Global ETF News Older than One Year
Consequences of Asset Shortages in Emerging Markets
April 23, 2012--Summary: We assess econometrically the impact of asset shortages on economic growth, asset bubbles, the probability of a crisis, and the current account for a group of 41 Emerging markets for 1995-2008.
The econometric estimations confirm that asset shortages pose a serious danger to EMs in terms of reducing economic growth, raising the probability of a crisis, and leading to asset price bubbles. Moreover, asset shortages can also explain the current account positions of EMs. The findings suggest that the consequences of asset shortages for macroeconomic stability are significant, and must be tackled urgently. We conclude with policy implications.
Source: IMF
Exchange-Traded Funds: Growth and Challenges
April 23, 2012--Abstract
The exchange-traded product market has made significant progress in the last decade. Assets under management have increased more than tenfold: from US$146 billion in 2002 to US$1.5 trillion in 2011. There has been a proliferation in the number of funds, and new funds are being regularly introduced. However, future growth is no longer something the industry can take for granted.
In a new report, Exchange-Traded Funds: Growth and Challenges, Celent discusses the evolution of the global exchange-traded product (ETP) market. The rapid growth of ETPs has attracted a lot of attention, from both competitors and regulators. There has been an ongoing debate about whether the growth of ETPs has been at the expense of the mutual fund industry or if ETPs are breaking new ground and attracting investment that might have gone elsewhere. Within the ETP market, there has been an ongoing tussle for supremacy between the managers of physical ETPs and the synthetic ETPs (which use derivatives).
Source: Celent
Custodians look to retune asset servicing
April 23, 2012--Estimated to be worth at least $1.5 trillion, exchange-traded funds offer custodians many opportunities to grow their revenue. ...
But the market is also fraught with challenges as new customers in new territories become more demanding of their asset
Source: Financial News
Dubai Gold & Commodities Exchange Weekly Market Commentary
April 22, 2012--Economic Data Overview
The most successful trading strategy for both commodities and currencies in the dollar / European bloc has been to question market extremes and look for established ranges to prevail.
Last week the euro broke back below 1.3000 very briefly only to be swallowed up by fresh investor demand as doubts emerged about the strength of the US recovery. Both oil and gold attract new demand as they test their long term bull trends, but gains have been modest and volatility is decreasing. The strongest directional markets currently are dollar / yen and dollar/rupee as the dollar continues to register healthy gains against both currencies. These "direction-off" strategies seem to work at the moment, regardless of the news flow. Last week the market chose to focus on the lower than expected weekly jobless claims and poor housing starts data as evidence that the US recovery is beginning to flag. Better than expected German confidence numbers were seen as more important than continued destabilisation of the Spanish and Italian debt markets. Peripheral European debt is struggling to attract investors and governments must pay over 6% in these nations to attract funds. If this situation cannot be reversed, it will not be long before the crisis circuit breaker of 7% will be broken. There is still is no plausible solution in place to reverse this potential crisis.
Last week the market chose to ignore the very promising US corporate earnings which boosted stock markets and highlighted real economic performance. It is also interesting to see that volumes in US Treasuries have begun to decline as investors appear unwilling to take the substantial risk of a pick-up in growth or inflation when yields are just above their all-time lows. The sole destination for investors looking for a safe haven is the German Bund market. It is easy to see that Bunds will continued to outperform their poorer European neighbours, but centralising risk in Europe with no end to the overall debt crisis surely is questionable. The IMF now has a bigger war chest after last week's G20 meeting. However, both Brazil and China have shrewdly limited their commitment of additional funds as they look for Europe to produce a more plausible solution to its own problems. The policy amongst German and French leaders of slowing the process to what will have to be a much larger bailout fund as they attempt to get re-elected is not helping the debt problem and this weekend may not help the current French president.
In terms of the directional plays, next week will be important as Japan and India face important challenges in managing their currencies. The BOJ rate decision is expected to see no change in rates. However, announcements will be important as the new policy of reflating the economy and making the yen more competitive is here to stay and Japan has stated at the G20 does not want any more yen strength. India is running out of options to stabilize the dollar/rupee rate. The market is in intervention territory. Interest rates were reduced this week to boost the economy and while oil prices did not rally strongly, balance of payments problems are still a concern. Next week the FOMC decision is not expected to see any change but the minutes will be important as any sign of easier monetary measures would boost gold and silver prices. The market will also look at the US growth data and measures of inflation in Europe
Source: Dubai Gold and Commodities Exchange (DGCX)
Financial Stability Board reports to G20on progress of financial regulatory reforms
April 20, 2012--The Chairman of the Financial Stability Board (FSB) reported to the G20 Finance Ministers and Central Bank Governors today on progress in the financial regulatory reform programme.
In connection with this, the FSB is publishing today:
a letter by the FSB Chair to the G20, sent ahead of their meeting, reporting on the progress being made in the following priority reform areas: (i) building resilient financial institutions; (ii) ending “too big to fail”; (iii) strengthening the oversight and regulation of shadow banking activities; (iv) completing OTC derivatives and other reforms to create core continuous markets; and (v) implementing agreed G20 reforms in a timely and consistent manner;
a report on progress in strengthening the oversight and regulation of the shadow banking system;
a joint report from the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board on their progress in converging their standards, together with a report on enhancements to the governance of the IASB.
Source: FSB
Continued Uncertainty and Recession in Eurozone Weaken Recovery in Emerging Europe and Central Asia
Effective social safety nets are critical for protecting the vulnerable; a looming demographic crisis makes reforms more urgent
April 20, 2012-The moderate recovery in Emerging Europe and Central Asia (ECA) in 2010-2011 is now threatened by continued uncertainty and recession in the Eurozone, resulting in slowing growth across most of the region in 2012, World Bank officials said at a press briefing during the World Bank/IMF Spring Meetings 2012.
Governments need to take actions on the fiscal, financial, and social fronts, with the growing demographic pressures in most countries of the region making these actions even more urgent.
“After a weak recovery in 2010-2011, growth in Emerging Europe and Central Asia is once again slowing, from 5.5 percent in 2011 to a projected 3.4 percent in 2012,” said Philippe Le Houérou, World Bank Vice-President for the Europe and Central Asia Region. “The crisis has left the countries in the region with tighter fiscal space, continuing pressures on banks, and higher levels of unemployment. While expenditures need to be rationalized, it is now critical that countries protect productive spending on human and physical capital and—with unemployment rising and demographic changes pressing—strengthen social safety nets.”
Source: World Bank
Silver price volatility deters investors
April 19, 2012--The price swings in the silver market in the past year have deterred investors in the metal, according to Thomson Reuters GFMS, putting prices on course for a correction of as much as 10 per cent in the next few months.
“To say that silver was on a roller-coaster ride during 2011 would be something of an understatement,” GFMS said in its annual review of the market published by the Silver Institute.
Source: FT.com
Modernizing Emerging Market Core Portfolios
Applying insights from "The Emerging Market Benchmark Bear Hug"
April 19, 2012--As of March 31, 2012, 97% of the assets invested in emerging market equity Exchange Traded Funds (ETFs) tracked broad benchmarks.1 These benchmarks are dominated by sectors that led many frontier countries to emerging market status, and
include economies that graduated to developed market status 15 years ago.
There is a simple solution to help investors modernize their emerging markets (EM) core. Through a blend of ETFs, investors can align their portfolios with the themes that many emerging market strategists believe will drive future EM growth.
Issue: Traditional EM investments may lag long-term growth themes
Emerging market research is largely focused on sustainable domestic demand—organic, local growth vs. export growth—including the themes of infrastructure, urbanization and the rise of the middle class consumer. Many market observers believe these will be the drivers that advance EM countries toward developed market status.
Source: Emerging Global Advisors
ESMA approves credit ratings from Argentina and Mexico for use in the EU
April 18, 2012--The European Securities and Markets Authority (ESMA) announces today that it considers the regulatory frameworks for credit rating agencies (CRAs) of Argentina and Mexico to be in line with European Union rules. Today's announcement allows European financial institutions to continue using credit ratings issued in these countries for regulatory purposes after 30 April 2012.
In order to facilitate regulatory information exchange, and as a precondition to endorsement, ESMA has entered into co-operation agreements for the supervision of CRAs with the national competent authorities of Argentina and Mexico. Ratings issued under the regulatory frameworks of Australia, Canada, Hong Kong, Japan, Singapore and the United States have already been approved for use in the EU.
view the ESMA-Final report Technical advice on CRA regulatory equivalence-US, Canada and Australia
Source: ESMA
ETF Securities: Global Commodity ETF Assets Hit Record $189B In 1Q
Global commodity ETF assets hit record $189 billion in first quarter
Quarterly inflows into commodity ETFs rise by $7.5 billion in first quarter
$1.2 billion of new money flows to oil ETFs in first quarter
April 18, 2012--Investors flocked to commodity-linked exchange-traded funds and products during the first quarter, lifting the sector ETF assets to a record $189 billion, ETF Securities said Wednesday.
A rebound in U.S. economic growth and the restructuring of Greek sovereign debt fanned investor demand for risky assets, lifting inflows into commodity ETFs by $7.5 billion during the first quarter of 2012 from the final quarter of 2011. This was the largest quarterly rise in almost a year.
Source: Wall Street Journal
