Weekly Market Insight

Latest Economic & Market Update 3rd July 2020

03rd July 2020

Good afternoon, it is 3rd July 2020 and here is your economic and market update from BlackBee. 

Graph of the Week: Social bond issuance booms during the pandemic

Data source: Bloomberg

The global pandemic has seen millions of people lose their jobs and companies go bankrupt, with the worst recession since the Great Depression being predicted. Social bonds provide funding for projects which have the purpose of helping society, for example addressing healthcare sector requirements and social housing needs. Sustainability bonds are focused on three areas; economic, environmental and social. Companies that issue sustainability bonds frame decision-making for the long-term rather than short-term profits. In 2019, nearly $18 billion in social bonds were issued globally. We are only halfway through 2020 and the amount of social bonds issued has more than doubled last year’s issuance, having reached over $42 billion already. The pandemic is fuelling growth in the social bond market. There is no doubt that the pandemic will have left a deep scar on the economy, one that will take years to recover from. Some companies have been forced out of business while other industries will arise from the crisis. As a result of the damage caused and inequalities created, emergency funding will be needed throughout and after the crisis as the pandemic will have created long-lasting effects. There has also been an increase in corporate issuance of social bonds. Pfizer issued a $1.25 billion bond in March, the demand for the bond was such that the offering was nearly 10 times oversubscribed. The aim of Pfizer’s social bond was to address global public health issues. As investors liquidated positions throughout the crisis, social and sustainability bonds appear as one of the areas that investors want to hold and build their positions in. The bonds are attractive for investors as they indicate a long-term focus and provide a positive social and environmental impact.

At a Glance:

  • US employment rate dropped to 11.1% in June, down from 13.3% in May as employers add 4.8m new jobs. 1.4m people applied for jobless benefits last week.
  • Tesla overtakes Toyota as the world’s most valuable carmaker based on market cap.
  • Data released from Eurostat shows that the jobless rate in Eurozone increased to 7.4% in May, up from 7.3% in April.

Best & Worst Performers of Large Cap Stocks on Thursday
Click the image to enlarge

Global Market Update
(as at close of markets 02/07/2020)