Global ETF News Older than One Year
Bond sell-off causes stress in ETF industry
June 21, 2013--A wave of selling caused many exchange traded funds to tumble below the value of their underlying assets as a bond market sell-off caused stress in the $2tn ETF industry.
ETFs track baskets of underlying assets, such as emerging-market stocks or municipal bonds, but discounts widened sharply on Thursday as dealers struggled to keep up with the sell orders.
Source: FT.com
Golden ratings era ending for emerging markets
June 21, 2013-A decade of improvement in emerging market credit ratings is coming to an end as higher borrowing costs and commodity price falls threaten to lay bare many countries' failure to reform during the good times.
Between 2007 and 2012 emerging economies earned almost 200 rating upgrades from the three main agencies, nearly half of them promotions to the top 'investment grade' category.
Given the weight investors still assign to credit ratings, that was a huge driver for much of the $8 trillion or so that has flowed to emerging stock and bond markets since 2004.
Source: Reuters
Thomson Reuters Global Equities Monthly Market Share Data Reports-May 2013
June 21, 2013--Trading is increasingly fragmented. Find out by how much and which venues in the Thomson Reuters summarised monthly reports.
Source: Mondovisione
FOA and FIA Announce Agreement to Combine Organisations under
June 21, 2013--The Futures and Options Association and the Futures Industry Association today announced an agreement in principle to combine their two organisations under one global structure and brand called FIA Global.
Under this agreement, FIA—with its affiliate FIA Asia—will form a confederation with FOA under FIA Global. This new structure will enable the associations to strengthen their influence on cross-border issues, substantially increase the coordination and information flow between regions, and provide a powerful global voice to express the views of FOA and FIA members.
Source: Futures and Options Association
European hedge funds struggle to break into U.S. market
June 20, 2013--European and Asian hedge fund firms are finding the potentially lucrative U.S. market impossible to ignore, but as tough as ever to negotiate.
Delegates at the annual GAIM conference in Monaco this week talked about the difficulties, particularly for small funds, in attracting new money to an industry once at the top of investors' wish lists.
Source: Reuters
Warming Climate to Hit South Asia Hard with Extreme Heat, Floods & Disease, World Bank Report Says
Effects expected from projected rise in temperature, worse effects if warming is bigger
June 19, 2013--An expected 2°C rise in the world's average temperatures in the next decades threatens South Asia's dense urban populations with extreme heat, flooding, and disease and could trap millions of people in poverty across the region, according to a new scientific report released today by the World Bank Group.
Depicting life in a not-too-distant future shaped by already present warming trends, the report warns that even 20 to 30 years from now, shifting rain patterns could leave some areas under water and others without enough water for power generation, irrigation or drinking. South Asia is already experiencing a warming climate, the report says, that can be seen in warmer periods in India, increasing variability of the monsoon rainfall, more heavy rainfalls and an increase in the number of droughts. Droughts will especially affect north-western India, Pakistan and Afghanistan.
Source: World Bank
SSgA Enhances Investment Capabilities to Meet Evolving Client Challenges
Dynamic Market Environment Drives Need for New Solutions
June 19, 2013--Investors today face increasingly complex investment challenges, according to State Street Global Advisors (SSgA), the asset management business of State Street Corporation.
Confronted with historically low rates, market uncertainty and the challenge of finding returns amid a complex regulatory environment, investors are demanding new investment approaches and strategies from asset managers. To help clients navigate these ever-changing market conditions, SSgA is strengthening its capabilities in both active and passive strategies.
"The markets of today are fundamentally different than those of the past due to the financial crisis and unprecedented monetary intervention, which has impacted investment returns and interest rates," said Scott Powers, president and CEO of SSgA.
Source: State Street Global Advisors
Borsa Istanbul to announce new major partner in two months
June 18, 2013--The head of Borsa Istanbul (Istanbul Stock Exchange),, Ibrahim Turhan, announced on Tuesday that the market will be partnering up with one of the major global stock markets in two months.
Turhan said the agreement is to be finalized in two months. He had previously stated that Borsa Istanbul was discussing a partnership with the London Stock Exchange, NYSE Euronext, Nasdaq and German Deutsche Bourse.
Source: Todays Zaman
Flaws with Black Scholes Model (BSM) & Exotic Greeks-new paper
June 18, 2013--ABSTRACT
In 1973, Fisher Black, Myron Scholes and separately Robert Merton derived the Black-Scholes-Merton (BSM) model, which was rewarded the Nobel Prize in 1997.
Despite its limitations, the model has survived until today as the dominant pricing model for standard and exotic European style options.
The model owes its success to its simplicity, high intuition and versatility. In 1997, the importance of their model was recognized worldwide when Myron Scholes and Robert Merton received the Nobel Prize for Economics. Unfortunately, Fisher Black died in 1995, or he would have also received the award [Hull, 2000]. The Black-Scholes model displayed the importance that mathematics plays in the field of finance. It also led to the growth and success of the new field of mathematical finance or financial engineering.
view the research paper-Flaws with Black Scholes Model (BSM) & Exotic Greeks
Source: thomsettoptions.com
Mirae-Can EM's Rate Cuts Help to Revive Economy?
Some countries cut rates in response to weakening growth.
June 18, 2013--China
Economy continued to show weak signals
Weak economic data seemed to lower the market's expectations on growth with economists revising down on this year's growth forecasts.
With the preliminary May HSBC Markit manufacturing PMI dropping below the 50-neutral level for the first time in six months, it showed recent economic activities continued to remain on the soft side. Retail sales also slowed to 11.8% year-over-year in April. Meanwhile, inflation growth fell to 2.1% YoY in May from 2.4% in April. Meanwhile, The State Council met to discuss plans for economic reform in 2013 on May 6. In addition to confirming its plan to eliminate or decentralize items requiring government approval, the State Council also announced its intention to implement reforms in nine key areas.
India
Interest rate cuts to be a floor to GDP growth.
Though declining inflation and subdued commodity prices led to strong performance of the India market through the first half of May, the strong US dollar and higher Indian trade deficit for April resulted in rupee depreciation, causing the market to lose momentum.
The Reserve Bank of India further reduced the repo rate by 25 basis points to 7.25%, bringing cumu¬lative rate cuts in the current cycle to 125 basis points. This is a response to the drop in the Wholesale Price Index in April.
Asean
Good economic signals for the Philippines.
In Malaysia, first-quarter GDP growth fell to 4.1% year-over-year, from 6.5% in the fourth quarter, on the back of slowing exports. That said, domestic investment demand remains high now that the elec¬tion overhang has been removed. The ruling coalition Barisan Nasional retained control, winning 60% of parliamentary seats.
First-quarter GDP growth in Thailand came in at 5.3% year-over-year, trailing the consensus forecast of 6%, as both private and govern¬ment consumption softened significantly from a high base.
Brazil
Weak currency and poor growth weigh on markets.
The Latin American region underperformed in May on the back of widespread currency weakness and disappointing GDP growth in Mexico and Colombia, in addition to Brazil. However, unlike Brazil, the central banks of Mexico and Colombia lowered interest rates in recent months in response to weakening growth.
Weak output data and earnings momentum con¬tinue to weigh on the Brazilian market. First-quarter GDP growth came at 1.9% year-over-year, much lower than the expected level. Slowing household and government consumption, along with weak exports, negatively impacted the demand side. Inflation remains at the top of the target band, increasing 6.5% year-over-year in May. In light of inflationary pressure, the central bank again raised interest rates by 50 basis points to 8%.
EMEA
Turkey and Poland cut rates to record low.
As weakening macro¬economic indicators, falling oil prices, and weak commodity prices weighed on the market, Russia underperformed the other emerging markets as well as developed markets in May.
Elsewhere in Eastern Europe, though the Turkish market continued to climb for much of the month, it fell significantly as anti-government protests escalated toward the end of the month. Meanwhile, in Poland, lower-than-expected output data and concerns that the US Federal Reserve will begin unwinding quantitative easing, has caused the Polish zloty to fall significantly against major currencies.
Source: Mirae Asset
