Global ETF News Older than One Year
The Impact of the Global Financial Crisis on Microfinance and Policy Implications
July 26, 2011--Summary: The global financial crisis affected microfinance institutions (MFIs) as lending growth was constrained by scarcer borrowing opportunities, while the economic slowdown negatively impacted asset quality and profitability. It also brought to the fore the relatively high interest rates that MFIs charge to their (low-income) customers.
This paper revisits the issue of systemic risk of MFIs, and finds that contrary to the evidence before the crisis, MFI performance is correlated not only to domestic economic conditions but also to changes in international capital markets. It also presents an empirical analysis of lending rates with the purpose of informing policy decisions, and finds that loan sizes, productivity, and MFI age contribute to explain differences in lending rate levels. This suggest that regulation (and policies) promoting MFI competition, and innovation in lending technologies have a better chance to result in decreased lending rates.
Source: IMF
New EDHEC-Risk Position Paper Confirms No Consensus Exists on Link between Speculation and Price Volatility
July 26, 2011--In a new EDHEC-Risk Institute position paper, “A Review of the G20 Meeting on Agriculture: Addressing Price Volatility in the Food Markets,” Hilary Till, Research Associate with EDHEC-Risk Institute, and Principal of Premia Capital Management, examines food price volatility in the context of the G20 meeting of agriculture ministers.
In reviewing the evidence so far regarding the impact of commodity trading, speculation, and index investment on price volatility, the report finds that the evidence for the prosecution does not seem particularly compelling at this point. The paper’s conclusion is to agree with the World Bank president who has said that the answer to food price volatility is not to prosecute or block markets, but to use them better. In the author’s view, one sensible use of financial engineering is for hedging volatile food price risk with appropriate commodity derivatives contracts.
The position paper reveals that French President Nicolas Sarkozy’s view that “the financialisation of agriculture markets… is a contributory factor in price volatility…” is contradicted by Dr. Pierre Jacquet, Chief Economist of the Agence Française de Développement, who notes that a number of market-based solutions could potentially help developing countries better manage commodity price volatility, including increasing access to risk-hedging instruments.
Source: EDHEC
Soros to close Quantum fund to outsiders
July 26, 2011--George Soros, the billionaire hedge fund manager, is closing his Quantum fund to outside investors and returning their money.
Quantum, which will continue to manage about $24.5bn of Soros family money, blamed the decision on new financial regulations requiring hedge funds to register with the Securities and Exchange Commission.
Source: FT.com
July 2011 “Market’s Measure” - Preliminary Report - A Monthly Report From Dow Jones Indexes On The Performance Of U.S., European, Asia And Other Global Stock Market Indexes
July 26, 2011--Dow Jones Industrial Average Posts 1.44% Gain in July, European Stocks Lose 1.68%, Asia Rises 0.95% and World Equities Rise by 2.19%
Oil & Gas Sector Posts Biggest Gain for July in U.S.
Financials Sector Takes the Hardest Hit for July in Europe
As of July 25, the Dow Jones Industrial Average rose 1.44% in July, closing at 12592.80. Stock market indexes in Europe fell while Asia and globally indexes were up in July, according to preliminary monthly figures from global index provider, Dow Jones Indexes.
The Dow Jones Industrial Average rose 1.44% in July, closing at 12592.80. Year-to-date, the index is up 8.77%.
The Dow Jones Europe Titans 80 Index is down 1.68% for July, closing at 1592.07. Year-to-date, the index is up 5.26%.
The Dow Jones Eurozone Titans 80 Index fell 4.31% for July, closing at 1586.02
Year-to-date, the index is up 5.28%. The Dow Jones Asian Titans 50 Index rose 0.95% in July to 139.36. So far this year, the index is down 4.35%. The Dow Jones Global Titans 50 Index rose 2.19% in July, closing at 187.62. Year-to-date, the index is up 5.94%.
Source: Mondovisione
New Emerging Market Strategies Target Volatility, Limit Downside
Offerings aim for growth while easing investors' concerns
July 25, 2011--
Some money managers are rolling out strategies designed to reduce volatility and provide downside protection in emerging markets as a way to appease skittish investors still wanting to capture superior growth.
Whether there's much of a market for these strategies remains to be seen
Source: Pensions & Investments
Analytics of Systemic Crises and the Role of Global Financial Safety Nets -IMF Working paper
July 25, 2011-Summary:
In response to the global crisis, the Fund overhauled its lending toolkit and boosted its resources, strengthening its ability to pre-empt financial crises.
This paper—with the companion paper on Mapping Cross-Border Financial Linkages—takes another look at the recent global crisis in the context of a broader review of past systemic crises to (i) assess whether rising linkages across countries is a source of latent systemic instability and (ii) ascertain whether the global financial safety net (GFSN) is adequate to contain crisis and contagion risks arising from such systemic instability. This paper develops a new methodology to identify systemic crises and reviews associated policy responses from a global, rather than country-level, perspective
view the Analytics of Systemic Crises and the Role of Global Financial Safety Nets paper
Source: IMF
Mapping Cross-Border Financial Linkages - A Supporting Case for Global Financial Safety Nets
July 25, 2011--Summary:
This paper maps cross-border financial linkages and identifies factors that drive them, contributing to the discussion on the appropriate design of a global financial safety net (GFSN).
It builds on previous staff work and complements the findings of the companion paper on the Analytics of Systemic Crises and the Role of Global Financial Safety Nets. This paper notes the growing roles of financial linkages and complexity in injecting latent instability into the global financial system, underscoring the value of a GFSN design that is effective in forestalling the risk that a localized liquidity shock propagates through the global financial network turning into a large-scale systemic crisis.
Source: IMF
U.S. Money Fund Exposure to European Banks Declines Moderately
July 25, 2011--Fitch Ratings has just published a report, U.S. Money Fund Exposure to European Banks Declines Moderately, which updates (as of June 30) its analysis of the exposure of U.S. prime money market funds to European banks. The study, based on a sample of the 10 largest prime money market funds (MMFs), reveals that:
European bank exposure on a dollar basis dropped by 8.7%, while total MMF assets in the sample decreased 7.5%
French exposure declined roughly in line with the overall decline in European exposure
U.K. dollar exposure remained essentially flat, but increased as a percentage of the funds' assets
Source: Fitch Ratings
LSE ramps up efforts against Deutsche Boerse-NYSE merger
July 25, 2011-The London Stock Exchange has stepped up its lobbying efforts against the merger between NYSE Euronext and Deutsche Börse, claiming,
in a document seen by Financial News, that the combined entity would “eliminate competition” in the European listed derivatives market and that the two companies have a “track record of acting against customers’ best interests”.
Source: efinancialnews
ETFS Precious Metals Weekly: Gold Soars Through $1620/oz as US Debt Deadline Looms, Deal Remains Elusive
July 25, 2011--Gold price rallies to new record high above $1620/oz as time begins to run out for raising the US debt ceiling to avoid default. Treasury Secretary Geithner remarked that Republican and Democrat lawmakers will need to find a suitable agreement by today in order to allow enough time for it to be passed into law by the deadline of Aug 2.
Investor appetite for gold accelerates amidst market uncertainty. COMEX speculative net long gold positioning reached its highest level in 8 months last week, increasing over 40% over the past fortnight.
Silver, platinum, palladium head higher as Euro debt package eases near term default concerns and US lead indicators point to a H2 rebound in the US. Futures positioning in silver, platinum and palladium have begun to recover over recent weeks after hitting their lowest levels in over a year after a COMEXrestriction related sell-off in May, with the sharpest rebound occurring in palladium.
Platinum supply issues remain at the fore as Lonmin, the No.3 global producer, announces drop in production, while Africa nationalisation issues also re-surface. Zimbabwe mooted possible expulsion of miners – including some of Africa’s largest platinum/palladium miners – that fail to meet local ownership targets last week.
Gold spikes above $1,620/oz as debt impasses stoke default concerns in the US. S&P reiterated its threat to downgrade its US sovereign debt credit rating as the Aug 2 deadline to raise the US debt ceiling looms. S&P estimates that there is a 50:50 chance that it will cut the USA AAA government debt rating within 3 months. No.1 global bond manager PIMCO suggested “In most likelihood, a last-minute political compromise will avoid a default but will leave the AAA rating extremely vulnerable”, with analysts speculating that any deal may leave longer term spending/tax questions unanswered.
visit www.etfsecurities.com for more info
Source: Source: ETFS Securities
