Global ETF News Older than One Year
Is Fiscal Policy Procyclical in Developing Oil-Producing Countries?-IMF Working paper
July 19, 2011--Summary: This paper examines the cyclicality of fiscal behavior in 28 developing oil-producing countries (OPCs) during 1990-2009. After testing five fiscal measures - government expenditure, consumption, investment, non-oil revenue, and non-oil primary balance - and correcting for reverse causality between non-oil output and fiscal variables, the results suggest that all of the five fiscal variables are strongly procyclical in the full sample.
Also, the results are not uniform across income groups: expenditure is procyclical in the low and middle-income countries, while it is countercyclical in the high-income countries. Fiscal policy tends to be affected by the external financing constraints in the middle- and high-income groups. However, the quality of institutions and political structure appear to be more significant for the low-income group.
view IMF Working paper-Is Fiscal Policy Procyclical in Developing Oil-Producing Countries?
Source: IMF
Global Commodity ETP Assets Rise 33% In 1H 2011, Trading Surges 95%
July 19, 2011--Global commodity ETP assets under management (AUM) rose 33% year-on-year to reach US$171bn at the end of 1H 2011, with on-exchange average monthly trading turnover nearly doubling year ago levels to hit US$167bn. These findings come from today's publication of ETF Securities' Global Commodity ETP Quarterly, Q2 2011, a comprehensive guide to investing in global commodity ETPs.
Key findings from ETF Securities' Global Commodity ETP Quarterly for Q2 2011 include:
Global commodity ETP assets stood at US$171bn at end of June 2011, up 33% on the year. Global commodity exchange traded product (ETP) 1 assets stood at US$171bn at the end of June 2011, 33% above year-ago levels as investors continue to increase weightings in the asset class. Assets are nearly triple end-2008 levels.
Source: Mondovisione
ETFS Precious Metals Weekly: Gold Soars Through $1600/oz as Trans-Atlantic Debt Deadlocks Spook Markets
July 18, 2011--Gold price rallies to new record high above $1600/oz, also hitting records in GBP and EUR denominated terms. US and EU government officials continue to struggle to find solutions to their respective sovereign debt-problems, driving investors into perceived safe havens.
Gold futures positioning bounces back to its highest levels in a month, after hitting 5 month lows in the past week. Although positioning has picked up substantially over the past week, positioning remains far from overbought, still 3% below its one year average.
Silver jumps towards $40/oz even as speculative futures positioning remains almost half pre-COMEX restriction levels. Silver has often acted as a geared play on gold price moves, with double the gains of gold over the past month. Market specualtion of ‘QE3’ also may have spurred interest in the metal.
Gold jumps towards $1,600/oz as debt impasses stoke default concerns on both sides of the Atlantic. ECB president Trichet reiterated his opposition to restructuring of Greek debt late last week as EU government officials prepared to meet for a second time to hammer out details of a Greek debt bailout scheme after the first failed to find a consensus last month. Meanwhile S&P became the second rating company to put a warning on the US’s top credit rating last week as Republicans and Democrats struggle to find consensus on how to pare the US government budget deficit as the Aug 2 deadline to rasie the US government debt ceiling draws closer.
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Source: ETFS Securities
Gold powers above $1600 on debt fears
July 18, 2011--Gold prices rallied to record highs above $1 600 an ounce in Europe on Monday as investors - spooked by the eurozone debt crisis and the threat of a US default - bought into the metal as a haven from risk.
Spot gold rose as high as $1 600.40/oz and was up 0.4% at $1 598.76/oz in morning trade. Gold rose more than 3% for a second straight week to Friday, a feat it has not achieved since February 2009.
Source: FIN24
OPEC Monthly Oil Report July 2011
July 15, 2011--Oil Market Highlights
The OPEC Reference Basket remained volatile in June, moving within a wide range of $102-$114/b. In monthly terms, the Basket fell for the second consecutive month to average
$109.04/b, down 90¢ from the previous month. Futures prices also declined as macroeconomic sentiment weakened across many regions, as well as on the temporary impact of the IEA’s decision
to release oil from strategic reserves.
The Nymex WTI front-month fell a further $5 or 5% to average $96.29/b. ICE Brent also declined but at a slower pace, due to lower supplies of light sweet crude and constraints in North Sea production. As a result, the Brent spread over WTI jumped to a record high on a monthly basis of around $17.60/b. In early July, the market remained volatile due to reduced speculative activity and weaker economic data. The Basket stood at $111.35/b on 11 July.
The forecast for world economic growth in 2011 remains at 3.9% following off-setting revisions in the US, Japan and Euro-zone. Growth in the developing countries remains unchanged, with China growing by 9.0% and India by 8.1% this year. In 2012, the world economy is expected to grow by 4.1%, slightly higher than in 2011. The OECD is forecast to grow by 2.5%, compared with this year’s growth of 2.1%. OECD growth is supported by the recovery in the Japanese economy, which is expected to expand by 2.5%. US growth is forecast at a higher 2.9%, while growth in the Euro-zone is seen slowing to 1.5%, due to planned austerity measures. The strong expansion in the developing countries is expected to ease somewhat, with China forecast at 8.5% and India at 7.7%.
view the OPEC Monthly Oil Report July 2011
Source: OPEC
Jovian to sell ETF business to Korea's Mirae for C$90 mln
Deal expected to close in about 120 days
Jovian's interest in Hahn Investment not part of the deal
Shares touch near 3-year high, then fall
July 15, 2011--Jovian Capital Corp said it would sell its nearly 58 percent stake in Canada's No. 3 exchange-traded funds business, BetaPro Management, to South Korea's Mirae Asset Global Investments Co Ltd for about C$90 million ($93.9 million).
Jovian shares, which soared 32 percent since the word of the talks were leaked to the South Korean press on July 5, touched a nearly three-year high of C$11.99 earlier on Friday. They later shed some gains to fall more than 4 percent to C$11.00 on the Toronto Stock Exchange.
Source: Reuters
The Financial Crisis and Information Gaps: Implementation Progress Report
July 15, 2011--EXECUTIVE SUMMARY
This report updates on progress by
the Financial Stability Board (FSB) Secretariat and International Monetary Fund (IMF) staff in implementing the 20 recommendations in the report The Financial Crisis and Information Gaps endorsed by the Group of Twenty (G-20) Finance Ministers and Central Bank Governors in November 2009. Since the last progress report a year ago, consultations with national authorities revealed broad agreement with, and a positive view of, the G-20 Data Gaps Initiative, with better identification of the build-up of risks in the financial sector and financial interconnectedness (domestic and cross-border) being among the highest priorities.
Work in the priority areas is progressing well:
A draft reporting template for the global systemically important financial institutions has been developed for banks, with the FSB Plenary agreeing to progress this work.
Agreements have been reached to enhance the Bank for International Settlements (BIS) international banking statistics (IBS) data to provide more granular information on a nationality basis; to increase the frequency from annual to semi annual of cross-border security holdings data in the IMF’s Coordinated Portfolio Investment Survey (CPIS); and to introduce a reporting template to provide a better understanding of domestic vulnerabilities by economic sector. The challenge over the coming year will be to start implementing these enhancements.
view The Financial Crisis and Information Gaps: Implementation Progress Report
Source: IMF
Investors Added $8.1B To Hedge Funds In May
July 12, 2011--Investors continued to pour money into hedge funds despite the industry's lackluster performance this year, according to a report Monday from industry trackers BarclayHedge and TrimTabs Investment Research. The hedge-fund industry took in $8.1 billion in May, marking the fifth straight month of inflows. Industry assets were flat at $1.79 trillion.
"The industry hauled in $75.0 billion in the first five months of 2011, which marks the heaviest such inflow since 2007," said BarclayHedge founder Sol Waksman. "Performance, however, has hardly been stellar. The Barclay Hedge Fund Index shows a year-to-date return of just 2.1% through May, and many managers are in the red for the year."
Source: Wall Street Journal
IMF Note on Global Economic Prospects and Policy Challenges
The Following executive summary is from a note by the Staff of the IMF prepared for the July 9–10, 2011 meeting of the Group of Twenty Deputies in Paris, France
July 14, 2011--Executive Summary
The multi-speed recovery continues.
Growth in the first quarter of 2011 was broadly in line with Staff expectations. Activity in most advanced economies has slowed in the second quarter, but the slowdown is expected to be temporary.
Overall, the outlook for global growth in 2011–12 remains broadly unchanged compared with the April 2011 World Economic Outlook, although with considerable differences among economies.
Growth is expected to remain sluggish in advanced economies faced with household, fiscal, and financial sector balance sheet problems, but strong in many emerging and developing economies.
Downside risks have risen.
Concern about debt sustainability and support for adjustment efforts in Europe’s periphery is leading to increased market worries about potential contagion. Risks from the lack of credible medium-term fiscal plans are also elevated in other advanced countries, notably the United States, in which a deadline for raising the debt ceiling looms large, and Japan.
By contrast, overheating pressures in many emerging and developing economies are intensifying, as exhibited by rising inflation and rapid credit growth.
Source: IMF
Country Insurance Using Financial Instruments-IMF Working paper
July 14, 2011--Summary: The availability of financial instruments related to indices that track global financial conditions and risk appetite can potentially offer countries alternative options to insure against external shocks.
This paper shows that while these instruments can explain much of the in-sample variation in borrowing spreads, this fails to materialize in hedging strategies that work well out-of-sample during tranquil times. However, positions on instruments such as those tracking the US High Yield Spread, the VIX, and especially other emerging market CDS spreads can substantially offset adverse movements in own spreads during times of systemic crises. Moreover, high risk countries seem to gain more, as their underlying weaknesses makes them more vulnerable to external shocks. Overall, the limited value in tranquil times, coupled with political economy arguments and innovation costs could justify the limited interest for this type of hedging in practice
view IMF Working paper-Country Insurance Using Financial Instruments
Source: IMF
