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India: The Current Downturn Presents an Opportunity to Push Ahead With Reforms to Accelerate Growth, Says World Bank
Expects GDP to expand 4.7% in 2014 and 6.2% in 2015; pace of poverty reduction faster, especially in low income states
October 16, 2013--Recent global market turmoil is unlikely to have major adverse effects on India and instead provides an opportunity to regain growth momentum through further progress on reforms, says the latest India Development Update of the World Bank.
According to the Update, a twice yearly report on the Indian economy and its prospects, global investors have focused more intensely on large emerging economies with greater current account and fiscal deficits as they withdrew funds from emerging markets in anticipation of an early end to the US Federal Reserve's quantitative easing program. In this risk-averse environment, India's large twin deficits and slowing growth momentum added to investors' fears.
"Recovering the higher rates of growth in India is critical to achieving the global goal of ending extreme poverty by 2030,” said Martin Rama, chief economist for the South Asia Region at the World Bank. "While the reform momentum has accelerated in the last few months, the current situation offers an opportunity to further strengthen the business environment and enhance fiscal space.”
The report expects real GDP to expand by 4.7% this fiscal year (FY2014) before accelerating to 6.2% in FY2015. Although output growth in the first quarter of the current fiscal year fell to 4.4%, growth is expected to rebound strongly in the second half of FY2014 with core inflation trending down, a bumper crop expected in agriculture (where a 5% increase in area sown is expected to raise agricultural growth to 3.4% from 1.9% a year ago), and exports likely to benefit substantially from the rupee's depreciation. Growth is expected to improve further in the medium term as strengthening exports support a recovery in industrial activity and new investment projects come on stream.
view the World Bank India Development Update: October2013
Source: IMF
DB-Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review-Japan focused ETFs continue to attract inflows
October 15, 2013--Data in this report is as of 11 October 2013.
Market Review
Last week, all the major markets in the Asia-Pacific region advanced on the hope of U.S. government would break the deal deadlock to raise the borrowing cap and prevent a default. Compared to the week before, from north to south:
Japan (Nikkei 225) +2.71%
South Korea (KOSPI2) +1.75%
China (CSI 300) +2.47%
Hong Kong (HSI) +0.34%
Singapore (FSSTI) +1.33%
Australia (S&P/ASX 200) +0.44%
New Product Launch Review
Last week, one new product was launched in the Asia-Pacific ETP market. Mirae Asset MAPS Global Investments listed one sector ETF (182480 KS) on the Korea Stock Exchange tracking MSCI US REIT Index. This is the second ETF in Asia which is providing exposure to US real estate sector. Previously, Korea Investment Trust listed one ETF (181480 KS) in Aug’13 tracking Dow Jones US Real Estate Index.
ETP Weekly Flows-Japan ETFs see +$284mn of inflows
Last week, Asia-Pacific ETP market recorded outflows of -$43mn vs. +$563mn of inflows for the previous week, setting the YTD weekly flows average at +$326mn (+$13.4bn YTD in total flows). On a country level, ETFs benchmarked to Japan and Hong Kong were the largest movers of the week. Japan focused ETFs collected +$284mn of inflows while Hong Kong focused ETFs experienced outflows of -$213mn.
Winners and losers: At ETP level, Daiwa Topix ETF (1305 JP), Maxis Nikkei 225 ETF (1346 JP) and Nomura Nikkei 225 ETF (1321 JP) were the largest cash flow receiver of the week collecting +$293mn, +$230mn and +$154mn respectively. Over the same period, biggest outflows were experienced by Daiwa Nikkei 225 ETF (1320 JP) and Tracker Fund of Hong Kong (2800 HK) recording -$737mn and -$221mn of outflows respectively.
Turnover Review -Floor activity up by 7.1%
Asia-Pacific ETP turnover totaled $10.1bn for the last week, 7.1% up from the previous week’s total. Japan took the lead in the turnover ranking with $3.4bn turnover, followed by South Korea ($3.1bn), China ($2bn) and Hong Kong ($1.3bn). Among equity ETFs, Emerging country, leveraged long, Asia-Pacific developed country and short ETFs had total turnover of $3.6bn, $3.2bn, $1.5bn and $0.8bn respectively. Within fixed income asset class, turnover in sovereign and money market ETFs totaled $234mn and $224mn respectively.
Assets under Management Review - Assets increased by $2.2bn
Last week, Asia-Pacific ETP AUM increased by $2.2bn and ended the week at $165.5bn. On a year-to-date basis, Asia-Pacific ETP market is up by $29.5bn or 21.7% above last year's closing.
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Source:Deutsche Bank-Synthetic Equity & Index Strategy-Asia
ESMA unable to recognize equivalence of Hong Kong's clearing
October 14, 2013--Because the laws implementing Hong Kong's over-the-counter clearing scheme haven't been adopted, Hong Kong is falling behind other Asian markets in gaining equivalency recognition from the European Securities and Markets Authority.
"While it is unclear when the primary legislation in Hong Kong will be passed, ...
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Source: Smartbrief
Index Tracker For The Masses
October 14, 2013--Recently, the SPDR Straits Times Index Exchange Traded Fund (SGX: ES3), or STI ETF, that tracks the Straits Times Index (SGX: ^STI), was reclassified as an Excluded Investment Product (EIP).
Previously, the STI ETF was classified as a Specified Investment Product (SIP) and investors looking to invest in the ETF had to undertake Customer Knowledge Assessment with their brokers to show that he or she has the relevant knowledge or experience to invest in such shares.
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Source: The Motley Fool
Demand for SGX FTSE China A50 Index Futures continues to grow fast
October 11, 2013--The liquidity and volume in the SGX FTSE China A50 Index Futures continued to grow fast, the Singapore Exchange said Friday.
The contract achieved an average daily volume of 88,729 contracts and an open interest level of 202,547 contracts in September.
Denominated in U.S. dollar, the SGX A50 Futures are the only offshore futures tracking the China A-shares market.
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Source: Shanghai Daily
REITS: Sebi throws a lifeline to developers, realty stocks perk up
October 11, 2013--Market regulator Sebi is soon likely to allow real estate investment trusts, or REITs, in India to provide investment avenues for investors.
REITs are trading units similar to mutual funds and Exchange Traded Funds for stocks, bonds and other securities. They also serve as financing instruments for liquidity-starved developers. The timing of this move is important keeping in mind the prevailing paucity of funds and the ongoing slowdown in the real estate sector.
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Source: Firstpost.com
Chinese Currency Hits Record High Against Dollar
Further Delay in Fed 'Tapering' Seen
October 11, 2013--The Chinese yuan hit a record high against the U.S. dollar in Hong Kong on Friday, buoyed by positive news about the U.S. debt ceiling and optimism that the Federal Reserve won't quickly wind down its monetary stimulus.
In the offshore market, where the currency is freely traded, the yuan hit 6.1020, compared with 6.1149 on Thursday afternoon.
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Source: Wall Street Journal
FMIC raises First Metro ETF capital to P10B
October 10, 2013--First Metro Investments Corp. is increasing its soon-to-launched exchange traded funds or ETFs to P10 billion from P3 billion, saying demand is going to be higher from local and foreign investors.
The company intends to seek Securities and Exchange Commission approval to raise the authorized capital stock of First Metro Exchange Traded Fund to P10 billion, Roberto Juanchito Dispo, First Metro Investments president, said Thursday.
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Source: GMA News
Shadow banking seen accounting for 40% of GDP-report
October 10, 2013--The size of China's shadow banking sector reached 20.5 trillion yuan ($3.4 trillion) by the end of 2012, equivalent to 40 percent of the country's GDP last year, the Xinhua News Agency reported Wednesday, citing a report published by a government think tank.
The report, released Tuesday by the Chinese Academy of Social Sciences (CASS), differed from official statistics, according to which the size of the shadow banking market in China was 14.6 trillion yuan by the end of last year, equivalent to 29 percent of the country's GDP.
The shadow banking sector's share of the country's total banking assets was 16 percent by the end of 2012, according to the CASS, which is also higher than official calculation of 11 percent, the report said.
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Source: Global Times
IMF-Asia and Pacific Regional Economic Outlook Update
October 10, 2013--Asia has not been spared by the recent re-pricing of financial assets in emerging markets, encountering a wave of capital outflows in the past few months. The overall impact has, so far, been manageable although some countries have been subject to greater stress.
Tighter global liquidity- and homegrown structural impediments in some countries-will weigh on growth, but for most economies the impact should be partly offset by a gradual pickup in exports to advanced economies and resilient domestic demand. If, however, conditions tighten further we are likely to see even greater differentiation across the region. Those with strong fundamentals and policy credibility will be able to offset imported tightening through lower policy rates and fiscal support. Others that have delayed reforms, left fiscal vulnerabilities untackled, or tolerated too-high inflation may be forced to respond with a procyclical policy tightening. Announcing credible medium-term reforms would rebuild confidence and ease policy trade-offs.
view the IMF Asia and Pacific Economic Outlook: October 2013 Update
Source: IMF
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