Company / Analytics

Analytics, 15 February 2020

Week 7 in Brief

The EU has added The Cayman Islands, a British overseas territory on its tax haven blacklist. The declaration, coming less than two weeks after the UK’s withdrawal from the bloc, is a clear indication of the war ahead in the EU – UK financial relationship. Furthermore, it indicates the UK’s loss of influence in EU decision making at a time when the EU and the UK are engaged in negotiations regarding London’s access to EU financial markets – the equivalence regime; equivalence grants EU institutions access to a non-member country’s financial markets provided that nation’s rules are equivalent to Brussels regulations. The Cayman Islands will join Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three US territories of American Samoa, Guam, and the US Virgin Islands, on the “non-cooperative” list. The island of Mauritius was removed from the list just a month ago.

Could an independent Scotland rejoin the EU? Yes. If the Scots voted for independence, Scotland would probably apply to rejoin the EU. But despite its unique history, it would have to follow the normal path to EU accession. However, the Scots are not keen on the euro and fisheries would be a flashpoint. There is increased goodwill within the EU towards Scottish independence after the UK’s withdrawal from the Union. Some analysts note that “While the Scottish government would be well-advised not to seek opt-outs of the kind the UK had; Scotland would have the potential to become a successful EU member”.

Should the market be worried about baby boomers? Baby Boomers could cause the next stock market crash. Reason? They are over-allocated in equities with trillions invested in stocks. Kiril Nikolaev writes that baby boomers know that time is not their best ally. They have gone all-in stocks because they can’t rely on their pension alone. But with retirement looming, they aren’t going to stick around when panic hits the market. Their exit could spell doom for the longest bull market in history when they panic sell.

Coronavirus might be here to stay. Over 67,000 people have been infected globally, the vast majority in mainland China while the death toll has reached over 1500. Medical workers have become more at risk, with over 1,700 infected, of which six have died. Global health experts led by the World Health Organisation are expected to land arrive in China this weekend.

European markets closed mixed Friday as investors monitored China’s coronavirus epidemic and a slew of corporate earnings. There are fears of a recession in Europe after Germany’s economy flattened at the end of 2019, and now there are worries that the virus could slam exports to China. But even though the coronavirus outbreak has closed factories, curbed spending and disrupted supply chains in the world’s second-largest economy – China, across the Atlantic, U.S. stocks have held close to records. Money managers are confident the disease will be contained.

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