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IMF Working paper-Local Government Financing Platforms in China: A Fortune or Misfortune?
December 16, 2013--Summary: China's rapid credit expansion in 2009-10 brought local government financing platforms (LGFPs) into the spotlight. This paper discusses their function, reasons behind their recent expansion, and risks they are posing to the financial sector, local governments, and sovereign balance sheet. This paper argues that LGFPs were a fortune for China in the past, but would turn out to be a misfortune if the causes of the rapid expansion of LGFPs are not addressed promptly.
In this context, the paper proposes ways to avoid misfortune by: acknowledging and addressing the revenue and expenditure mismatches at the local government level; establishing a comprehensive framework to regulate and supervise local government budgets; ensuring the sustainability of the financial resources obtained from the sale of land use rights; and developing local government bond markets and promoting financial reforms.
view the IMF Working paper-Local Government Financing Platforms in China: A Fortune or Misfortune?
Indonesia growth forecast shows slower growth in 2014; risks remain high
December 16, 2013--Reversing the slower growth forecast for 2014 will require additional and more focused policy responses, says the World Bank's latest Indonesia Economic Quarterly report, released today.
While policymakers in Indonesia have taken steps to encourage near-term macroeconomic stability, especially through monetary policy and exchange rate adjustments, further structural reforms are needed to support export performance and encourage long-term faster growth.
view the World Bank report Indonesia Economic Quarterly: Slower growth; high risks
Singapore Exchange Looks to China, Derivatives for Growth
December 16, 2013--Faced with lackluster trading in Southeast Asian stocks, Singapore''s main trading platform is looking to resurrect its fortunes by turning to derivatives and China for growth.
Singapore Exchange Ltd., Southeast Asia's biggest bourse better known as SGX-is positioning itself as an entry point for foreign investors seeking to tap emerging economies in Asia. It is also looking to fend off competition from Hong Kong, particularly for new listings and as a currency-trading center.
China's third gold ETF in muted start as consumers prefer physical metal
December 16, 2013--E Fund Management Co Ltd has launched China's third gold-backed exchange-traded fund (ETF) but, like its predecessors, the product has failed to make a splash as investors in the world's biggest bullion user show a preference for physical metal.
E Fund Gold ETF began trading on Monday and saw its market value drop by 0.6 percent on the Shenzhen Stock Exchange.
Mainland fund industry AUM surpasses 4 trillion RMB
December 16, 2013--The total AUM of China's fund industry broke the 4 trillion RMB (US$634.9 billion) mark in November this year, according to figures released by the Asset Management Association of China (AMAC).
As of the end of November, the size of mutual funds overseen by Mainland asset managers amounted to 2.91 trillion RMB, which represented a growth of 1.8% year-on-year. Meanwhile, the size of the non-public raised funds, which includes enterprise annuities, segregated accounts, and fundamental pension funds, was 1.15 trillion RMB, an increase of 52.5% from 754.1 billion RMB a year earlier.
SPDJI launches S&P Total China BMI Indices
December 13, 2013--S&P Dow Jones Indices (SPDJI) has launched its S&P Total China BMI Indices. An extension to the S&P Global BMI family, the five indices are designed to allow global investors to analyse the Chinese equity market in a robust and efficient manner by including both A-shares and offshore listings in one set of indices.
The indices launched on December 12 include:
S&P China A BMI: A broad market index representing large-, mid-, and small-cap China A-shares;
ETF/ETN Monthly Report for Nov 2013
December 12, 2013--Monthly trading value hit a record high in November!
With monthly trading value reaching approx. JPY 2.4 trillion, the ETF/ETN market in November reached a new record high, surpassing the previous record of approx. JPY 2.1 trillion set in May.
Trading of leveraged and inverse ETFs remained active, with NEXT FUNDS Nikkei 225 Leveraged Index Exchange Traded Fund (1570) occupying more than 50% of the trading value of the entire ETF/ETN market.
ETFs tracking TOPIX and Nikkei 225 also saw steady gains in trading value.
view the TSE ETF/ETN Monthly Report for Nov 2013
DB-Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review-Inflows across DM and EM ETFs
December 12, 2013--Data in this report is as of 6 December 2013.
Market Review
Last week, all the major markets in the Asia-Pacific region remained in negative territory except China. Compared to the week before, from north to south:
Japan (Nikkei 225) -2.31%
South Korea (KOSPI2) -3.29%
China (CSI 300) +0.55%
Hong Kong (HSI) -0.58%
Singapore (FSSTI) -1.96%
Australia (S&P/ASX 200) -2.52%
New Product Launch Review
Last week, two new products were launched in the Asia-Pacific ETP market. First Metro Asset Management listed one equity ETF (FMETF PM) on the Philippine Stock Exchange providing exposure to the equity market of Philippines. This is the first ETF launch in the Philippines Stock Exchange. Wanjia Asset Management listed its first ETF tracking SSE 380 Index on the Shanghai Stock Exchange.
ETP Weekly Flows-Inflows across DM and EM ETFs
Last week, Asia-Pacific ETP market recorded inflows of +$0.7bn vs. +$1.0bn of inflows for the previous week, setting the YTD weekly flows average at +$0.3bn (+$14.8bn YTD in total flows). Developed markets equity ETFs collected weekly inflows of +$396mn while emerging markets equity ETFs collected +$312mn of inflows over the last week. On a country level, ETFs benchmarked to Japan and South Korea received inflows of +$400mn and +$244mn respectively.
Winners and losers: At ETP level, Maxis Nikkei 225 ETF (1346 JP), CSOP FTSE China A50 ETF (82822 HK) and Mirae Asset MAPS TIGER 200 ETF (102110 KS) were the largest flows receivers of the week collecting +$335mn, +$302mn and +$208mn respectively. Over the same period, biggest outflows were experienced by iShares Nikkei 225 (1329 JP) and Samsung KODEX Leverage ETF (122630 KS) recording -$80mn and -$57mn of outflows respectively.
Turnover Review-Floor activity up by 11.7%
Asia-Pacific ETP turnover totaled $17.8bn for the last week, 11.7% up from the previous week’s total. Stock exchanges in Japan remained on the top of the turnover ranking with $7.1bn turnover, followed by South Korea ($4.1bn), China ($4.0bn) and Hong Kong $2.0bn. Among equity ETFs, leveraged long strategy, emerging country, Asia-Pacific developed country and short strategy ETFs had total turnover of $6.5bn, $5.9bn, $2.3bn and $0.9bn respectively. Within fixed income asset class, turnover in sovereign and money market ETFs totaled $1.2bn and $0.2bn respectively.
Assets under Management Review-Assets decreased by $1.8bn
Last week, Asia-Pacific ETP AUM decreased by $1.8bn and ended the week at $166bn. On a year-to-date basis, Asia-Pacific ETP market is up by $30.1bn or 22.1% above last year’s closing.
India Poised to be a Global Leader in the Development of Solar Power, Says New World Bank Report
Inadequate finance, lack of shared infrastructure and constraints to supply chain key barriers to scaling up
December 12, 2013--Launched in 2010, the Jawaharlal Nehru National Solar Mission Phase 1 (JNNSM) is well-poised to make India a global leader in the development of solar power. In a span of three years, India has taken a significant step forward in implementing its green growth agenda by increasing its installed capacity of solar power from around 30 MW to more than 2,000 MW, says a new World Bank report.
What is significant is that JNNSM has been instrumental in bringing down the cost of solar power to a level that is competitive across the world, says the report. It has reduced the costs of solar energy to $0.15 per kWh, making India amongst the lowest cost destinations for grid-connected solar Photovoltaic (PV) in the world.
China yuan hits new record high against USD
December 11, 2013--The Chinese currency Renminbi, or the yuan, rose to a fresh record high against the US dollar for the fourth consecutive trading day on Wednesday.
The yuan rose 14 basis points to reach 6.11 per US dollar,the strongest since July 2005, when the country launched reforms of the exchange rate mechanism, according to the China Foreign Exchange Trading System.
The People's Bank of China on Tuesday set the dollar-yuan central parity rate at 6.1114, stronger than Monday's 6.113 and Friday' s 6.1232. This was in line with broad dollar weakness despite better-than-expected US job data released on Friday and also came after strong Chinese exports data over the weekend.
