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IMF India: Selected Issues
February 20, 2014--Summary: The background papers for the 2014 Article IV explore key issues affecting the Indian economy,and implications for fiscal,monetary,structural,and financial sector policies. The first chapter uncovers the factors behind the unprecedented widening of India’s current account deficit in terms of the sectoral savings-investment balance. Persistently-high inflation is found to have depressed real returns,prompting a surge in gold imports and a marked deterioration in household financial savings.
The second chapter investigates inward and outward spillovers to and from India. The results show that output shocks emanating in globally-systemic countries have important global effects,but their impact on India is limited. Shocks originating in India have relatively small global implications,but are very important for several South Asian economies. The third chapter investigates the role of monetary policy in the context of high and persistent food and fuel inflation. As the second-round effects on core inflation are large,in order to durably reduce inflation,monetary policy will need to maintain a tight stance for a prolonged period of time. In addition,progress on structural reforms to raise potential growth is critical to reduce the burden on monetary policy. The fourth chapter explores progress in poverty reduction and inclusive growth. Robust economic growth has been a major driver of poverty reduction and inclusiveness. Social expenditures,spending on education,and educational attainment rates are important for fostering inclusive growth; while macro-financial stability,with particular attention to inflation risks,is critical for sustaining inclusive growth.
view the IMF India: Selected Issues paper
IMF India: Staff Report for 2014 Article IV Consultation
February 20, 2014-- Summary: KEY ISSUES Context: The tightening of global liquidity has increased external pressures and heightened the focus on India's macroeconomic imbalances (high inflation, large current account and fiscal deficits) and structural weaknesses (particularly supply bottlenecks in infrastructure, power and mining).
Outlook and risks: Growth is expected to slow to 4.6 percent this fiscal year, the lowest level in a decade, reflecting global developments and domestic supply constraints.
Headline CPI inflation is expected to remain near double digits for the remainder of the fiscal year. The current account deficit is narrowing, driven by a significant improvement in exports, robust remittances flows, and a rapid diminution of gold imports. Nonetheless, India has very little room to adopt countercyclical policies, constrained by persistently-high inflation, and sizeable fiscal and external imbalances. Spillovers from renewed external pressures interacting with domestic vulnerabilities are the principal risks.
Key policy recommendations:
High and persistent inflation is a key macroeconomic challenge facing India. Further increases in the policy rate will be necessary to tackle high inflation and inflation expectations.
view the IMF India: Staff Report for 2014 Article IV Consultation
S.Korea to launch 20-yr T-bond futures, monitor forex deposits
February 19, 2014--South Korea's financial regulator said on Thursday it plans to establish a 20-year government bond futures market by 2015 to boost derivatives trading activity and offer investors' more hedging options.
The Financial Services Commission (FSC), in an annual report to the president, said a greater variety of derivatives products will offer investors the ability to properly manage their investment risks.
HKEx Welcomes First International ETF on Mainland China's Onshore Bond Market
February 18, 2014--Hong Kong Exchanges and Clearing Limited (HKEx) welcomes the listing set for tomorrow, 19 February 2014 of the CSOP China 5-Year Treasury Bond ETF, which will be the first Exchange Traded Fund, or ETF, outside Mainland China that tracks the Mainland onshore bond market.
The underlying index of the ETF is the China Bond 5-year Treasury Bond Index compiled by China Central Depositary & Clearing Co., Ltd.
The new listing will have a Renminbi (RMB) counter and a Hong Kong (HKD) dollar counter to allow investors to trade the units in either currency. It will be HKEx's 14th dual counter (RMB and HKD) ETF, its 12th RQFII* ETF and is the 117th ETF listed in Hong Kong.
Energizing Green Cities: Solutions to Meet Demand and Spark Economic Growth
February 18, 2014--STORY HIGHLIGHTS: Half of the world's population lives in cities, and urban population in East Asia is growing twice as fast as in the rest of the world.
Urban energy demands and GHG emissions are rising- but cities can become global engines of green growth.
The World Bank's Sustainable Energy and Emissions Planning can help cities get on the green growth path to benefit the environment and their own economic growth.
Cities in Southeast Asia (SEA) are growing twice as fast as the rest of the world and by 2030, it is expected that 70 percent of SEA population will live in cities. Worldwide, cities account for around two-thirds of global energy demand and greenhouse gas (GHG) emissions. While cities have always been the engines of economic growth, now they also hold the key to a sustainable development in SEA. Given their size and dynamic growth, SEA cities today have a unique opportunity to also become global engines of green growth by choosing energy-efficient solutions for their infrastructure needs.
DB-Synthetic Equity & Index Strategy- Asia-Pac Weekly ETF Market Review- Inflows to Japan ETFs and outflows from Korea ETFs
February 18, 2014--Data in this report is as of 14 February 2014.
Market Review
Last week, all the major markets in the Asia-Pacific region remained in positive territory except Japan. Compared to the week before, from north to south:
Japan (Nikkei 225) -1.03%
South Korea (KOSPI2) +0.89%
China (CSI 300) +3.76%
Hong Kong (HSI) +3.06%
Singapore (FSSTI) +0.85%
Australia (S&P/ASX 200) +3.67%
New Product Launch Review
There was no new ETP listing in the last week.
ETP Weekly Flows-Mild weekly inflows
Last week, Asia-Pacific ETP market recorded inflows of +$0.3bn vs. +$3.9bn for the previous week, setting the YTD weekly flows average at +$1.2bn (+$7.5bn YTD in total flows). Developed markets equity ETFs registered weekly inflows of +$704mn, primarily contributed by Japan focused ETFs (+$672mn). Emerging markets ETFs saw redemptions of -$264mn, mostly from South Korea benchmarked ETFs (-$246mn). Leveraged long strategy ETFs also experienced outflows of close to -$200mn over the last week.
Winners and losers: At ETP level, CSOP FTSE China A50 ETF (82822 HK), Nikko Exchange Traded Index 225 (1330 JP) and TOPIX ETF (1306 JP) were the largest flows receivers of the week collecting +$228mn, +$183mn and +$168mn respectively. Over the same period, biggest outflows were experienced by Samsung KODEX Leverage ETF (122630 KS), Samsung KODEX 200 (069500 KS) and Bosera FTSE China A50 Index ETF (2832 HK) recording -$175mn, -$158mn and -$141mn of outflows respectively.
Turnover Review- Floor activity up by 2.9%
Asia-Pacific ETP turnover totaled $13.3bn for the last week, 2.9% up from the previous week’s total. After holidays in the first week of February, turnover activity in China and Hong Kong took pace during last week recording week-on-week change of $2.3bn (+656%) and $0.7bn (+61%) respectively. Among other major markets, turnover declined by $1.9bn (-26%) in Japan and $0.6bn (-16.5%) in South Korea on a weekly basis. Within equity ETFs, leveraged long strategy, emerging country, Asia-Pac developed country and short strategy ETFs had total turnover of $5.2bn (-20%), $4.4bn (+76%), $1.6bn (-32%) and $0.9bn (+7%) respectively. Among fixed income ETFs, money market and sovereign ETFs recorded turnover of $0.3bn (+35%) and $0.2bn (+152%) respectively over the last week.
Assets under Management Review-Assets increased by $2.5bn
Last week, Asia-Pacific ETP AUM added $2.5bn and ended the week at $167.9bn. On a year-to-date basis, Asia-Pacific ETP market is down by $1.1bn or 0.6% below last year’s closing.
China Record Credit Growth Boosts Outlook for Economy
February 17, 2014--Record new credit in China in January will help the economy maintain momentum while highlighting challenges for officials trying to limit the risk of financial turbulence from defaults and bad loans.
Aggregate financing, the broadest measure of credit, was 2.58 trillion yuan ($425 billion), the People's Bank of China said in a Feb. 15 statement. New local-currency lending was 1.32 trillion yuan, the highest level since 2010.
BlackRock aims to find right formula for Asia-Pacific
February 17, 2014--The Asia-Pacific region has been the weak link in BlackRock (BLK) Inc. (BLK)'s global growth story in recent years, leading some market veterans to conclude the New York-based giant has yet to find a formula for success there.
In a Feb. 10 interview, Mark McCombe, BlackRock's Asia-Pacific chairman, conceded the company faced some serious headwinds when he took the helm two years ago in Hong Kong.
Clouds gather over Thai economy
February 17, 2014--Any comfort investors in Thailand draw from what happened four years ago, when economic growth, the stock market and foreign investment all surged despite deadly unrest in Bangkok, may be sorely misplaced.
The latest bout of political strife will delay major government spending projects, and damage a lucrative tourism industry. And, even if Thailand's politics calm down, its economy will remain handicapped by weak private investment and rising household debt
Korea-Australia treaty hailed as key to passport
February 17, 2014--John Brogden sees the ARFP scheme as harmonising regulation in Asia.
The pending free trade agreement between Australia and Korea is being hailed as a vital step if the proposed Asia Region Funds Passport (ARFP) is to succeed. Yesterday...
