Global ETF News Older than One Year
Financial Sector the "Achilles’ Heel" of Global Recovery
Financial system still vulnerable despite ongoing recovery
Funding risks for banks and governments a major concern
Financial reforms remain unfinished
October 5, 2010--Progress to restore global financial stability has suffered a setback in advanced economies, the International Monetary Fund said in its latest Global Financial Stability Report, with markets still sensitive to negative surprises.
While the outlook in the Global Financial Stability Report is for continued recovery and a gradual improvement in financial stability, considerable risks remain. Rising public debt burdens, funding challenges for banks, and increased uncertainty about the next phase of the recovery have prevented a return of confidence.
José Viñals, Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department, said the financial system remains the “Achilles’ heel of the recovery” because of unfinished repairs to bank balance sheets and the need for further regulatory reforms.
“As a result, financial markets remain sensitive to negative surprises, and can quickly shift back to crisis mode,” said Viñals.
Sovereign risks and financial fragilities
Coordinated government support programs and the announcement of ambitious fiscal reforms have helped contain the market turmoil that broke out in April and May this year. However, fiscal risks remain elevated, particularly in advanced economies where public sector balance sheets have significant weaknesses.
Public debt is still high and rising in many advanced economies, and more needs to be done to ensure sustainability;
view the Global Financial Stability Report
Source: IMF
OECD annual inflation rate steady at 1.6% in August 2010
October 5, 2010--Consumer prices in the OECD area1 rose by 1.6% in the year to August 2010, the same inflation rate as in July. Growth in energy prices slowed down to 4.8% in August compared with 6.2% in July,
while consumer prices for food rose by 1.4% compared with 1.1% in July.
Excluding food and energy, the annual inflation rate held steady at 1.2 % in the year to August 2010.
Deflation continued in Japan for the nineteenth consecutive month with consumer prices falling by 0.9% in the year to August. Inflation decelerated slightly in all other G7 countries. Annual inflation was 1.7% in Canada (down from 1.8% in July), 1.6% in Italy (down from 1.7%), 1.4% in France (down from 1.7%), 1.1% in the United States (down from 1.2%) and 1.0% in Germany (down from 1.2%). Euro area annual inflation (HICP) was 1.6% in August, down from 1.7% in July.
Source: OECD
PE-Backed Buyout Deal Flow Increases for Third Quarter in Succession in Strongest Quarter since Financial Crisis
Private equity-backed deals announced in Q3 2010 have an aggregate value of $66.7bn, an
increase of nearly one-third on the previous quarter.
October 4, 2010--Preqin’s quarterly deal flow data shows a total of 515 private equity buyout deals announced in Q3 2010, with an aggregate value
of $66.7bn. This represents a 29% increase in the aggregate value from Q2 2010, when 498 deals were announced with an aggregate value of $51.9bn, and a notable 147% increase on the 396 deals valued at $27bn reported in Q1 2010. Deal flow in Q3 2010 represents the strongest quarter for buyout deals in the post-financial crisis landscape.
Other key findings include:
In Q3 2010, North American aggregate deal value increased 6.5% from the previous quarter, with 249 deals valued at $34.2 billion announced in Q3 2010, up from the 233 buyouts valued at $32bn in Q2 2010.
Furthermore, Q3 2010 deal flow in North America represents a significant 165% increase on the aggregate deal value seen in the region in Q1 2010, and remains notably higher than deal flow witnessed in the region during 2009.
European aggregate deal value increased significantly from the previous quarter, with 186 buyouts valued at $26.3bn announced during the quarter, a notable 120% increase from the $12bn in deal value witnessed during Q2 2010. Notable deals in the region include the take private of UK-based Tomkins plc by Onex Corporation and CPP Investment Board for $5bn, and the announced acquisition of Switzerland-based Sunrise Communications by CVC Capital Partners from PEbacked TDC A/S for CHF 3.3bn.
While deal flow in Asia and Rest of World has seen a slight decrease from the previous quarter, it has continued to remain above the levels seen in the previous year, with 80 deals valued at $6.2bn announced in the region, a 62% increase from the $3.8bn reported a year earlier in Q3 2009.
Source: Preqin
BATS Y-Exchange (BYX) Will Rebate Liquidity Removers, Launches October 15
Announces $0.0003 Rebate Per Share To Remove Liquidity, No Charge To Add Displayed Liquidity
October 4, 2010-- BATS Y-Exchange (BYX), which launches October 15th, will offer a rebate of $0.0003 per share to remove liquidity from the BYX book and no charge to add displayed liquidity.
Under traditional maker-taker pricing, the liquidity remover pays a fee to trade against orders on the exchange. Under the new BYX program, however, BATS will provide a rebate to these market participants, creating a very attractive price differentiation for the new exchange.
"We are pleased to launch BYX while offering members a new price point, including the highest liquidity removal rebate among exchanges for all securities, consistent with our philosophy of simple and aggressive pricing," said Chris Isaacson, chief operating officer of BATS Exchange. "BYX will also feature BATS' sophisticated smart order routing technology to help our members navigate market complexities in an efficient and cost-effective manner.
Source: BATS
Institutional Use Of Stock Trading Ideas Set New Records In 3Q10
October 4, 2010--Institutional use of stock trading ideas set new records in the third quarter ended September 30, 2010, according to the Trade Idea Monitor (TIM). This is as opposed to trading volumes, which generally declined.
Sell side firms sent a record 204,679 new and closed ideas to buy side clients in 3Q10, up 6% from the prior record set last quarter, and up 64% from the year ago third quarter. New ideas recommend when to open positions; closed ideas when to get out.
The TIM reported a record net 700 firms around the world with live trade idea programs as of September 30, 2010, up 8% from 2Q10 and up 28% from 3Q09. About 75% are brokers developing ideas and 25% are hedge and quant funds and traditional long-only investment managers buying ideas.
The TIM's database of closed ideas as of September 30, 2010 totaled a record 1,194,172, up 15% from June 30, 2010 and up 70% from a year ago. The "idea base" is used by money managers to assess the historical performance of brokers for fundamental trade idea investment programs, or to develop quantitative trade idea investing models.
Source: Mondovisione
Faltering risk appetite boosts Treasuries
October 4, 2010--Monday 21:30 BST. Risk appetite was in retreat as market gauges presented a confusion picture of for investors, and gloomy economic indicators dominated sentiment.
US and European equities are flat as traders struggle to justify pushing stocks further ahead following their recent good run and desks absorb some mixed US home sales and factory data.
Two-year Treasury yields have hit a record low, touching 0.40 per cent, as concerns about US growth leaves many investors convinced that the Federal Reserve will provide more monetary stimuli. Meanwhile the dollar, of late the market’s favourite inverse proxy for risk appetite, is bouncing firmly off recent 8-month lows.
Source: FT.com
Europe woos Asia to boost global role
October 4, 2010--Europe sought a heightened global role with Asia's emerging giants Monday at talks ranging from trade to climate change between nations representing more than half the world's population.
The two-day Asia-Europe Meeting (ASEM) of 46 nations, followed by separate EU summits with China and South Korea on Wednesday, opens amid renewed tension between Beijing and Tokyo over disputed islands in the East China Sea.
Chinese Premier Wen Jiabao, indisputably star guest of the talks, could hold a face-to-face meeting with Japanese Prime Minister Naoto Kan to ease the dispute, diplomats said.
For the European Union, the get-together of dozens of heads of state and government in the gilded Goya-hung halls of the Belgian royal palace opens a window of opportunity to strengthen ties with the Asia region at a time of fast global change.
Source: AFP
Insurance-linked securities-A niche market expanding
October 4, 2010--The market for insurance-linked securities (ILS) expanded strongly during the past few years. Although exact data on issuance volumes is not available – due to the private nature of many transactions – estimates suggest that the market grew tenfold during the past decade and more than doubled during the past five years.
Despite high growth rates, ILS have not yet found their way into mainstream asset management. Compared to other securitised products ILS represent a niche market, which to date has not justified the build-up of large buy-side resources. The main buyers of insurance-linked products are dedicated cat funds, hedge funds and money managers, followed by (re-)insurers and banks. Retail clients have so far been largely absent from the ILS market.
Insurance-linked securities have weathered the financial crisis relatively well. Due to the low correlation between insurance risk and credit or asset price risk, ILS were less affected by the crisis than other securitised products – although more than previously anticipated. Issuance declined during the crisis but has resumed pre-crisis levels in the non-life segment.
Lessons learned from the financial crisis will lead to more robust products, including the use of higher quality collateral and less complex structures. Meanwhile, systemic threats to financial markets appear to be limited, given the relatively small size of the ILS market.
Going forward, the market will receive support from various directions:
For the insurance sector, ILS provide unique coverage unavailable in the traditional marketplace. They allow purchasers of protection to diversify their counterparties and access a separate pool of capital.
Investors are presented with an uncorrelated asset class, which can be used to generate synergies in a portfolio context. ILS provide an efficient mechanism to place macro and micro views on specific insurance risks.
Source: Deutsche Bank Research
Just Do It—Shaping the New Financial System
October 4, 2010--Fearful financial markets, an uncertain growth outlook, fiscal anxieties, long unemployment lines….no other financial crisis since the Great Depression has led to such widespread dislocation in financial markets, with such abrupt consequences for growth, trade, and employment.
The crisis exposed fundamental weaknesses in many areas of the world economy, the most obvious being dramatic deficiencies in the regulation and supervision?nationally and internationally?of financial institutions and markets.
On the bright side, the crisis has provided the impetus for a major overhaul of the financial regulatory system. So, are we making the most of this opportunity to fix the system?
Three years into this crisis, the good news is that policymakers have made important progress in some areas, and the work underway is moving in the right direction.
view new Staff Position Paper-Shaping the New Financial System
Source: IMF
Asia takes gamble on US Treasuries
October 1, 2010--Some of the biggest US Treasury bulls reside across the eastern side of the Pacific and they have few doubts that the world’s largest economy is turning Japanese.
For many months, US Treasury traders and investors have noted a particularly strong demand for bonds coming out of Asia, which has helped foster low bond yields for much of this year.
A bigger issue for global markets is whether the pessimistic view from Asia about the US is correct; namely that the country faces a sustained period of low economic growth, accompanied by disinflation – a slowing in the rate of price inflation – or even outright deflation.
Source: FT.com
