金融危机对欧美电信的影响

1、Global Financial Crisis: Europe and USAnalysis, Telecoms Industry Impacts and Outlook on ChinaPrepared for:24st November, 2021Boston London Kansas City Shanghai Washington, DCAgendaTodays discussionGlobal Financial Crisis AssessmentImpact on Telecom industryImpact and Perspective on ChinaOverviewGlo

2、bal Financial Crisis AssessmentGlobal ImbalancesHigh debt levelsLack of transparency on riskDecline in housing market Commodity price spikesFears of inflationCausesCredit crunchBank collapsesStock markets plummetUnemployment on the riseLoss of consumer confidence and spending cutLoss of business con

3、fidenceRecessionary pressuresEffectsBank rescue packagesFiscal stimuliInterest rate dropsInstitutional measures ResponsesWill be presented in terms of:GDPInflationLabourFiscal and Current Account BalanceOutlookAgendaTodays discussionGlobal Financial Crisis AssessmentCausesEffectsResponsesOutlookImpa

4、ct on Telecom industryImpact and Perspective on ChinaCausesHuge global imbalances destabilise economies, currencies and interest ratesUnited States, as the worlds greatest power, is the worlds greatest borrowerThe buildup in U.S. net foreign debt is substantially mirrored in reserve accumulation by

5、emerging marketsAccount deficitSpain, UK and Italy are the 3 European countries with the highest account balance deficitAccount surplusChina has the largest surplusIn general, many more countries have deficits than surplusesOthers include Japan, many Asian emerging market economies, and increasingly

6、 oil-producing countries, including Russia as well as countries of the Middle EastThe disorderly correction of account balances via abrupt declines in USD and rise in US interest rates, threatens global prosperity and growthCommentsCausesOver the last decade, escalating consumer credit has underpinn

7、ed banking successLending to households has continued to expand at strong ratesHousehold debt is only around 90% of income in the euro-zone. That compares very favourably with 140% in the US and 160% in the UKSince the millennium, consumers in the UK and the US have accrued significant household deb

8、t with respect to gross dispensable incomeThis debt has been a great source of income for banks, founded on the belief that modern capital markets had become so much more advanced than their predecessors that banks would always be able to trade debt securitiesThis in turn encouraged banks to keep lo

9、wering lending standards, since they assumed they could sell the risk on. Abundant market liquidity led some firms to overestimate the markets capacity to absorb risk. The same buoyant environment resulted in market pressure for high returns and high levels of competition among financial firms, feed

10、ing back into the cycle of easy creditCommentsUp to April 08CausesMore recently, lending to the private sector has accelerated while lending to households has deceleratedFurther growth in private sector credit in EuropeWhile lending growth to households has continued on a modest downward trend, bank

11、 lending to firms is still accelerating and reached a new series-high of 14.8% in Feb 08However the strength of bank lending may simply indicate that firms want their assets to be as liquid as possible in the current circumstancesCommentsUp to April 08Asset-backed securitiesNon-agency mortgage-backe

12、d securitiesUS Securitisation Issuance ($bn)CausesComplex mortgage-backed securities and CDS issuance has undergone rapid proliferation since the early 2000s, creating a huge, hidden global riskCommentsSource: Financial Times “Into the StormCredit default swaps (CDS) are essentially insurance contra

13、cts against the risk that companies and other creditors will fail to pay back loansIn CDS should make the financial system safer because it allows investors to offset the risk of holding corporate bonds and other fixed-income securitiesCDS issuance exploded during the mid-decade credit boom, with in

14、surance provided not just for corporate or government bonds but also the complex mortgage-backed securities that underpinned a surge in house pricesNow the fear is that with so many institutions stretched for money, CDS issuers may not be able to fulfill contractual obligations to pay up in the even

15、t of defaultCausesCDO issuance has greatly increased during the last few years, creating immediate wealth for banks. But these complex securities were not accurately valuedABS: Asset-Backed SecuritiesCDO: Collateralised Debt ObligationMBS: Mortgage-Backed SecuritySources: JP Morgan Chase; Inside Mor

16、tgage Finance; European Securitization Forum; IMF staff estimates and calculationsA CDO is a security backed by a pool of various types of debt, which may include corporate bonds sold in the capital markets, loans made to corporations by institutional lenders, and tranches of securitisations.CausesT

17、hen weakening of the US housing market begun in 2006 where 23% of home loan market were sub-prime mortgages at end of 2006 many with adjustable interest ratesDecline in real estate then spread to the rest of the worldNote: House prices deflated by the Consumer Price IndexReal House Prices: Year-on-y

18、ear Percentage ChangeReal House Prices: Year-on-year Percentage ChangeUS housing market troubles continueExcessive supply in the housing market with vacancy rate and home inventory at a near all time high although there was a lift in new home sales in October15%-16% annual drop in prices where downw

19、ard pressure on housing prices will continue into 2021 Potential buyers face problems with tighter credit and higher mortgage ratesThe housing markets have long way to go with more price adjustment in the UK and continental Europe countries Tighter credit will affect potential buyers ability to purc

20、hase housing US housing price adjustment started in 2006UK housing price adjustment started in 2007CommentsCommentsSource: National sourcesCausesCommodity price spikes are probably the result of activity by investors seeking a haven from rising inflation and the weak dollarSource: VoxEU.org, marketw

21、atch CommentsWhile credit and stock markets and confidence in the US economy plunged, the commodities markets soaredTraditionally commodities demand overlaps tightly onto economic activityThis relationships has obviously broken down as the commodities surge followed the unmistakable economic slowdow

22、nCommodity price spiking may be the result of portfolio shift against liquid assets by sovereign investors, sovereign wealth funds, partly triggered by lax monetary policy, especially in the USPension funds and other institutional investors are driving commodity prices to the moon by allocating mass

23、ive amounts of money to energy and agricultural investments and sidestepping regulatory limits on big speculative betsHigh costs can be traced to speculative buying as investors seek a haven from rising inflation and a weak dollar as well as weak suppliesRising prices lead to inflation, furthering t

24、he economic downturnCausesThe surge in commodities has pushed up headline inflationSource: IMF, World Economic Outlook, Eurostat, Bloomberg, ECB, Haver AnalyticsInflation in Emerging EuropeHeadline and Core InflationCommentsThe surge in commodities directly impacts on headline inflation by affecting

25、 the consumer price indexThere are also second round effects in workers demand higher wages to compensate for loss of purchasing power, and if firms pass on higher costs of production to price of others goodsSince July 2007, headline inflation rocketed in the Euro area, which was subsequently follow

26、ed by the UKOverall HICP Inflation Rate (ECB measure for EU)CausesFears of inflation have kept interest rates upInflation Expectations in the Euro Area and UK CommentsWith so much media coverage of the subprime mortgage issue, the credit crunch and the impending financial crisis, inflation expectati

27、ons were way above actual inflation itselfInflation is extremely low by historical standards. Most of the volatility in headline measures of the consumer price index has been caused by extreme relative price changes in oil and food. Relative price changes are very important they are market signals f

28、or investment and consumption but they are not inflationThis was recognised by Mervin King, governor of the Bank of England, in his September letter to the UK chancellor: “The pick up in commodity, energy and other import prices reflects a change in these prices relative to the prices of other goods

29、 and services. This is not the same as a generalised rise in prices and wages caused by rapid growth in the amount of money spent on the economy.However, European banks did not make this fact clear to the publicTherefore, the fear of inflation has partly justified the maintenance of high interest ra

30、tesSource: IMF,Bloomberg, ECB, Haver Analytics, Financial TimesaAgendaTodays discussionGlobal Financial Crisis AssessmentCausesEffectsResponsesOutlookImpact on Telecom industryImpact and Perspective on ChinaEffectsCredit has dried up Interbank rates are up and banks are changing their lending standa

31、rdsSpreads of 3 Month Interbank Rates over Expected Policy RatesCommentsThe credit crisis has led to the Euribor to mark its highest level in history, reaching 5.5%, a historic peak in its 10 years of life that, if maintained during the month of October, would result in the mortgages underwritten a

32、year ago rises more than 900 euros per yearIn October 2007, the Euribor stood at 4.60%, bringing the share of half a mortgage of 150,000 euros to happen 25 years from around 845 euros to more than 920, almost 80 euros more per monthEuribor, the Euro Inter-bank offered rate, for 3-month lending betwe

33、en banks in the Eurozone, fell slightly today but remains at an elevated level signalling continued stress in the credit marketsThe issue the ECB faces is that decreasing the base rate has little effect on Euribor due to lack of confidence in the banking sectorEffectsBank credit default swap rates b

34、egun increasing in 2H07 and sky rocketed during the banking crisis, clearly indicating the stress in the financial market Widening credit spread between corporate and government bonds making all corporate financing expensive Source: JP Morgan, Datastream1. On average of 5 year credit default swap ra

35、tes on banks senior debt2. Merrill Lynch corporate BBB rated bonds. Spreads based on avg. yields for 5-7 years and for 7-10 yearsBank Credit Default Swap rates1Spread in the US rising to almost 7% Credit Spreads between Corporate and Government Benchmark Bonds2EffectsConsumer lending is being heavil

36、y restrictedChanges in Credit Standards for Loans and Lending to EnterprisesComments1 / Net percentage of banks reporting tightening of credit standardsThe cost of borrowing has increased significantly, despite dramatic base rate cuts in the last few monthsIn the UK, since 1 August 2021, there have

37、been numerous increases to rates and charges on cards for new customers including:16 cards increasing purchase APRs 12 cards increasing cash per annum rates 11 cards increasing balance transfer fees7 cards increasing cash advance fees7 providers reducing the number of interest free days4 cards incre

38、asing foreign usage feesOn top of this, some providers have slashed their 0% balance transfer deal terms, so consumers looking to reduce their outgoings may struggle to find a deal that they can repay before the 0% period expiresIn the last three months alone, the average rate across all cards has i

39、ncreased from 16.8% to 17.2%. Just like on mortgages, card companies are factoring in a much bigger margin for the risk of consumers defaulting, so rates are going upCollapses of financial institutions in US and Europe are perhaps the most visible signs of a crisis that have spiraled into a global r

40、ecessionSource: ForresterMajor EventsSubprime mortgagesCollateralizeddebt obligations on subprime mortgagesMoney marketmutual fundsCommercialpaperCredit default swapsAugust 2007 -June 2008January-Sept.14, 2008Sept. 16.-Oct. 2008Sept. 17.-Oct. 2008Sept. 17.-Oct. 2008Major Financial Institutions Colla

41、psesEffectsEffectsMajor financial institutions have collapsed, been acquired or been nationalisedBank Date Status Bear Stearns16 MarTaken over by JP Morgan for $2 a shareFannie Mae 07 Sep Nationalized for up to $100bnFreddie Mac 07 Sep Nationalized for up to $100bn Lehman Bros 15 Sep Collapsed and w

42、ent into administrationMerrill Lynch 15 Sep Taken over by Bank of America AIG 16 Sep Part-nationalized up to $85bnHBOS 18 Sep Taken over by Lloyds TSBWaMu 25 Sep Collapsed and sold to JP MorganFortis 28 Sep Nationalized with help of BNP ParibasBradford & Bingley 29 Sep Part nationalized / Acquired b

43、y Santander Wachovia 29 Sep Taken over by CitigroupGlitnir 29 Sep Nationalized Hypo Real Estate 06 Oct Rescue package ($50bn total to credit line)RBS 13 Oct Part-nationalized (5bn preference shares)Lloyds TSB 13 Oct Part-nationalized EffectsWe observed a sharp decline in share prices in 2Q-3Q08 when

44、 with troubles in financial sector starting in 2H07 when the subprime mortgage troubles began to surfaceSource: DatastreamUS Share PricesEuro Area Share Prices(Share price indices, January 1, 2007 = 100)(Share price indices, January 1, 2007 = 100)= Non-financial Sector= Financial SectorEffectsConsum

45、er prices in Europe for food and energy soared, primarily due to commodity price increasesSource: OECD, CPIsEuropean Consumer Prices Indices: % Change on Same Period in Previous YearEffectsUnemployment has hit some Euro countries much harder than others, but has not risen significantly across the EU

46、 as a whole yetSource: OECD, CPIsCommentsUnemployment across the euro area has barely moved in the year since the credit crunch first bit, whereas it has risen in Britain and by even more in America. These countries have faster underlying growth than the euro area, so they lose more jobs when growth

47、 is sluggish. The euro area also has a less flexible labour market, so although unemployment is generally higher, it rises less rapidly in a downturnUnemployment has jumped in Spain and Ireland, the two countries hit hardest by the property bust and the scarcity of mortgage credit. Italys travails s

48、uggest that job losses are inevitable even in rigid economies, if a slump is deep enough. It is only a fall in unemployment in Germany that has kept the euro areas overall level stableThe “financing gapwhat firms need to borrow in order to maintain their spendingis around 5% of GDP in France and mor

49、e than 8% of GDP in Spain. The pain in Spain is already apparent. French firms are often slow to cut costs but eventually cave in, says Mr. Owen. A dearth of bank credit could now force savage retrenchment. But Germanys cash-rich firms are under less pressure to prune budgets. Indeed, Siemens, an en

50、gineering giant, plans to use its cash pile to provide finance to some of its less well-heeled customersEffectsBusiness and consumer confidence plummeted in the Euro AreaCommentsCommentsAdditional Sources: The EconomistThe latest leg of the downturn appears to be broad-based, as the credit drought c

51、ramps consumer spending, business investment and exports. Consumers were in retreat long before the recent assaults on their fragile confidence, demonstrated by shrinking household spending in Q1 and Q2 2021The recent fall in business confidence may have more to do with anxiety about customer spendi

52、ng than worries that banks will cut credit lines. Some industries are also more likely to suffer more than others. Lenders may strengthen ties with their more stolid customers (manufacturers, utility companies and so on) at the expense of retailers, property developers and private-equity firmsCar sa

53、les are a key indicator of consumer spending. The latest data show the European car industry is suffering badly due to the downturnNew car sales in Europe fell by 14.5% in October, the sixth monthly fall in a row, according to the European carmakers association, the AceaIreland and Spain both suffer

54、ing badly from the bursting of a housing bubble saw dramatic falls with Irish sales halving and Spanish sales down 40 percentEuropes biggest car market, Germany, was down 8.2 percent from weak sales a year ago. France was down 7.4 percent, Britain dropped 23 percent and Italy 18.9 percentGeneral Mot

55、ors said that, because of difficult financial circumstances, it would seek governmental support in foreign countries where it has significant operations and holdings, such as GermanyGeneral Motors is also demanding state aid from five German states where it manufactures its European brand, Opel (whi

56、ch sells under the Vauxhall badge in the UK)CommentsEffectsEffectsThere is higher unemployment across the globe with US unemployment rate rising to 6.5% in October and more layoffs seems to be aheadMany forecast unemployment is still on the rise where US unemployment rate could get as high as 8% Sou

57、rce: OECD (Main Economic Indicators database) Unemployment RatesAfter years of low and lowering unemployment there has been a sharp increase in unemployment Beginning in August payroll employment has declined by 217K a month compared 75K the first seven months of 2021CommentsHigher unemployment with

58、 expectations of further layoffsUndermines consumer confidence and their willingness to spendEffectsU.S. consumer confidence declined sharply October, to a 30-year lowAnxiety about unemployment, worsening financial crisis, and falling stock market spurred the high fall after recovery in SeptemberUS

59、Consumer Confidence IndexUS consumer have gotten significantly more nervous about the direction of the US economy in the past monthMuch lower value than in the 90 recession and even in the 80-82 periodThe fall in consumer expectations was even more61.5 to 35.5 indicating that consumer think the dura

60、tion of recession is lengthening Source: The Conference Board Consumer Confidence Index based on survey of 5,000 US householdsCommentsThe lowest value of US consumer confidenceEffectsConsumers are sharply cutting spending, US retail sales plummet 2.8% in October the largest fall on record Weaken in