June 25 – Daily Brief of World Finance & GCC News

WORLD FINANCE NEWS BRIEF

IMF Projects Deeper Global Recession on Growing Virus Threat by bloomberg.com

The fund said Wednesday it now expects global gross domestic product to shrink 4.9% this year, more than the 3% predicted in April. For 2021, the fund sees growth of 5.4%, down from 5.8%.

“A high degree of uncertainty surrounds this forecast with both upside and downside risks,” Gopinath said

Announced fiscal measures amounting to about $11 trillion globally, up from $8 trillion estimated in April, have helped cushion the blow to workers and businesses.

The IMF sees advanced economies shrinking the most, contracting 8%, compared with 6.1% previously. Emerging-market and developing economies will see a 3% contraction, compared with the 1% forecast in April.

India saw the largest revision among the biggest economies from the April forecasts, with a 4.5% contraction now expected, compared with a prior projection of a 1.9% expansion, the fund said.

Wirecard by ft.com

Wirecard’s unusual hybrid of banking and non-banking operations makes its accounts harder to compare with peers, and helps persuade investors to rely on the company’s adjusted versions of financial statements.

As Europe’s largest fintech, it is seen as a rare German tech company able to challenge the giants of Silicon Valley.

The FT publishes details of Wirecard’s outsourced payments processing. It appears that arrangements with three partner companies in the Philippines, Singapore and Dubai were responsible for most of the group’s worldwide profits.

October 2019 The FT publishes documents indicating that profits at Wirecard units in Dubai and Dublin were fraudulently inflated and that customers listed in documents provided to EY did not exist.

December 2019 The FT reports that Wirecard appears to have counted cash held in escrow accounts managed by trustees within the cash balances declared on its financial statements.

June 22 Wirecard acknowledges for the first time the potential scale of multiyear accounting fraud, warning that the €1.9bn of cash probably does “not exist”.

How to invest when ‘safe’ assets are no longer really safe

Before the coronavirus crisis, US government bonds were trusted by investors as one of the best instruments to hedge against market sell-offs.

Since 1990, a portfolio split into 60 per cent stocks and 40 per cent government bonds and rebalanced quarterly, has delivered a Sharpe ratio — a measure of return adjusting for risk — of 1.02, with a maximum fall of 23 per cent. But since 2010, in an era dominated by so-called quantitative easing programmes, that ratio rises to 1.34, with a maximum drawdown of only 6 per cent.

But as the saying goes, past performance is no guarantee of future results. The balance of risk and return may now be broken.

GCC NEWS BRIEF

LinkedIn Data Reveals UAE Sectors Recruiting in Covid-19 Crisis by arabianbusiness.com

The downturn stabilized somewhat towards the end of April and continued in an “upward trend” of slow recovery in line with global trends in May.

Pompeo: U.S. Prepared to Help Lebanon if It Carries Out Real Reforms

About the author

Financial advisor to UHNWI, private entities, family offices, and companies. Certified Anti-Corruption Manager from The American Anti-Corruption Institute

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