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China to increase RQFII quota
November 6, 2012--Chinese regulators are planning to continually ease investment restrictions for RQFII, or renminbi-Qualified Foreign Institutional Investors, and raise the quota to channel more domestic currency into the mainland securities market, the China Securities Regulatory Commission said.
RQFII are investors allowed to invest renminbi funds raised in Hong Kong in securities in China.
The commission will coordinate with the central bank and the State Administration of Foreign Exchange to work out an amendment draft of the RQFII regulations, aiming to allow more financial institutions in Hong Kong to apply for the quota, an official from the CSRC said.
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Source: China Daily
Chinese system undergoes stealthy reform
November 6, 2012--China's financial system has undergone a significant transformation over the past few months, but it has happened so quietly that it has remained off the radar for many investors.
The big change is the way in which the central bank conducts monetary policy. The People’s Bank of China has dramatically ramped up its use of open market operations, relying almost exclusively on bond repurchase agreements to inject cash into the economy.
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Source: FT.com
Australian Dollar Hits Five Week High As RBA Holds Steady .
November 6, 2012--The Australian dollar hit a five-week high on Tuesday after the central bank surprised economists by not cutting rates, signalling a more upbeat outlook for the resource-rich economy.
At its monthly meeting, the Reserve Bank of Australia, or RBA, kept its overnight target rate at 3.25% and described its policy settings as about right.
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Source: Wall Street Journal
Matters of Concern in Relation to Changes in Trading Methods of Calendar Spreads
November 5, 2012--As previously announced(*), OSE will change the trading methods in futures calendar spreads starting from the Day Session on Monday, November 26, 2012.
We ask that concerned personnel be notified about these matters as listed below.
1. Introduction of a call auctions
Orders for calendar spreads can be placed during the opening auction in addition to during the regular session.
In accordance to the above change, orders for the Day Session can be placed from 8 a.m. (4:15 p.m. for the Night Session) and a call auction will take place at 9 a.m. (4:30 p.m. for the Night Session).
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Source: OSE (Osaka Securities Exchange)
Australia's Federal Court issues landmark judgment against S&P, ABN Amro
November 5, 2012--Australia's Federal court issued a landmark judgment on Monday that Standard & Poor's misled investors by giving its highest rating to derivatives that lost almost all their value in the run-up to the 2008 global economic crisis.
The Australian case marked the first time a ratings agency had faced trial over the complex financial products widely cited as one of the factors that triggered the crisis and could set a precedent for future litigation around the world.
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Source: Reuters
Australia moves toward "kill switches" for automated trades
November 5, 2012--The Australian Securities & Investments Commission is expected to release proposals to govern automated trading in the wake of incidents such as the May 2010 "flash crash" and the Knight Capital glitch this year.
The proposed changes are part of a broader overhaul, which includes task forces delving into high-frequency trading and dark pools. "You have got to make sure that [technological change] doesn't outpace regulation because if it does outpace regulation, that is where you get risk," ASIC Chairman Greg Medcraft said.
Source: FIA Smartbrief
South Korea 3Q GDP Grows at Slowest Pace in 3 Years
Third-quarter GDP growth at slowest pace in nearly three years, but largely in line with market expectations
Analysts expect fourth-quarter growth to accelerate, albeit at a meager rate, helped government stimulus and economic recovery in China
November 2, 2012--The South Korean economy grew at the slowest pace in nearly three years in the third quarter from the prior three months as the persistent euro-zone debt crisis hurt corporate investment, the Bank of Korea said Friday, adding to pressure on the central bank to keep
its policy rate low to promote growth.
Gross domestic product rose a seasonally adjusted 0.2% in the July-September period from the second quarter, slowing from the second-quarter's 0.3% rise. It marks as the worst quarter since the fourth quarter of 2009, when the economy also grew 0.2% from the previous quarter.
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Source: Nasdaq.com
Clarity on QFII tax issue expected in months
November 2, 2012--Chinese regulators are tipped to provide clarity within six months on a mooted 10% withholding tax to be applied retrospectively for capital gains made by QFII investors trading A-shares.
Speculation over the tax has been circulating since 2008, when a corporate income tax law came into force. In particular, foreign investors are concerned about how far back such a tax would be applied since it would hit performance of funds that had not fully provisioned for such a liability.
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Source: Pro Hedge
IMF Working Paper-The Evolution of Asian Financial Linkages: Key Determinants and the Role of Policy
November 1, 2012--This paper examines how Asian financial linkages with systemic economies have changed over time. After developing a factor model, it estimates Asian financial sensitivities to systemic economies, and then seeks to uncover their key determinants, which include trade and financial linkages, as well as policies.
In line with Asia’s growing role in the global economy—including through deeper financial integration—regional financial markets have become more sensitive to systemic economies. Asian financial sensitivities to systemic economies exhibit cyclical fluctuations, and reached historically high levels during the latest global financial crisis of 2008–09. While macroeconomic policy frameworks have helped Asian economies cope well with market turbulence, they cannot completely insulate Asian financial markets against major global financial shocks.
view IMF working paper-The Evolution of Asian Financial Linkages: Key Determinants and the Role of Policy
Source: IMF
DB-Asia-Pac Weekly ETF Market Review-ETP AUM remains flat amid bearish equity markets
November 1, 2012--Market Review
Last week, all the major markets in the Asia-Pacific region remained in negative territory except Singapore. Compared to the week before, from north to south:
Japan (Nikkei 225)-0.77%
Korea (KOSPI2) -2.99%
China (CSI 300) -3.63%
Hong Kong (HSI) -0.03%
Singapore (FSSTI) +0.28%
Australia (S&P/ASX 200) -2.16%%
New Product Launch Review
Three new ETFs were launched in the Asia-Pacific ETP market during last week. E Fund Management listed one equity ETF on Shanghai Stock Exchange offering exposure to Hang Seng China Enterprise Index and Mirae Asset MAPS Global Investments listed one equity ETF on the Korea Stock Exchange tracking KOSPI 200 Covered Call Index. Further, China Asset Management launched one equity ETF on Shenzhen Stock Exchange tracking Hang Seng Index and cross listed one equity ETF on Hong Kong Exchange tracking CSI 300 Index. (See Figure 4 for further details)
Turnover Review
Asia-Pacific ETP turnover totaled $7bn last week, 12.6% up from the previous week’s total. South Korea continued to top the turnover ranking with $2.7bn, followed by China ($1.6bn), Hong Kong ($1.4bn), Japan ($0.6bn), and Taiwan ($0.3bn). Among Equity ETFs, the Emerging Country, Leveraged Strategy, Asia-Pacific Developed Country, and Short Strategy ETFs had total turnovers of $3.3bn, $1.5bn, $1.1bn, and $0.7bn respectively. Among the Commodity asset class, turnover in Gold ETPs totaled $103mn.
Assets under Management Review
Last week, Asia-Pacific ETP AUM decreased by $715mn and ended at $123.6bn. On a year-to-date basis, Asia-Pacific ETP market is up by $32.1bn or 35.1% above last year’s closing.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy - Asia