partner, has won+10.7% of votes, up +6% from the previous term. Both parties failed to get any seats in 2013 as they were short of the 5% threshold. Besides the Grand Coalition, Merkel’s another choice of government is the Jamaica combination, i.e. CDS/CSU+ FDP+ Green. However, given the traditional rivalry, as well as the divergence in economic perspective, between FDP and Green, it remains highly uncertain of whether this combination would work.
Macroeconomic Events:
Monday marks the start of the next round of EU-UK Brexit negotiations. The market appears to have got some reliefs after UK Prime Minister Theresa May noted on Friday that the UK is seeking a 2-year transition period before officially leaving the EU. She also confirmed that the intention of keeping the single market access in transition. ECB President Mario Draghi will speak to the EU Parliament later today. Earlier in Asian session, Japan’s Prime Minister Abe might be announcing on the snap election in October. For the week ahead, Fed Chair Janet Yellen would be speaking at the NABE conference on Tuesday on the topic of “Inflation, uncertainty and monetary policy”, whilst US President Donald would be addressing on tax reform on Wednesday. On the central bank meeting, we would have the RBNZ meeting on September 28.
Commitments of Traders:
Speculators were bullish over the energy complex in the week ended September 19. Net LENGTH for crude oil futures jumped +73 594 contracts from a week ago to 418 074. NET LENGTH of heating oil increased +4 349 contracts to 48 416 while net LENGTH for gasoline rose +806 contracts to 80 273. Net SHORT for natural gas decreased -28 135 contracts to 23 888 for the week.
Speculators were bearish over the precious metal complex last week. Net LENGTH for gold slumped -18 671 contracts to 236 089, while that for silver futures fell -7 184 contracts to 67 803. For PGMs, net LENGTH for platinum declined -6 349 contracts to 31 648 while that for palladium dropped -890 contracts to 22 416.
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Kiwi and Euro Fell After Elections