Daily Update: January 21, 2022

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Start each business day with our analyzes of the most pressing developments affecting the markets today, along with a curated selection of our latest and most important news on the global economy.

The coronavirus pandemic has created a COVID-19 economy, defined by changing consumer behavior, accelerated digitalization, renewed urgency to address climate change, and heightened awareness of future market risks. This has transformed the global insurance industry by reinforcing the importance of technology and the need to prepare for unprecedented events.

“As greater visibility emerges in a post-pandemic world, insurers will be challenged to reassess how they interact with customers, distributors, investors and other key stakeholders. industry leadership in driving transformational change from an environmental, social and governance perspective will continue to grow across all geographies,” S&P Global Market Intelligence said in its 2022 outlook for the insurance sector. “These changes are occurring against a backdrop of new and evolving financial, geopolitical, legal, technological and climate-related risks, many of which will require the development and implementation of different pricing, underwriting, booking and distribution. It’s an environment that will reward the nimble, penalize the ill-prepared, and threaten the continued relevance of those unwilling to break their status quo.

2022 is likely to produce strong capital market and trading activity, slowing growth corn stable credit quality, and a stronger emphasis on underwriting for the insurance industry as it continues meeting the challenges of the pandemic and get ready for new operating conditions and future risks, according to S&P Global Ratings. More insurance companies could turn to technological transformation to increase their market share, whether offering coverage of new decentralized finance assets or use data to severity and frequency price in the coverage of operating losses.

Last year, insurers picked up the slack market cap growth, raise billions from capital markets, and enjoy a jump in bonus earnings and increased revenue, but struggle with historic losses as a result of extreme weather events. In 2020, global insurance markets largely endured asset risk, capital market volatility and lower premium growth prospects.

After the insurance industry has adjusted to the plethora of unprecedented events that have rocked markets over the past three years, market participants are warning against complacency. Building insurance solutions for tail risks “gives you the illusion of certainty that you can’t have, that the world just doesn’t offer,” said Peter Giger, chief risk officer of Zurich Insurance Group. , to S&P Global Market Intelligence in an interview.

Today is Friday, January 21, 2021, and here’s today’s essential intelligence.

Economy


Economic Research: Macroeconomic Update

The omicron variant of COVID-19 has spread rapidly but its economic impact appears to be limited. The link between the virus and economic activity has weakened throughout the pandemic as policymakers and economic agents adapt. Additionally, the omicron variant is less lethal than earlier variants and appears to have a shorter lifespan. Cases are already declining in some areas.

—Read the full article from S&P Global Ratings

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Capital markets


Watch: Financial Markets Outlook – January 2022

In the first Capital Markets View of 2022, Taron and Chris recap a banner year and make some predictions for the year ahead. Loan issuance broke many records in 2007 globally, and the issuance mix was strong, with a high percentage of deals focused on M&As. The pipeline continues to look solid in the near term, including some large deals. They also talk about the continued rise in direct lending, high yields in the secondary lending market, a record year for CLO issuance with a good pipeline again, and finally how investments in non- CLO could increase in 2022.

—Read the full article from S&P Global Ratings

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International trade


South Korea, GCC agree to discuss FTA to reduce crude trade costs

South Korea has agreed with the six-member Gulf Cooperation Council to resume talks on their free trade deal, which could help the world’s fifth-largest crude importer increase its purchases of sour crude in the Middle East in a cost-effective manner, the Department of Energy said on Jan. 20. Commerce Minister Yeo Han-koo and GCC Secretary General Nayef Falah M. Al-Hajraf signed the joint statement in Riyadh, under which the two sides will start negotiations in the first quarter of this year with the aim of to reach a formal FTA agreement “as soon as possible”, according to the Ministry of Trade, Industry and Energy.

—Read the full article from S&P Global Dishes

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ESG


Moscow preview: Russia aims to play a major role in global hydrogen markets

Russia plans to leverage its large natural gas reserves, existing infrastructure and cooperation with foreign partners to take a significant share in the global hydrogen market. Targeting 20% ​​market share by 2030, Russia is expected to ramp up production over the next five years. S&P Global Platts Analytics projects Russian hydrogen production of 3.4 million tonnes of ammonia and 2.7 million tonnes of refining in 2021. It expects these volumes to increase to 3.8 million. tonnes and 3.1 million tonnes, respectively, by 2025.

—Read the full article from S&P Global Dishes

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Energy and raw materials


Biden White House under pressure again as oil prices climb towards $90/B

The White House again faces few options to respond to high oil prices as they surge toward $90/b just two months after the Biden administration tapped emergency crude stockpiles. Analysts expect the administration to look at the usual bag of policy and rhetoric that erupts when domestic fuel prices rise, including urging U.S. and OPEC drillers to pump more, tapping again the Strategic Petroleum Reserve, pushing anti-OPEC legislation in Congress, pushing the Federal Trade Commission to continue investigating price gouging and potentially bringing back talk of U.S. crude export restrictions.

—Read the full article from S&P Global Dishes

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Technology and media


Billion-Dollar Movies Are Returning, Signaling A Shift In Studios’ Streaming Strategy

The return this winter of a billion-dollar-plus title to theaters proved that the box office is still just as relevant for big-budget franchises, even as distribution strategies for smaller films remain in flux. . “Spider-Man: No Way Home” by Sony Group Corp. was the first film in two years to break the 10-figure mark. While an encouraging sign of recovery, this unique success comes after several pre-pandemic years when studios and theaters spread ticket sales across several billion-dollar movies a year.

—Read the full article from S&P Global Market Intelligence

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Written by Molly Mintz.

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