Report on expected developments – developments in the operating environment
Deutsche Börse Group anticipates that the global economy will grow moderately during the forecast period. In the case of the emerging markets, the Group expects that countries with a current account surplus will expand at an above-average rate. Due to cyclical as well as structural factors, these countries will no longer be able to match the high growth rates seen in the past. Furthermore, the Group expects the economies of industrialised nations to recover slowly following a series of challenging years in the aftermath of the financial crisis, with economic growth picking up slightly over the previous years. Looking at Europe, the Group expects an improvement of the economic situation, driven by developments in Germany and France, the two largest economies. Against this generally positive background, we are assuming that market participants will have more confidence in the capital markets compared to the previous year, which was marked events, such as the Brexit referendum and the US presidential elections. However, current uncertainties could once again unsettle the markets. These include geopolitical crises, the development of commodity prices, monetary policy moves by the Fed in the US and the ECB in Europe, or a crisis of confidence in the growth of certain emerging market countries, especially in Asia. Regarding interest rate trends, the Group does not expect to see any fundamental departure from the current low interest rate policy in Europe. While the monthly volumes of the ECB’s bond-buying programme will be slightly reduced, the deposit rate is expected to remain at –0.4 per cent. Now that the positive effects during 2016 of this monetary policy on cash and derivatives markets trading volumes have largely run their course, the Group does not expect any such stimulus for 2017. The turnaround in US interest rates continued at the end of 2016, and we expect further hikes in 2017 – provided that the economy (and inflation) accelerate further.
In its economic development forecast for 2017 published in January 2017, the International Monetary Fund (IMF) predicts an increase of around 1.6 per cent in the euro zone and growth of around 1.5 per cent in Germany. Expectations for the United States are slightly higher than for the euro zone: the US economy is forecast to grow by around 2.3 per cent. The highest growth by far in 2017 – approximately 6.5 per cent – is again expected in Asian countries (and especially China), due to expected high domestic demand. Given the extremely varied estimates for the different economic regions, global economic growth is projected to be around 3.4 per cent in 2017.
Governments and central banks are currently working to enhance regulation of the financial markets so as to stabilise the financial sector and prevent future crises of the magnitude experienced. The measures planned, and in some cases already initiated, range from revising the legal framework for banking business and capital adequacy requirements through rules for clearing over-the-counter (OTC) derivatives transactions down to improving financial market supervision (for more information, please see the “Regulatory environment” section of the report on economic position). For Deutsche Börse Group’s customers, the ultimate impact of these far-reaching regulatory reform projects on market structures and business models is difficult to gauge accurately at present. Deutsche Börse anticipates that this uncertainty will continue to weigh on market participants’ business activities during the forecast period. For the Group itself, the various regulatory projects will have both positive and negative consequences. Overall, however, the Group sees the changing regulatory environment as an opportunity to expand its business further; see the report on opportunities for further details.
In addition to the structural opportunities arising from regulation, the Group expects to see further debate in the forecast period on the potential introduction of a financial transaction tax. The introduction of a financial transaction tax will continue to be pursued in 2017 by a number of EU Member States, which have formed an alliance to achieve greater cooperation. The introduction of such a tax would negatively impact Deutsche Börse Group’s business performance. Since the ten Member States concerned have been unable to date to reach agreement on the tax base, tax rates and technical collection and remittance methods, it is not possible to gauge the concrete impact on the Group’s business.