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IMF Working paper-China's Monetary Policy and Interest Rate Liberalization: Lessons from International Experiences
May 1, 2014--Summary: China has been moving to a more market oriented financial system, which has implications for the monetary policy environment. The paper investigates the stability of the money demand function (MDF) in light of progress in financial sector reforms that, for example, have resulted in significant financial innovation (so-called shadow banking) and more liberalized interest rates.
The analysis of international experience suggests that rapid development of the financial system often leads to structural shifts in the MDF. For example, financial innovation and liberalization alter the sensitivity of money balances to income and the interest rate. For China, we find that the stable long-run relationship between money demand, output, and interest rates that existed between 2002 and 2008 disappears after 2008. This coincides with the period of rapid financial innovation, especially the growth in off-balance sheet and nonbank financial intermediation. The results suggest that usefulness of M2 as an intermediate monetary target has declined with financial innovation and reform. A result that underscores the importance of moving toward increased reliance on more price-based targets such as interest rates.
China mulls 'mega' FTA
May 1, 2014--Skyline of the Lujiazui Financial District with the Oriental Pearl TV Tower, the Shanghai World Financial Center, the Shanghai Tower under construction and other skyscrapers and high-rise buildings in Pudong, Shanghai, China, Dec 21, 2013.
China has proposed studying the feasibility of a mega free-trade agreement in the Asia-Pacific region as the many flourishing FTAs in the area could burden businesses with different standards, a senior official said on Wednesday.
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Source: China Daily
EURO STOXX 50 index licensed to Mirae Asset Global Investments to underlie exchange-traded fund
April 30, 2014--STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced that the EURO STOXX 50 Index has been licensed to Mirae Asset Global Investments, a leading Korean asset management specialist, to serve as the basis for an exchange-traded fund (ETF). The ETF will be listed on Korea Exchange(KRX) today.
It is the first time that the EURO STOXX 50 Index has been licensed to underlie an ETF in Korea. There are currently 21 ETFs on the index available, globally.
"Licensing the EURO STOXX 50 Index for the first time for an ETF listed in Korea is a big step for STOXX, and also underlines our dedication to grow in the Asian markets," said Hartmut Graf, chief executive officer, STOXX Limited. "The EURO STOXX 50 Index remains Europe's most favoured and well-known blue chip equity index. Its liquidity, transparency and rules based methodology makes the index an ideal tool to participate in the performance of the Eurozone equity markets."
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Source: Stoxx
IMF Working paper-India's Recent Macroeconomic Performance: An Assessment and Way Forward
April 29, 2014--Summary: The macroeconomic policy response in India after the North Atlantic financial crisis (NAFC) was rapid. The overshooting of the stimulus and its gradual withdrawal sowed seeds for inflationary and BoP pressures and growth slowdown, then exacerbated by domestic policy bottlenecks and volatility in international financial markets during mid-2013.
Appropriate domestic oil prices and fiscal consolidation will contribute to the recovery of private sector investment. Fiscal consolidation would also facilitate a reduction in inflation, which would moderate gold imports and favorably impact real exchange rate and current account deficit.
view the IMF Working paper-India's Recent Macroeconomic Performance: An Assessment and Way Forward
Source: IMF
DB-Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review-
April 29, 2014--Data in this report is as of 25 April 2014
Market Review
Last week, Asia-Pacific region had mixed markets with Australia and Singapore ending on positive side:
Japan (Nikkei 225) -0.60%
South Korea (KOSPI2) -1.57%
China (CSI 300) -2.55%
Hong Kong (HSI) -2.36%
Singapore (FSSTI) +0.42%
Australia (S&P/ASX 200) +1.41%
New Product Launch Review
One new ETF was listed in Asia-Pacific ETP market during last week. Reliance capital Asset Management listed one Equity ETF (RCONSUM IN) on the National Stock Exchange (India) focusing on Indian consumer discretionary sector.
ETP Weekly Flows - Minor weekly outflows for the region
Asia-Pacific ETP market recorded outflows of -$121mn during last week (- +$4.9bn over the prev. week), setting the YTD weekly flows average at +$675mn (+$11.1bn in YTD flows). Japan focused ETFs continue to witness inflows recording +$345mn in weekly flows while Taiwan focused ETFs experienced outflows of -$121mn. Among other sub-segments, leveraged long strategy ETFs saw outflows of -$216mn over the last week.
Winners and losers: At ETP level, Daiwa ETF - Nikkei 225 (1320 JP) and Nikko Exchange Traded Index 225 (1330 JP) were the largest flows receivers of the week collecting +$202mn and +$129mn respectively. Over the same period, biggest outflows were experienced by Taiwan Top50 Tracker Fund (0050 TT), Next Funds Nikkei 225 Leveraged Index ETF (1570 JP) and CSOP FTSE China A50 ETF (82822 HK) recording -$120mn, -$104mn and -$104mn of outflows respectively.
Turnover Review - Floor activity up by 3.8%
Asia-Pacific ETP turnover totaled $11.6bn for the last week, 3.8% up from the previous week’s total. On a country level, yet again stock exchanges in Japan topped the turnover ranking with aggregate turnover of $4.1bn (-3.2%), followed by China ($3.2bn, +8.6%), South Korea ($2.7bn, +6.6%), and Hong Kong ($1.3bn, +20.4%). Among equity ETFs, leveraged long strategy, emerging country, Asia-Pacific developed country, and short strategy ETFs were the most traded products recording total turnovers of $4.3bn, $3.9bn, $0.8bn and $0.6bn respectively. Within fixed income ETFs, money market ETFs recorded turnover of $1.3bn (-3.1%) over the last week.
Assets under Management Review -Assets sustained above $170bn
Asia-Pac ETP AUM closed the week at $171.8bn after weekly losses of $2bn.
On a year-to-date basis, Asia-Pac ETP market is up by $2.7bn or 1.6% above
last year’s closing.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy- Asia
IMF Regional Economic Outlook: Asia and Pacific, April, 2014
Sustaining the Momentum: Vigilance and Reforms
April 28, 2014--Asia is well positioned to meet the challenges ahead provided it stays the course on reforms. The region has strengthened its resilience to global risks and will continue as a source of global economic dynamism. Recent actions taken to address vulnerabilities are starting to bear fruit.
However, with the risk of further bouts of volatility ahead, policy complacency will be penalized. Asia's reform momentum must therefore be nurtured so as to secure the region's position as the global growth leader.
Growth in Asia is projected to remain steady at 5.4 percent in 2014 and 5.5 percent in 2015. External demand is set to pick up alongside the recovery in advanced economies, and domestic demand should remain solid across most of the region. With the expected upcoming tightening of global liquidity, Asia will face higher interest rates and potential bouts of capital flow and asset price volatility.
Nevertheless, despite some tightening, financial conditions should remain supportive, underpinned by still-accommodative monetary policies, strong credit growth, and exchange rates that remain weaker than they were a year ago.
view the IMF Regional Economic Outlook: Asia and Pacific, April, 2014
Source: IMF
Deutsche shakes up securities services unit
April 28, 2014--Like some of its big rivals, the bank has repositioned its securities services arm,
appointing a new head in Asia and putting more emphasis on collateral and clearing, and on cross-selling opportunities.
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Source: Asian Investor
Singapore becomes yuan's largest offshore clearing center
April 28, 2014--Singapore has overtaken London as the largest clearing center for China's domestic currency outside of China and Hong Kong, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
Data released by the SWIFT show the value of Singapore's renminbi payments increased by 375 percent between March 2014 and March 2013, making Singapore number one in terms of renminbi payments value, excluding China and Hong Kong.
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Source: CNBC
Alteration of Trading Unit of ETF
April 25, 2014--The trading units of the ETFs below will be changed from May 10, 2014 (Sat.) (in effect, May 12 (Mon.)) as follows
Issue Name: iShares Nikkei225 ETF
Code: 1329
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Source: TSE
DB-Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review -Japan focused ETFs witness $4.4bn inflows
Data in this report is as of 18 April 2014
April 24, 2014--Market Review
Last week, Asia-Pacific region had mixed markets with Japan partially
reversing previous week's losses. Compared to the week before, from north to
south:
Japan (Nikkei 225) +3.98%
South Korea (KOSPI2) +0.38%
China (CSI 300) -2.03%
Hong Kong (HSI) -1.06%
Singapore (FSSTI) +1.74%
Australia (S&P/ASX 200) +0.47%
New Product Launch Review
There was no ETP launch in the last week.
ETP Weekly Flows- Single ETF boosts weekly inflows
Asia-Pacific ETP market recorded inflows of +$4.8bn during last week
(-$522mn over the prev. week), setting the YTD weekly flows average at
+$724mn (+$11.2bn in YTD flows). Developed markets benchmarked ETFs
recorded inflows of +$4.5bn led by Japan focused ETFs (+$4.4bn). These
inflows primarily came from one ETF (Daiwa ETF – Topix (1305 JP): +$3.8bn).
Emerging markets ETF flows remained in negative territory (-$37mn) where
China and South Korea focused ETFs went into opposite direction recording
inflows of +$200mn and outflows of -$200mn respectively. Among other subsegments,
leveraged long strategy and financial sector ETFs saw inflows of
+$323mn and +$157mn respectively over the last week.
Winners and losers: At ETP level, Daiwa ETF- Topix (1305 JP), Next Funds Nikkei 225 Leveraged Index ETF (1570 JP) and CSOP FTSE China A50 ETF (82822 HK) were the largest flows receivers of the week collecting +$3.8bn, +$354mn and +$206mn respectively. Over the same period, biggest outflows were experienced by Samsung KODEX 200 (069500 KS) and Maxis Nikkei 225 ETF (1346 JP) recording -$212mn and -$104mn of outflows. Turnover Review -Floor activity down by 26.5%
Asia-Pacific ETP turnover totaled $11.2bn for the last week, 26.5% down from the previous week’s total. On a country level, stock exchanges in Japan topped the turnover ranking with aggregate turnover of $4.2bn (-31.9%), followed by China ($3bn, -5.9%), South Korea ($2.5bn, -11.5%), and Hong Kong ($1bn, - 57.6%). Among equity ETFs, leveraged long strategy, emerging country, Asia- Pacific developed country, and short strategy ETFs were the most traded products recording total turnovers of $4.1bn, $3.4bn, $1.1bn and $0.7bn respectively. Within fixed income ETFs, money market ETFs recorded turnover of $1.3bn (+17.9%) over the last week.
Assets under Management Review-Assets crossed $170bn mark
Asia-Pac ETP AUM closed the week at a new high of $172.7bn after weekly
gains of $6.2bn. On a year-to-date basis, Asia-Pac ETP market is up by $3.6bn
or 2.1% above last year’s closing.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy- Asia