SINGLE-PUBBLICAZIONE

Special Covid-19 Series, Issue #30

Autore : Action Institute

Data: 06-04-2021

Tipo: Other

Tematica: Action Institute

 

Hello, Action Institute Community!

 

While the COVID-19 pandemic is hurting the global economy, we at Action Institute aim at delivering a whole-rounded perspective, cutting through the noise.

 

Our weekly Special series approaches the effects of the virus from different perspectives: from medical facts to health policy, from economic policy to macroeconomic issues, from politics to financial markets, from technology to the impact on businesses, and more. We encourage our esteemed readers to provide us with feedback and suggestions.

 

This weekly issue proposes a selection of papers and articles focused on (i) Technology and (ii) Financial Markets.

 

 

TECHNOLOGY
“Technology is a word that describes something that doesn’t work yet.”, Douglas Adams

 “Innovation: Your launchpad out of the COVID-19 crisis” (McKinsey Global Institute, Laura Furstenthal, Martin Hirt and Erik Roth, March 18th, 2021). This research suggests that organisations that innovate through crises, by focusing on generating new growth rather than simply weathering the storm, significantly outperform over time. According to the authors, creating an innovation launchpad entails three core steps: reallocating towards the future, embedding flexibility, and hacking processes.

 “High-Tech Face Masks Aim to Step Up the Fight Against Covid-19” (WSJ, Suzanne Oliver, March 27th, 2021). According to this article, masks for healthcare workers, and also those marketed to consumers, will undergo three main technological innovation in the near future. From being endowed with sensors giving feedback on fit and functionality, through their ability to instantly diagnose the presence of diseases, to even being capable of actively neutralising viruses, these face mask prototypes will contribute to more effectively fight the spread of diseases in the future.

 “Bright side of the moonshots” (The Economist, March 27th, 2021). This column explains how the biomedical technologies brought together by COVID-19 will transform human health. In particular, the application of genetics to medicine, in a systematic and transformative way, would allow scientists to track the spread of diseases, but also to understand how to cure and prevent them.

FINANCIAL MARKETS
“Markets are moved by animal spirits, and not by reason.”, John Maynard Keynes
 “Analysis of the developments in EU capital flows in the Global context” (Ceps, Cinzia Alcid et al., March 4th, 2021). This report presents an analysis of the main trends and developments in global and EU capital movements up to 2019 and the challenges brought about by the COVID-19 pandemic. The study analyses in detail the intra and extra EU flows, focusing on foreign direct investment volumes and counterparties as well as on the international role of the euro, by looking at the demand for euro reserves. It thus provides several implications from the policy perspective.

 “The impact of COVID-19 on capital markets, one year in” (McKinsey Global Institute, Chris Bradley and Peter Stumpner, March 10th, 2021). This study investigates the impact of the COVID-19 pandemic on different sectors of the world economy. By looking at market returns data of 5,000 of the world’s biggest companies, the analysis shows that the pandemic has led to an increased dispersion of returns across, as well as within, sectors, with losers notably belonging to air travel and real estate, and winners in pharma and consumer durables. COVID-19 is also shown to have accelerated pre-pandemic trends, rather than reverting them, with companies operating in sectors such as high tech and medical technology further increasing their market capitalization.

 “Dash for cash’ versus ‘dash for collateral’: Market liquidity of European sovereign bonds during the Covid-19 crisis” (Vox.eu, Emanuel Moench, Loriana Pelizzon and Michael Schneider, March 23rd, 2021). The following article explores the deteriorations in sovereign debt market liquidity which occured in both the US and the EU during the COVID-19 pandemic. While the liquidity crisis in the US was driven by a ‘dash for cash’, that in the EU appears to be caused by a  ‘dash for collateral’. The article suggests some differences between the two regions, as well as variations across European countries.

 “Preparing for a wave of non-performing loans: Empirical insights and important lessons” (Vox.eu, Johannes Kasinger et al., April 1st, 2021). Similarly to the 2008 financial crisis, the COVID-19 pandemic brought about high levels of non-performing loans. The following article provides empirical insights into their current levels in Europe, and draws lessons from the previous financial crises for their effective treatment. It highlights the importance of early and realistic assessment of loan losses to avoid adverse incentives for banks. The authors add that secondary markets for loans would help in this process and further facilitate bank resolution, as laid down in the Bank Recovery and Resolution Directive.

Credit

Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover […]

Health

Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization […]

Innovation

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker […]

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein […]