Global ETF News Older than One Year
Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements-IMF Working Paper
May 4, 2011--Summary:
This paper uses a DSGE model with banks and financial frictions in credit markets to assess the medium-term macroeconomic costs of increasing capital and liquidity requirements.
The analysis indicates that the macroeconomic costs of such measures are sensitive to the length of the implementation period as well as to the adjustment strategy used by banks, and the scope for monetary policy to respond to the regulatory changes.
view the IMF Working paper-Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements
Source: IMF
Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions- IMF
May 3, 2011--EXECUTIVE SUMMARY
Most tax systems today contain a “debt bias,” offering a tax advantage for corporations to finance their investments by debt. This has grown increasingly hard to justify.
One cannot compellingly argue for giving tax preferences to debt based on legal, administrative, or economic considerations. The evidence shows, rather, that debt bias creates significant inequities, complexities, and economic distortions. For instance, it has led to inefficiently high debt-to-equity ratios in corporations. It discriminates against innovative growth firms, impeding stronger economic growth. Debt bias also threatens public revenues, because it enables companies to reduce tax liabilities by using hybrid financial instruments as well as by restructuring their finances internally, moving debt between affiliates.
view the paper-Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions
Source: IMF
Factories in China, US slow as those in Europe, India see boom
May 3, 2011--Manufacturing growth in the world’s two biggest economies softened in March but firmed in Europe and India, according to reports highlighting the fractured nature of the global economic recovery.
The United States and China both saw a tempering of factory production in April, with the pace of US manufacturing expansion easing for a second straight month. Still, US activity remained firm and input prices rose to their highest in nearly three years, according to data from the Institute for Supply Management released on Monday. ISM said its factory index fell to 60.4 in April from 61.2 the previous month, slightly above forecasts for a reading of 60. It has held above the 50-threshold that separates growth from contraction since August 2009 and peaked in February2011.
Source: Todays Zaman
Statistics : Annual inflation accelerates to 2.7% in March 2011
May 3, 2011--Consumer prices in the OECD area rose by 2.7% in the year to March 2011, compared with 2.4% in February. This increase was driven by an acceleration in energy prices which grew by 12.4% in March, compared with 10.2% in February. Food prices continued to rise at relatively high rates: 3.2% in March (compared with 3.1% in February).
Excluding food and energy, consumer prices rose by 1.4 % in March 2011, the highest rate since March 2010.
Inflation accelerated strongly in the year to March 2011 in Canada (to 3.3%, up from 2.2% in February) and the United States (to 2.7%, up from 2.1%). It also accelerated in France (to 2.0%, up from 1.7%) and Italy (to 2.5%, up from 2.4%) but was stable in Germany (2.1%) and Japan (0.0%). In the United Kingdom, inflation remained relatively high compared to other major economies but slowed to 4.0% in March compared with 4.4% in February. Euro area annual inflation (HICP) rose to 2.7%, up from 2.4% in February.
Source: OECD
NYSE Euronext Chief Isn’t Fazed by Hostile Nasdaq Bid
May 3, 2011--While the Nasdaq OMX Group and the IntercontinentalExchange finally said on Monday they intended to go directly to NYSE Euronext shareholders to win over the exchange operator, the Big Board’s chief executive said he wasn’t worried.
Duncan L. Niederauer, NYSE Euronext’s chief executive, said that his company’s limited response on Monday to Nasdaq and ICE’s announcement was because it contained little new information.
“A lot of it was expected,” he told DealBook on the sidelines of the Milken Institute’s Global Conference 2011 here.
Source: New York Times
World markets get boost from bin Laden death
May 3, 2011--The death of al-Qaida leader Osama bin Laden has helped lift the mood in the markets all around the world Monday at the start of an extremely busy week of economic news.
U.S. President Barack Obama's announcement that the man who inspired the deadly Sept. 11, 2001, terror attacks in the United States had been killed in an operation by special forces in Pakistan, prompted an increase in investors' appetite for risk. That usually benefits assets like stocks but dents widely-considered financial safe havens, such as gold.
Source: FT.com
S&P CIVETS 60 Index Launched to Measure Growth Beyond the BRICs
The 'CIVETS' - Colombia, Indonesia, Vietnam, Egypt, Turkey & South Africa - combine potential for growth and accelerating global investor interest
May 3, 2011--In response to market demand, S&P Indices has launched the S&P CIVETS 60, a tradable index comprised of second-generation emerging markets, characterized by dynamic, rapidly changing economies and young, growing populations. CIVETS is a recent, and increasingly, widely recognized acronym that refers to the countries of Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
The S&P CIVETS 60 is comprised of ten liquid stocks trading on each relevant domestic exchange within the 6 CIVETS countries. The Index is unique in that no other index covers these specific markets as a tradable index, and it is likely to serve as the basis for ETFs in Europe and Asia.
"With reasonably sophisticated financial systems and rapidly maturing equity markets, the six CIVETS countries show all the signs of becoming increasingly important to international investors," says Michael Orzano, Associate Director of Global Equity Indices at S&P Indices. "The launch of this Index underlines the leadership we've shown in building out our family of emerging/frontier market and BRIC indices over the last decade."
To be included in the S&P CIVETS 60, stocks must have a float-adjusted market capitalization above $500 million. The Index is a modified market capitalization-weighted index, with no country having a weight of more than 30% at each semi-annual rebalancing.
The CIVETS countries have a total population of over 580 million as of December 31, 2010, and share some key characteristics: their economies are relatively diversified, not overly reliant on natural resources, and with increasing foreign direct investment.
As of March 31, 2011, South Africa represented 31.61% of the Index, followed by Indonesia (28.14%), Turkey (21.01%), Columbia (12.49%), Egypt (5.68%) and Vietnam (1.07%).
Source: Standard & Poors
Assessing Fiscal Stress -IMF Working Paper
May 2, 2011--Summary
This paper develops a new index which provides early warning signals of fiscal sustainability problems for advanced and emerging economies. Unlike previous studies, the index assesses the determinants of fiscal stress periods, covering public debt default as well as near-default events.
The fiscal stress index depends on a parsimonious set of fiscal indicators, aggregated using the approach proposed by Kaminsky, Lizondo and Reinhart (1998). The index is used to assess the build up of fiscal stress over time since the mid-1990s in advanced and emering economies. Fiscal stress has increased recently to record-high levels in advanced countries, reflecting raising solvency risks and financing needs. In emerging economies, risks are lower than in mature economies owing to sounder fiscal fundamentals, but fiscal stress remains higher than before the crisis.
view IMF Working-Assessing Fiscal Stress
Source: IMF
NASDAQ OMX Group and IntercontinentalExchange Announce Exchange Offer for NYSE Euronext
Reaffirms Seriousness of Their Offer and Continued Willingness to Enter Into Discussion
May 2, 2011--NASDAQ OMX and IntercontinentalExchange (ICE) today announced that each of their respective Boards of Directors have approved their intent to commence an exchange offer to acquire all of the outstanding shares of NYSE Euronext common stock in a cash and stock transaction valued at approximately $11 billion. Under the terms of the offer, each share of NYSE Euronext would be exchanged for $14.24 in cash, 0.4069 shares of NASDAQ OMX common stock and 0.1436 shares of ICE common stock.
If NASDAQ OMX and ICE are successful in acquiring shares pursuant to the offer, they would consummate a second step merger as soon as possible thereafter to acquire the remaining NYSE Euronext shares for the same consideration per share.
ICE Chairman and CEO Jeffrey C. Sprecher said: "The Board of NYSE Euronext has twice rejected our superior proposal without meeting with us, despite the fact that their existing merger agreement with the Deutsche Boerse allows them to talk with us. While we are hopeful that the Board will decide to consider this transaction, we are taking our proposal to NYSE Euronext stockholders upon the commencement of this exchange offer to provide the opportunity to consider our proposal directly."
NASDAQ OMX CEO Bob Greifeld said: "The NYSE Euronext Board has continually challenged the seriousness of our proposal and refused to engage us in discussion despite the positive feedback we have received from their stockholders. The commencement of this exchange offer should convince the NYSE Euronext Board of the seriousness of our intentions. We continue to welcome the opportunity to enter into meaningful discussion with the NYSE Euronext Board in order to achieve a transaction that is in the best interests of their stockholders."
This exchange offer follows an initial public proposal made by NASDAQ OMX and ICE to the NYSE Euronext Board on April 1, 2011 to discuss a possible combination of the companies and the delivery of a draft merger agreement on April 19, 2011 in which NASDAQ OMX and ICE provided significant detail and assurances on their proposal, which contains no financing conditions. On both occasions, NASDAQ OMX and ICE's proposals were summarily rejected by NYSE Euronext's Board without any attempt for engagement or discussion. The complete terms and conditions of NASDAQ OMX's and ICE's exchange offer will be set forth in an offer to exchange/prospectus expected to be filed with the U.S. Securities and Exchange Commission during May.
NASDAQ OMX and ICE remain hopeful that NYSE Euronext will ultimately recognize the value of working with them in a direct and constructive fashion to complete this strategic transaction in a way that is tax-efficient, minimizes regulatory hurdles, and produces the greatest value for shareholders of NYSE Euronext.
Additional Details
All details and other supporting information related to this proposal are available on http://www.nasdaq.com/deal and http://ir.theice.com
Source: NASDAQ OMX
Basel III and Our Banks: Overhaul, or Overdraft?
We look at how the tough, new Basel III rules may impact the largest U.S. banks.
May 2, 2011--Basel III is an international accord whose objective is to standardize some banking safety requirements in a worldwide economy. The failure of Lehman Brothers, Northern Rock, and persistent troubles in Greece, Spain, Italy, Ireland and Portugal underscore how shock waves from one nation's problems can reverberate worldwide. Basel III may not be a panacea:
It will not necessarily prevent a subsequent global financial crisis, in our opinion, nor will it completely insulate financial institutions from the unsettling effects of one. However, what Basel III will do is require banks to better prepare themselves for the unknown, including requiring them to bolster their balance sheets by holding additional capital.
Source: Morningstar
