THE EURO-MEDITERRANEAN INVESTMENT FORUM - Investments in the Euro-Med area in the post-Covid era September 1, 2020 Speaker: Luca Colussa, Generali ...
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THE EURO-MEDITERRANEAN INVESTMENT FORUM Investments in the Euro-Med area in the post-Covid era September 1, 2020 Speaker: Luca Colussa, Generali Investments Partners S.p.A. Società di gestione del risparmio
2
Covid-19: Big 3 and the Balkans the most affected countries so far
Covid-19: Cases and deaths
per 1 million population, data as of Aug 21
1000 ITA ESP
FRA
BIH
100 SVN ALB MNE
EGY TUR ISR
Deaths
HRV
GRC CYP MLT
10
SYR Euro Med
TUN World
1
100 1000 10000
Cases
Source: Datastream, August 21, 20203
Fatality rate drifting lower, but new cases in the Balkans in the spotlight
Covid-19: New cases and deaths
per 1 million population, last 4 weeks, data as Aug 21
100 MNE
ALB ISR
BIH
SVN HRV
10 EGY TUR ESP
ITA
Deaths
SYR
GRC FRA MLT
1 CYP
TUN Euro Med
World
0
50 500 5000
Cases
Source: Datastream, August 21, 20204 Positivity rate: A better metric to track the pandemic Source: https://ourworldindata.org/coronavirus-testing, August 21, 2020
5
Unprecedented collapse in real GDP as lockdown and travel restrictions
hit output and tourism receipts
Sharp revision in real GDP forecasts
Source: IMF WEO April 2020 vs October 2019
0
-2
EGY
IMF revision in real GDP
growth for 2020 (in %)
-4
-6 TUN MLT
MAR BIH
-8 DZA TUR
ISR
ALB
-10 SVN CYP
HRV MNE
-12 ITA
GRC
-14 LBN
FRA
-16 ESP
-18
0 2000 4000 6000 8000 10000 12000 14000
Covid-19 cases per million population, since inception
Source: IMF World Economic Outlook, Datastream, August 21, 20206
Tourism receipts a key economic driver in the region, second wave of
Covid-19 a main risk to the recovery
Tourism travel receipts: 2019
Source: IMF, % of GDP
25
20
15
10
5
0
MNE HRV ALB LBN CYP MLT GRC MAR ESP SVN BIH TUN EGY TUR ITA FRA ISR
Tourism receipts
Source: IMF, Datastream, August 21, 20207
Public debt set to rise further, sustainability concerns to be tackled when
the Covid-19 crisis ease
General government debt ratio
Source: IMF World Economic Outlook, in % of GDP as of end-2019
200
180
160
140
120
100
80
60
40
20
0
EU countries Other Med countries Median Median
Source: IMF World Economic Outlook, Datastream, August 21, 20208
Agencies cut credit assessment, several countries face downside risks
Second best
Moody's S&P Fitch
rating
Outlook from positive to
Croatia BBB- - -
stable
Outlook from positive to
Cyprus BBB- - -
stable
Outlook from positive to Outlook from stable to
France AA -
stable negative
Outlook from positive to Outlook from positive to
Greece BB- -
stable stable
Downgrade from BBB to BBB-
Italy BBB- - -
(stable outlook)
Outlook from positive to
Malta A - -
stable
Slovenia A - - -
Spain A- - - -
Albania B+ - - -
Outlook from positive to
Bosnia & Herz. B - -
stable
Egypt B - - -
Outlook from positive to
Israel A+ - -
stable
Lebanon D Downgrade to C Downgrade to D Downgrade to RD
Outlook from positive to Outlook from stable to
Montenegro B+ -
stable negative
Outlook from stable to
Morocco BBB- - -
negative
Downgrade from B+ to B
Tunisia B - -
(stable outlook)
Outlook from stable to
Turkey B+ - -
negative
Source: Bloomberg, August 21, 2020. Algeria, Libya and Syria are not rated.9
2020 NGEU: € 230 bn in grants for EU Med countries (... and more loans
available). IMF, EIB and other Supranationals support EM countries
2020 Next Generation EU: Grants
Source: EU Commission, Bruegel, Datastream. % of GDP
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Estonia
Latvia
Italy
France
Belgium
Denmark
Greece
Cyprus
Poland
Finland
Sweden
Bulgaria
Lithuania
Malta
Austria
Slovenia
Germany
Ireland
Slovakia
Romania
Portugal
Hungary
Netherlands
Luxembourg
Croatia
Spain
Czechia
Euro Med Others
Source: EU Commission, Bruegel (https://www.bruegel.org/2020/07/having-the-cake-how-eu-recovery-fund/), Datastream, August 21, 202010
ECB and EU Recovery Fund helped ease tensions on sovereign spreads
Sovereign spreads: EU Med vs Other Med
5-year bond spread vs Germany (rebased Jan 31, 2020 = 100)
250 250
200 200
150 150
100 100
Nation-wide EU Commission
lockdown in proposal on
50 50
Italy Recovery Fund
0 0
02/20 03/20 04/20 05/20 06/20 07/20 08/20
EU Med Other Med
Source: Datastream, August 21, 2020
EU Med = Croatia, Cyprus, France, Greece, Italy, Slovenia11
Balkans and MENA spreads still rather wide compared to pre-crisis levels
Recovery Fund a game changer for spreads
% change in 5-year bond spread vs Germany (4-year bond for Israel,
Morocco and Tunisia. Lebanon defaulted)
250%
200%
150%
100%
50%
0%
-50%
Last (Aug 31) vs Jan 31 May 15 (before Recovery Fund) vs Jan 31
Source: Datastream, August 21, 2020Thank You. The information contained in this document is only for general information on products and services provided by Generali Investments Partners S.p.A. Società di gestione del risparmio. It shall under no circumstance constitute an offer, recommendation or solicitation to subscribe units/shares of undertakings for collective investment in transferable securities or application for an offer of investments services. It is not linked to or it is not intended to be the foundation of any contract or commitment. It shall not be considered as an explicit or implicit recommendation of investment strategy or as investment advice. Before subscribing an offer of investment services, each potential client shall be given every document provided by the regulations in force from time to time, documents to be carefully read by the client before making any investment choice. Generali Investments Partners S.p.A. Società di gestione del risparmio shall in no event be liable for any damages or losses resulting from or caused by an improper use of the information contained in this press release or by defects or omissions in its contents. Certain information in this publication has been obtained from sources outside of Generali Investments Partners S.p.A. Società di gestione del risparmio. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof. Generali Investments Partners S.p.A. Società di gestione del risparmio relieves itself from any responsibility concerning mistakes or omissions and shall not be considered responsible in case of possible damages or losses related to the improper use of the information herein provided. The position and opinion of Generali Investments Partners S.p.A. Società di gestione del risparmio may change over time. More information on Generali Investments Partners S.p.A. Società di gestione del risparmio is available on our website www.generali-investments.com/. .
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