Weekly Market Insight

Latest Economic & Market Update 15th October 2020

15th October 2020

Good afternoon, it is October 15th 2020 and here is your economic and market update from BlackBee.
Today’s focus:

  • “Ireland is the preference for financial firms leaving UK” – S&P
  • US stimulus package stumbles despite IMF fiscal spending recommendation

According to a report by S&P Global Market Intelligence, Ireland is seen as the most attractive EU relocation site for UK based financial companies making Brexit adjustments, according to S&P Global Market Intelligence analysis. Ireland will receive the most financial movers with 36 companies planning to shift business divisions or staff here ahead of December 31st, the end of the Brexit transition period. Germany (22), France (20) and Luxembourg (20) are the next most popular countries that will see an increase in multinational financial operations present. Goldman Sachs, JP Morgan and Morgan Stanley are some of the establishments that have decided to set up subsidiaries in or relocate staff to Ireland. BlackBee believes that this migration of large institutions will provide stability, and even potentially strengthen, the Dublin prime commercial property market. During the pandemic, many workers across Ireland have worked via remote access. However long term, companies are likely to desire an employee office presence if even on a rotational basis. A PwC survey found that 88% of Irish CFOs plan to reconfigure worksites to promote physical distancing. Flexible office presence and an increase in employee personal space will, in our view, see prime office space demand continue in Dublin once the Covid-19 restrictions subside.

US equities closed lower on Wednesday following Steve Mnuchin’s assessment on the negotiating stages between Democrats and Republicans for a US fiscal stimulus package. The Treasury Secretary said that despite progress, the two sides remained “far apart” on certain elements of a deal. S&P 500 dropped 0.7% while the tech-focused Nasdaq Composite closed 0.8%. (Source: Financial Times) The stock market losses are evidence of how investors believe a lack of fiscal support from the government negatively impacts economic growth. In the same week that the Irish Department of Finance announced the largest budget in the history of the State, the IMF released Q4’s edition of the World Economic Outlook. The Fund’s view on fiscal spending is that the additional debt incurred to finance “a lift in potential output, ensure participatory growth that benefits all, and protect the vulnerable is more likely to pay for itself down the road by increasing the size of the economy”. BlackBee’s aim is to create investor value while also having a positive impact on communities. BlackBee’s social housing and healthcare investment strategies aim to help the Government tackle these important societal issues. The Government’s current Rebuilding Ireland program and Fair Deal scheme are existing policies where the State and private sector collaborate together. As the IMF recommends government spending, private sector initiatives for social housing refits that provide long term leases, or the creation and uplift of nursing home stock, will be welcome avenues for the Irish government to channel this fiscal expenditure.

Best & Worst Performers of Large Cap US Stocks on Wednesday
Click image to enlarge

Global Market Update
(as at close of markets 14/10/2020)