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IMF Working paper-Fiscal Vulnerabilities and Risks from Local Government Finance in China
January 15, 2014--Summary: China weathered the global financial crisis better than most, thanks to a large and timely stimulus. This stimulus, however, was mainly in the form of off-budget infrastructure spending and thus not visible in the headline fiscal data. We construct a time series for the augmented fiscal deficit and debt-augmented to include off-budget activity-that better illustrates the counter-cyclical role of fiscal policy.
The results also show that the augmented fiscal deficit and debt are both considerably higher than the headline government data suggest. Nonetheless, at around 45 percent of GDP, the augmented debt is still at a manageable level.
view the IMF Working paper-Fiscal Vulnerabilities and Risks from Local Government Finance in China
Source: World Bank
China's finances weaker than data show, IMF report says
International Monetary Fund warns of 'macroeconomic shock' unless Beijing comes up with a better system to monitor local government debt
January 15, 2014--The mainland's fiscal position is weaker than official data shows but not significant enough to cause alarm, the IMF said in a report released yesterday
The International Monetary Fund also warned that the mainland was now "more vulnerable to a macroeconomic shock" because of its higher debt and bigger deficit.
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Source: South China Morning Post
S.Korea plans price band limits on futures, options trading
January 15, 2014--South Korea's financial regulator said on Wednesday that it plans to impose price band limits on futures and options trading after a local brokerage suffered crippling losses on erroneously placed options transactions last month.
Unlisted Hanmag Securities' capital was wiped out after the brokerage erroneously placed a series of transactions on KOSPI 200 options in December, putting it in serious jeopardy. Although Hanmag is a small brokerage and the orders did not have serious consequences for the broader market, the regulator is seeking to prevent similar incidents from recurring.
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Source: Reuters
ETF FUM hits $10 billion
January 14, 2014--The Australian exchange-traded fund (ETF) market has reached the $10 billion mark in assets under management (AUM), after about $235 million of new money flowed into the market in December.
According to the BetaShares "Australian ETF End of Year Review" for 2013, the market recorded its highest ever annual growth over the course of the year,with FUM increasing by $3.5 billion, or 55 per cent, to end the year at $10 billion.
BetaShares managing director Alex Vynokur said international equities emerged as the key trend for the year, with about $1 billion flowing towards funds offering exposure to developed equities markets.
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Source: Financial Observer
China, Hong Kong in 'Final Stretch' on Fund Mutual Recognition
January 14, 2014--Hong Kong is in the "final stretch" of talks with China on mutual recognition of funds, which will pave the way for cross-border sales, said Alexa Lam, deputy chief executive officer at the city's Securities and Futures Commission.
Both sides reached broad agreement on the scope of the project, including what funds will qualify, eligibility requirements of the managers, disclosure and investor protection, Lam said at a financial forum in Hong Kong today.
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Source: Bloomberg
Commercial Banks May Issue Corporate Bonds at SSE to Replenish Capital
January 14, 2014--On November 8, 2013, the China Securities Regulatory Commission (CSRC) and the China Banking Regulatory Commission (CBRC) jointly issued the "Guiding Opinions on Commercial Banks Issuing Corporate Bonds to Replenish Capital" (the "Guiding Opinions" for short), which allows listed and to-be-listed commercial banks to issue corporate bonds at exchanges to replenish capital.
The Shanghai Stock Exchange (SSE) has also recently released the "Notice on Commercial Banks Issuing Corporate Bonds to Replenish Capital and the Issues Related to Listing, Trading and Transfer of the Bonds" (the "Notice" for short), which makes specific provisions on listing and trading, transfer, information disclosure, and other issues related to corporate bonds issued by commercial banks for capital replenishment at the SSE. The issuance of the "Guiding Opinions" and the "Notice" symbolizes that channels of commercial banks for capital replenishment have been expanded to the exchange markets, which is of positive significance for promoting the innovation of capital instruments in the banking sector and improving the integration of China's bond market.
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Source: Shanghai Stock Exchange
IMF Working paper-Potential Growth in Emerging Asia
January 14, 2013-- Summary: Using three distinct approaches-statistical filtering, production function, and multivariate model- this paper estimates potential growth for China, India, and five ASEAN countries (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) during 1993-2013.
The main findings include: (i) both China and India have recently exhibited a slowdown in potential growth, largely reflecting a decline of total factor productivity (TFP) growth; (ii) by contrast, trend growth for the five ASEAN countries has been rather stable and might even have increased marginally, with the notable exception of Vietnam;(iii) over the longer term, demographic factors will be much more supportive in India and some ASEAN economies than in China, where working-age population should start shrinking, with the overall dependency ratio climbing by the end of this decade.
Improving or sustaining potential growth calls for broad structural reforms.
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Source: IMF
Religare-Invesco targets offshore market
January 14, 2014--The firm is launching a feeder fund into its JV partner's pan-European equity fund,
while its is also focusing on sub-advisory for pending India-focused Invesco products internationally.
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Source: Asian Investor
PSU exchange-traded fund a weak bet for investors
Putting money in key PSUs a better option
January 13, 2014--The Centre has approved the plan to launch an exchange-traded fund (ETF) comprising 11 blue-chip stocks of public-sector undertakings (PSUs), despite the PSU basket consistently underperforming the benchmark indices. It hopes to raise Rs 3,000 crore through the fund this financial year.
However, a closer look at the numbers suggests putting your money in individual stocks of top PSUs might be a better investment option. Hypothetically, if the ETF was launched three years ago, its net asset value as of now would have shrunk a little more than 20 per; in comparison, the Sensex has risen five per cent during the period.
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Source: The Business Standard
Battle for retail trading volume heats up in Japan
January 13, 2014--JPX is due to begin introducing smaller tick sizes this week, while proprietary trading systems are making technology upgrades.
But do retail investors really care?
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Source: Asian Investor
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