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Latin America - Markets refocus on fundamentals
April 12 , 2012--Latin American equities trailed global equities in 2011, giving back a small part of the huge outperformance delivered over the past decade.
Risk aversion has persisted since the fourth quarter of 2010, largely because of deterioration in the financial stability of the euro zone.
In 2012, however, we anticipate that markets will once again focus on local fundamentals. Starting from a base case of decelerating inflation across Latin America, we see room for multiple expansion across the region’s equity markets over the coming 18 months. In addition, because the political calendar appears relatively quiet in 2012, we believe election-related market volatility likely will be reduced.
Inflationary pressures that negatively affected Latin American equities in 2011 are expected to ease into 2012, removing the key, recent, local overhang to performance. The one exception is in Argentina, where official data mask a more deep-rooted inflation issue. In Brazil, we forecast that inflation data will have peaked in 2011, followed by a downward trend throughout the first half of 2012. Brazilian IPCA readings have remained stubbornly high since April 2011, above the 6.5% ceiling of the target band.
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Source: Mirae Asset Management
MSCI Tries to Make 'Frontier' Markets Safer
April 12, 2012--A new ETF offering announced Wednesday hopes to bring a little more civility to the frontier.
Investment product provider MSCI Inc. (NYSE:MSCI) is launching a new index, the MSCI Frontier Markets 100 Index — a spin-off of its broader MSCI Frontier Markets Index and comprising 100 of its largest and most liquid companies. In turn, this new index, will be used for a future BlackRock (NYSE:BLK) iShares ETF.
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Source: InvestorPlace
Nasdaq Proposes Issuers Pay Market Makers in Less-Active ETFs
April 12, 2012--Nasdaq Stock Market (NDAQ) (NDAQ) asked the U.S. Securities and Exchange Commission to allow companies sponsoring exchange-traded funds to pay market makers about $200 per day to quote their shares more aggressively.
The practice, currently illegal in the U.S., would spur quoting and transactions in ETFs that trade less than 2 million shares daily, benefiting investors by making more volume available to buy or sell at better prices, Nasdaq told the SEC in a filing published on April 6. The exchange said it would begin the program, which regulators must approve before it can be implemented, as a one-year study. The SEC rejected two earlier requests before they reached the public comment stage.
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Source: Business Week
Fed's Dudley: Too soon to say economy out of danger
April 12, 2012--The disappointing performance of the U.S. labor market in March shows it is too early to conclude the economy is out of the woods, despite months of encouraging economic data, New York Federal Reserve Bank president William Dudley said on Thursday.
The Fed is gathering more data to determine whether last month's non-farm payrolls report, which showed the economy added way fewer jobs than expected, was just a weather-related setback or a sign the recovery is losing momentum again, Dudley said.
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Source: Reuters
Asset managers demand ETF clarity
April 12, 2012--BlackRock and Vanguard, two of the largest issuers of exchange traded funds, are calling for clearer discrimination between their products and securities offered by investment banks that promise similar returns but would leave investors exposed were the issuing bank to fail.
The move comes as at least two regulators investigate unusual price movements last month in a tradeable security issued by Credit Suisse, which ETF issuers worry could lead investors to turn away from their own products.
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Source: FT.com
US equity funds see $7 bln outflow in week -Lipper
April 12, 2012--Investors pulled $7.03
billion from equity funds in the week ending April 11, with the bulk of the money coming out of funds invested in U.S. stocks, especially through exchange-traded funds, data from Thomson
Reuters' Lipper showed on Thursday.
Over the course of the holiday-shortened reporting week, the
Standard & Poor's 500 Index, the U.S. benchmark for equities, fell 2.16 percent.
Taxable bond funds took in $56 million, but investors pulled $4.39 billion from money market funds and $57 million from municipal bond funds, Lipper said.
Investors pulled $6.88 billion from equity funds invested in U.S. equities, of which $5.68 billion came from ETFs holding U.S. stocks. The high rate of investment outflow from ETFs suggests it came from institutional investors.
Almost half of the money withdrawn from ETFs that was invested in U.S. stocks came from funds that mimic the return of two major stock indexes, the S&P 500 and the Dow Jones industrial average.
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Source: Reuters
CFTC.gov Financial Data for Futures Commission Merchants Update
March 11, 2012--The selected FCM financial data as of 2/29/2012 (from reports filed by 4/1/2012) is now available
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Source: CFTC.gov
Fitch: Popular Short-Term ETFs Offer Higher Yield, But Add Risk
April 11, 2012--Fitch Ratings notes the growing popularity of short-term fixed-income Exchange Traded Funds, or ETFs. These are short-term bond funds that market themselves as a close alternative to money market funds.
We note one example that underscores the growing popularity of this product in PIMCO Enhanced Short Maturity Strategy ETF (MINT). The objective of MINT is the maximum current income consistent with preservation of capital and daily liquidity, identical to that of MMFs. The fund has reached $1.5 billion in the 2.5 years since its inception in November 2009. MINT currently offers a 0.96% 30-day yield versus an average 0.03% yield delivered by taxable MMFs, according to iMoneyNet. That's a sizable difference, and one that underscores the allure for investors in traditional MMFs.
Investors also benefit from additional transparency with actively managed ETFs, as they are obligated under Securities and Exchange Commission rules to disclose their portfolio holdings daily versus monthly for MMFs.
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Source: Fitch Ratings
SEC readies vote on circuit-breaker replacement
April 11, 2012--On 4 April, the US Securities and Exchange Commission (SEC) announced, after several extensions, that it would finally decide whether to approve a new volatility-mitigation plan for the US equities market by 31 May.
The new mechanism would replace the current single-stock circuit breakers for securities in the S&P 500 and Russell 1000 indices and certain exchange-traded funds (ETFs) sets to expire on August 11, or sooner if the new plan is implemented prior to the deadline.
The plan, developed by a consortium of the leading US equities and equity options exchanges – including NYSE Euronext, Nasdaq OMX, BATS Global Markets, Direct Edge and Chicago Stock Exchange – in league with the Financial Industry Regulatory Authority (FINRA), seeks to replace the single-stock circuit breaker pilot that has been in position since June 2011 to better address extraordinary market volatility, such as experienced on 6 May, 2010.
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Source: The trade
CFTC to Hold Open Meeting to Consider Two Final Rules
April 11, 2012--The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Wednesday, April 18, 2012, at 9:30 a.m., to consider two Final Rules:
Final Rule on Further Definition of "Swap Dealer," "Security-Based Swap Dealer," "Major Swap Participant," "Major Security-Based Swap Participant," and "Eligible Contract Participant."
Final Rule on Commodity Options.
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Source: CFTC.gov
