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Top China Banks Triple Debt Write-Offs as Defaults Loom
October 23, 2013--China's biggest banks tripled the amount of bad loans written off in the first half, cleaning up their books ahead of what may be a fresh wave of defaults.
Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four largest rivals expunged in the first six months 22.1 billion yuan ($3.65 billion) of debt that couldn’t be collected, up from 7.65 billion yuan a year earlier, filings showed. That didn't pare first-half profits, which climbed to a record $76 billion, as provisions were set aside in earlier periods when the loans began souring.
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Source: Bloomberg
Introduction of CNX Nifty Futures
October 23, 2013--1. Purpose
Considering needs of investment in and hedging against India's rapidly growing capital market, Osaka Securities Exchange Co., Ltd. (OSE) will introduce futures based on CNX Nifty which is a major Indian stock index used as a benchmark in various financial instruments.
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2. Outline of Trading
(1) Trading Hours (JST):
From 9:00 a.m. to 3:15 p.m. and from 4:30 p.m.to 3:00 a.m. on the next day
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Source: Tokyo Stock Exchange
Singapore joins the RQFII party
City state given 50b yuan quota during visit by Vice-Premier Zhang Gaoli
October 23, 2013--Singapore has bolstered its credentials as an offshore yuan hub, joining Hong Kong and London as the only the third centre outside mainland China allowed to use the currency to trade in Chinese stocks and bonds.
The city state would obtain 50 billion yuan (HK$63.6 billion) worth of quota under the renminbi qualified foreign institutional investor (RQFII) scheme, the country's central bank said yesterday. The announcement came during a visit by Vice-Premier Zhang Gaoli.
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Source: South China Morning Post
Futures trade on ASX volatility index begins
October 22, 2013--The Australian Securities Exchange has started futures trading on the S&P/ASX 200 VIX Index, a volatility gauge designed to help traders hedge against stock-market drops and speculate on swings.
"S&P/ASX 200 VIX futures will allow users to isolate local equity market volatility and avoid the timing, currency and matching risk incurred when using volatility products based on offshore indices," ASX said in a statement yesterday.
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The Sydney Morning Herald
DB Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review- Korea and Taiwan focused ETFs experience outflows
October 22, 2013--Data in this report is as of 18 October 2013.
Market Review
All the major markets in the Asia-Pacific region except China, ended the week in positive territory. Compared to the week before, from north to south:
Japan (Nikkei 225) +1.09%
South Korea (KOSPI2) +1.84%
China (CSI 300) -1.72%
Hong Kong (HSI) +0.52%
Singapore (FSSTI) +0.41%
Australia (S&P/ASX 200) +1.73%
New Product Launch Review
Last week, five new equity and two multi asset products were launched in the Asia-Pacific ETP market. Market Vectors Australia listed four sector ETFs (MVB AU, MVE AU, MVA AU & MVR AU) on the Australian Securities Exchange focused on Australia’s banking, emerging energy resources, property and energy sectors respectively. UBS listed one sector ETF (159933 CH) on the Shenzhen Stock Exchange tracking CSI 300 Financial and Property index. Further, KB Asset Management listed two multi asset ETFs (183700 KS) and (183710 KS) on the Korea Stock Exchange providing exposure to the mix of Korean equities and bonds.
ETP Weekly Flows- South Korea and Taiwan ETFs experience outflows
Last week, Asia-Pacific ETP market recorded outflows of -$596mn vs. -$39mn of outflows for the previous week, setting the YTD weekly flows average at +$304mn (+$12.8bn YTD in total flows). Outflows were primarily experienced by emerging markets and leveraged long strategy ETFs recording -$476mn and -$149mn of redemptions. Within emerging markets equity ETFs, products benchmarked to South Korea and Taiwan saw outflows of -$323mn and -$147mn respectively.
Winners and losers: At ETP level, newly listed UBS SDIC CSI 300 Financials Index ETF (159933 CH) and Kindex 200 ETF (105190 KS) were the largest cash flow receiver of the week collecting +$83mn and +$71mn respectively. Over the same period, biggest outflows were experienced by Samsung KODEX 200 (069500 KS), Daiwa Topix ETF (1305 JP), and Taiwan Top50 Tracker Fund (0050 TT) recording -$351mn, -$228mn and -$147mn of outflows respectively.
Turnover Review - Floor activity revolves around $10bn
Asia-Pacific ETP turnover totaled $10.1bn for the last week. South Korea took the lead in the turnover ranking with $3.7bn turnover, followed by China ($2.6bn), Japan ($2.3bn) and Hong Kong ($1bn). Among equity ETFs, Emerging country, leveraged long, Asia-Pacific developed country and short ETFs had total turnover of $4.2bn, $2.6bn, $1bn and $0.7bn respectively. Within fixed income asset class, turnover in sovereign and money market ETFs totaled $635mn and $187mn respectively.
Assets under Management Review - Assets decreased by $1.5bn
Last week, Asia-Pacific ETP AUM decreased by $1.5bn and ended the week at $164.1bn. On a year-to-date basis, Asia-Pacific ETP market is up by $28.1bn or 20.7% above last year’s closing.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy- Asia
K&L Gates Legal Insight: 2013 Recent Developments in Hong Kong Funds Market
October 22, 2013--The Hong Kong funds industry has faced significant challenges in recent years, having had to deal with the fallout from several financial scandals and a securities regulator that has become more aggressive in an effort to minimize the possibility of future scandals.
Hong Kong also faces increasing competition from Singapore and Taiwan, which have been trying to attract financial business from Hong Kong. However, in 2013, the securities regulators in the People's Republic of China (PRC) announced revisions to the RQFII pilot scheme that it had already introduced in Hong Kong two years ago, as well as an unprecedented mutual funds recognition platform between the PRC and Hong Kong fund market that will insure Hong Kong’s funds market for the immediate future and help it maintain its position at the forefront of Asian investment centres.
RQFII
The Renmimbi (RMB) Qualified Foreign Institutional Investor (RQFII) pilot scheme, announced in December 2011, was intended to be an expansion of the Qualified Foreign Institutional Investor (QFII) program, the key difference being that, whereas QFII quota-holders had to convert foreign currency into RMB in order to invest in PRC securities, RQFII quota-holders could invest directly into PRC domestic capital markets with offshore RMB. The RQFII pilot scheme also allows institutional investors outside the PRC to facilitate investments of offshore RMB deposits back into Chinese capital markets, by enabling them to establish RMB-denominated funds and/or public or private funds or other investment products outside of the PRC and utilising the RMB thereby raised to invest in PRC domestic assets.
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Source: Choo Lye Tan, K&L Insightd
Beyond the City Limits: Report Finds Rapid Suburban Growth in India ,Potential for Sustainable Cities to Reduce Poverty
October 21, 2013--For decades,there has been a widely held view that India's urbanization has been slower than the rest of the developing world. A report from the World Bank turns that theory on its head. Suburban growth is the signature of India's urbanization. Rural areas adjacent to India's major metropolitan cities are witnessing faster economic growth and generating higher employment than the mega-cities.
'Urbanization beyond Municipal Boundaries' examines the phenomenon of India's rapid suburbanization,looking at its impact on efficiency,inclusion and sustainability. The government of India has included many of the recommendations in its urban plans.
view the World Bank report-Urbanization beyond Municipal Boundaries: Nurturing Metropolitan Economies and Connecting Peri-Urban Areas in India
Source: World Bank
SSE's New Trading Rules to be Implemented in Dec.: Thresholds For Block Trading Lowered
October 19, 2013--With the growth of the Chinese capital market and the successive launching of innovative business lines and products, the market is increasingly calling for a flexible and diversified trading system. The Shanghai Stock Exchange (SSE), in response to the market need, carries out systematical innovation and platform renovation for the block trading market, in a bid to build it into a wholesale market advancing in line with the bidding-based matching market.
Besides, the SSE continues to diversify and perfect trading products and systems of the bond market. In order to standardize innovative business lines, the SSE has made some amendments to the "SSE Trading Rules". That is,, it has made some complements and adjustments for issues including the systematical innovation of block trading, the relevant arrangement for repayment of bonds on installments, the upper limit of single declared order of bonds, and intraday trading of bond ETF products and others, with the details as follows:
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Source: Shanghai Stock Exchange (SSE)
Philippines SEC Approves First Metro Equity ETF
October 18, 2013--The Philippines' Securities and Exchange Commission has cleared the application of First Metro Philippine Equity Exchange Traded Fund Inc. to offer its entire capital stock of 30 million shares, paving the way for the introduction of exchange-traded funds into the country.
Each of the First Metro Equity's shares has a par value of PHP100 ($2.32) and a net asset value of PHP98.66 at the end of June.
Last week, the company secured the approval of the Philippine Stock Exchange to list on the bourse.
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Source: Wall Street Journal
IMF Working Paper-Outlook for Interest Rates and Japanese Banks' Risk Exposures under Abenomics
October 18, 2013-- Summary: This paper examines how Japan's long-term interest rates and Japanese banks' interest rate risk exposures may evolve under Abenomics.
Results from a panel regression analysis for major advanced economies shows that long-term government bond yields in Japan are determined to a large extent by growth and inflation outlook, fiscal conditions, demography, and the investor base of government securities. A further deterioration of fiscal conditions would push up long-term rates by about 2 percentage points over the medium term, but the rise is partly offset by higher demand for safe assets amid population aging and increased purchases by the Bank of Japan. At the same time, illustrative scenarios suggest the interest rate risk exposure of Japanese banks could decline substantially over the next two years. However, if structural and fiscal reforms are incomplete, both long-tem yields and interest-risk exposures of Japanese banks could increase over the medium term.
view the IMF Working paper-Outlook for Interest Rates and Japanese Banks' Risk Exposures under Abenomics
Source: IMF
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