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Third time lucky? China's push to internationalise the renminbi
November 2, 2023--This paper analyses China's different attempts to internationalise its currency and how they have fared.
Executive summary
Western concerns that the renminbi could rival the dollar as an international currency contrast with underwhelming numbers in terms of global settlements in renminbi and with the experience of China's two main previous failed attempts to achieve renminbi internationalisation.
However, China is moving towards a more realistic plan for renminbi internationalisation, focusing on China's strengths in trade and financing.
China is now the main trading partner for a very large number of countries and has become a major creditor for a good part of the Global South. This, together with the increasingly frequent restrictions on the use of the dollar, is strengthening the renminbi.
The cross-border use of the renminbi for trade settlements and financing (Chinese banks' overseas loans denominated in renminbi and official renminbi swap lines offered by the People's Bank of China) has been on the rise since 2022, coinciding with Russia's invasion of Ukraine and the related Western sanctions.
Taiwan rules on dividend ETFs will not deter investors, experts say
October 31, 2023--'Earnings equalisation mechanisms' used by managers to help artificially increase dividend payouts are under scrutiny
Regulatory pressure on Taiwanese asset managers to disclose how much capital is being used to make payouts from high-dividend exchange traded funds is unlikely to dent investor enthusiasm for the products, experts say.
In September, Taiwan's regulator announced that from November 1, managers must disclose the dividend composition of ETFs as part of a crackdown on "earnings equalisation mechanisms".
These essentially siphon off a portion of new investments in the funds to support previously targeted dividend payouts that would otherwise be diluted by the new investors.
However, fund firms are now facing scrutiny from the Financial Supervisory Commission after complaints.
The Global Energy Transition Offers an Opportunity to Boost Growth in South Asia
October 30, 2023--Despite solid growth, South Asia faces a risky outlook, says the World Bank in its latest regional economic update, urging countries to fully capitalize on the global energy transition to help boost growth. Toward Faster, Cleaner Growth is the subject of a two-day conference organized by the BRAC Institute of Governance and Development (BIGD) and the World Bank.
Opening today, the conference is a platform for academics, experts, and researchers to discuss the opportunities and challenges the region faces in pursuing green growth.
Constrained by slowing growth and fiscal challenges, South Asia's governments have limited room to help their economies make the most of the global energy transition. The global energy transition presents an opportunity to boost productivity and investment, create jobs, cut air pollution, and reduce reliance on fuel imports. Even with limited fiscal space, countries can encourage firms to adopt more energy-efficient technologies through market-based regulations, information campaigns, broader access to finance, and the provision of reliable power grids.
DOD Report Details Chinese Efforts to Build Military Power
October 20, 2023--The People's Republic of China is continuing its efforts to overturn the international rules-based order and is building an increasingly effective military to further these aims, said a senior defense official speaking on background.
Spotlight: 2023 China Military Power Report
The official gave reporters a preview of the 2023 China Military Power Report that DOD delivered to Congress today. The annual report to Congress is based on the National Defense Strategy's premise that China is the only competitor with the intent, will and capability to reshape the international order, said the official.
view the 2023 Report on Military and Security Developments Involving the People's Republic of China
Australian ETF 'underdog' is taking on Vanguard and BlackRock
October 19, 2023--Sydney-based Betashares has recently expanded into New Zealand and the superannuation industry
Three fund firms have emerged as leaders in Australia's exchange traded fund industry, which has become one of the fastest growing in the world. Battling alongside two global ETF giants is a local "underdog" with a different origin story and challenges for ensuring longer-term growth.
Alex Vynokur, a Ukrainian national who had emigrated to Australia 15 years earlier, set up a new Sydney-based Betashares in 2009, sensing changing market trends and investor needs.
UBS and Barclays buck trend with substantial China ETF bets
October 19, 2023--Both banks are top backers of a China-domiciled financials exchange traded funds launch
Barclays Bank and UBS have been named among the biggest investors in two newly launched exchange traded funds in China, at a time when many foreign investors continue to shun Chinese stocks.
China Asset Management, one of the country's largest public fund houses, announced on October 11 that its new ChinaAMC CSI Hong Kong Connect Mainland Financials ETF listed on the Shanghai Stock Exchange after raising Rmb209mn ($28.6mn) in initial assets.
China's economy grows 4.9% in Q3, beating expectations but slowing from previous quarter
October 18, 2023--China's economy slowed in the summer as global demand for its exports faltered and the ailing property sector sank deeper into crisis, the government said Wednesday.
The world's second-largest economy expanded at a 4.9% annual pace in July-September, beating analysts' forecasts of about 4.5%, official data show.
But that was much slower than the 6.3% annual growth rate of the previous quarter.
The Chinese government has acted to help the economy with various policies, raising spending on building ports and other infrastructure, cutting interest rates and easing curbs on home-buying. But economists say wider reforms are needed to address long-term problems that are stifling growth.
Solactive Collaborates with BT Funds Management (BTNZ) on a Range of International Equity Indices against which c.3 Billion NZD are to be Benchmarked
October 16, 2023--Solactive and BT Funds Management (BTNZ) have joined forces to introduce a suite of indices derived from Solactive's flagship Global Benchmark Series (GBS). Some of them incorporate a customized strategy to align with the investment manager's sustainability principles, adhering to the exclusion list of companies identified and maintained by BTNZ.
The new indices serve as benchmarks for active funds and mandates managed by five different asset managers acting on behalf of BTNZ and their members.
This collaboration represents an additional c. 3 billion NZD of assets linked to Solactive's indices, as of October 2023.
The Solactive GBS Global Markets ex Oceania Large & Mid Cap NZD Index NTR (SOGLMCZN), the Solactive GBS Developed Markets ex Oceania Large & Mid Cap NZD Index NTR (ticker: SODLMCZN), and the Solactive GBS Emerging Markets Large & Mid Cap NZD Index NTR (SEMLMCZN) provide exposure to companies in various segments of global, developed, and emerging markets respectively.
The first two exclude Australia and New Zealand from their selection, clearly separating the exposure from other strategies to further strengthen investment diversification.
BIS Working Papers-To lend or not to lend: the Bank of Japan's ETF purchase program and securities lending
October 16, 2023--August 2, 2023-Summary
Focus-We study the effects of the Bank of Japan's (BOJ) ETF purchasing programme on stock returns, focusing particularly on the role of the stock lending market. In 2010, the BOJ established a programme to conduct outright purchases of various financial assets to stimulate the economy. This policy is unique as a monetary policy because equity index-tracking exchange-traded funds (ETFs) were included in those assets.
The BOJ has continuously increased its purchasing amounts and its market presence has provoked discussions on how it has affected the market's structure.
Contribution
While some previous studies show that the programme significantly affected Japanese stock prices, these arguments relied solely on demand and supply in the spot market, almost completely ignoring the role of the stock lending market. To fill this gap, this study investigates the effects of the ETF purchasing programme by focusing on both spot and stock lending markets.
Asia Continues to Fuel Global Growth, but Economic Momentum is Slowing
October 13, 2023--The region is likely to see faster disinflation, but prospects for growth in coming years are dimming
Strong consumer spending has supported growth in Asia's three largest economies this year, but there are already signs that the region's recovery may be running out of steam.
We expect growth in Asia and the Pacific to accelerate from 3.9 percent in 2022 to 4.6 percent this year, unchanged from the projection from last April.
This is largely explained by the post-reopening recovery in China and stronger-than-expected growth in the first half of the year in Japan and India. With pandemic restrictions lifted, demand in these economies was bolstered by consumers running down savings accumulated during the pandemic, leading to notable strength in the services sector.
While Asia is still set to contribute about two-thirds of all global growth this year, it is important to note that growth is significantly lower than what was projected before the pandemic and output has been set back by a series of global shocks.
We have lowered our estimate for growth next year to 4.2 percent, from the 4.4 percent projected in April.