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China Macro-Rmb: At worst no appreciationRmb: At worst no appreciation
October 23, 2012--As of 19 October, the Rmb was slightly weaker than the US dollar compared with its value at the beginning of the year. In our view, the recent appreciation trend will continue until the currency exits 'depreciation' territory for the year.
China’s huge international reserves of US$3.2tn mean that the government does not have to depreciate the Rmb if it does not want to. In addition, we believe the Chinese government will not tolerate a weak image of the Rmb while it is in the process of Rmb internationalization and capital account liberalization. Currently, exchange rate risks in China are mostly tilted towards increasing volatility, and not towards depreciation risks.
At worst the Rmb will show no appreciation for the year
Despite the recent sharp appreciation, the Rmb is still slightly weaker YTD against the US dollar. We believe the current appreciation trend is more than explained by the upcoming US presidential election, as the appreciation has been against other major currencies too. The trend will likely continue until the Rmb exits ‘depreciation’ territory for the year.
Medium-term fundamentals still argue for Rmb appreciation in real terms
Although China’s trade balance has fallen from a huge surplus of 8-9% of GDP before the global financial crisis, it will remain in surplus for the medium term. FDI inflows have slowed due to cyclical and structural factors, but we expect them to continue. These inflows, combined with China’s current US$3.29tn of international reserves, will buffer any capital outflows in our baseline scenario. In other words, the Rmb does not have to depreciate if the government does not want it to.
view the report-[China Macro] Rmb: At worst no appreciation
Source: Mirae Asset Financial Group
China launches yuan ETFs for Hong Kong stocks
China launches two yuan-denominated ETFs tracking Hong Kong stocks
New ETFs allows mainland investors to indirectly trade Hong Kong shares
Funds help domestic investors to diversify portfolios
October 22, 2012--China launched two yuan-denominated exchange-traded funds tracking Hong Kong stocks Monday allowing mainland investors to indirectly trade shares in the former British colony for the first time.
The ETF rollout is part of a broader liberalization and improvement by Beijing of China's tightly-controlled financial sector and capital markets as the government seeks to bolster domestic consumption and economic growth. China's securities regulator approved the ETFs in June.
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Source: MarketWatch
DB-Synthetic Equity & Index Strategy-Asia-Weekly ETF Market Review-ETP AUM added $4.3bn amid bullish equity markets
October 22, 2012--Market Review
Last week, all the major markets in the Asia-Pacific region remained in positive territory. Compared to the week before, from north to south:
Japan (Nikkei 225) +5.49%
Korea (KOSPI2) +0.93%
China (CSI 300) +1.21%
Hong Kong (HSI) +1.97%
Singapore (FSSTI) +0.24%
Australia (S&P/ASX 200) +1.88%
New Product Launch Review
Last week, one new product was launched in the Asia-Pacific ETP market. UBS made its regional debut with the listing of one equity ETF on the Australian Securities Exchange tracking UBS Research Preferred Index. (See Figure 4 for further details)
Turnover Review
Asia-Pacific ETP turnover totaled $6.2bn last week, 7.5% down from the previous week’s total. South Korea continued to top the turnover ranking with $1.9bn, followed by China ($1.5bn), Hong Kong ($1.4bn), Japan ($0.8bn), and Australia ($0.3bn). Among Equity ETFs, the Emerging Country, Leveraged Strategy, Asia-Pacific Developed Country, and Short Strategy ETFs had total turnovers of $3bn, $1.2bn, $1bn, and $0.4bn respectively. Among the Commodity asset class, turnover in Gold ETPs totaled $101mn.
Assets under Management Review
Last week, Asia-Pacific ETP AUM increased by $4.3bn and ended at $124.3bn. On a year-to-date basis, Asia-Pacific ETP market is up by $32.8bn or 36% above last year’s closing.
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Source: Deutsche Bank - Synthetic Equity & Index Strategy-Asia
First Australian ETF launched by UBS
October 19, 2012--Global banking group UBS has launched the first exchange-traded fund on the Australian Securities Exchange, in a move that allows investors access to the bank's wide range of research and analysis, The Australian Financial Review reports.
According to the newspaper, UBS Australia and New Zealand chief executive officer and joint global head of investment banking Matthew Grounds and ASX Ltd chief executive Elmer Funke Kupper rang the opening bell on the exchange earlier this week.
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Source: UBS
Liquidity, tracking error key for Asian ETF users
Asia-Pacific institutional investors give their thoughts on ETF usage in a recent survey by Greenwich Associates and State Street Global Advisors
October 19, 2012--Institutional use of exchange-traded funds in Asia-Pacific may lag well behind that in the US, but it is evolving along similar lines, according to a survey* from Greenwich Associates and State Street Global Advisors (SSgA).
Asian institutional investors still do much, probably most, of their buying of ETFs offshore, usually of US-listed funds; in fact, four in 10 buy exclusively on foreign exchanges. That is not surprising, since the greatest ETF liquidity and trading volumes – as well as the widest range of products – are to be found in North America, above all on the New York Stock Exchange.
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Source: Asian Investor
Institutional use of ETFs set for rapid rise in Asia
October 18, 2012--Asian institutional interests in exchange-traded funds are on the rise and allocations into this asset class may surpass Europe in the next five to 10 years, according to State Street Global Advisors (SSga).
With increasing use of ETFs for tactical purposes and demand for added sophistication in Asia, ETF assets in the region may double in the next couple of years and increase to between $300bn-$400bn in the next five to 10 years, says Frank Henze, MD and Head of SPDR ETFs, Asia Pacific. There are currently 470 ETF products in the region, including Japan, with $113bn of assets. Europe has 2,325 ETF products, with assets at $310bn.
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Source: IP&A
China Macro-A policy-driven economy
October 18, 2012--Once again, the 3Q GDP data has proved that the Chinese economy remains largely driven by policies. GDP in 3Q grew by 7.4%-the lowest growth seen for the past decade.
Yet, in our view, this marks the near-term bottom of the economy, and a recovery due to the easing of policy since May is gaining momentum. Despite improved market sentiment on China’s near-term growth outlook, many investors are still cautious on the takeoff of the economy. We forecast 7.8% for 4Q12, and are more optimistic for 2013 with a projected growth of 8.3%.
The Chinese economy has largely stabilized at the bottom due to recent policy easing
On the monetary side, the PBC has cut the interest rate twice, and the effective lending rate floor is as low as 4.2%. In addition, the PBC has also been using substantial reverse repos to stabilize liquidity conditions at a proper level. As a result, financing conditions have persistently improved since May (Figure 25) as total social financing in September was up nearly three times YoY. In that sense, monetary policy has done its job. No further monetary easing is warranted beyond the current status quo.
view report-[China Macro] A policy-driven economy
Source: Mirae Asset Financial Group
OECD-India: Sustaining high/inclusive growth
October 17, 2012--Foreword
India's economy has grown at an impressive pace over the last two decades as a result of wide-ranging
structural reforms to open up the economy and make it more competitive.
More recently, activity has slowed reflecting not only the weak global environment but also the emergence of
strains created by the pressure that rapid economic growth has put on energy, natural resources, infrastructure and skills.
Institutions, regulation and economic governance need to adapt to sustain the economic transformation required for India to address its social and economic challenges. The bottlenecks that are bearing down on growth will have to be addressed for India to continue to narrow its major gap in living standards with middleincome and OECD economies, to reduce widespread poverty, to reverse rising inequality and to improve the wellbeing of all Indians. This is essential for India but also for the world economy at large.
view the OECD "Better Policies" Series-India: Sustaining high and inclusive growth
Source: OECD
Deutsche Bank-Synthetic Equity & Index Strategy-Asia-Pac Weekly ETF Market Review-ETP AUM remains flat amid mixed equity markets
October 15, 2012--Market Review
Last week, the Asia-Pacific region had mixed markets. Compared to the week before, from north to south:
Japan (Nikkei 225) -3.71%
Korea (KOSPI2) -3.67%
China (CSI 300) +0.50%
Hong Kong (HSI) +0.59%
Singapore (FSSTI) -2.13%
Australia (S&P/ASX 200) -0.17%
New Product Launch Review
Three new ETFs were launched in the Asia-Pacific ETP market during last week. Dacheng Fund Management Co Ltd listed one equity ETF on Shanghai Stock Exchange offering exposure to CSI 500 SSE Stocks Index and Samsung Asset Management listed one multi asset ETF on the Korea Stock Exchange tracking S&P/KRX Balanced Equity & Gold Index. Further, Harvest Fund Management Company launched one equity ETF on Hong Kong Exchange tracking MSCI China A Index with two listings traded in Hong Kong Dollar and Chinese Yuan respectively. (See Figure 4 for further details)
Turnover Review
Asia-Pacific ETP turnover totaled $6.7bn last week, 181% 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 ($1.5bn), Japan ($0.6bn), and Taiwan ($0.2bn). Among Equity ETFs, the Emerging Country, Leveraged Strategy, Asia-Pacific Developed Country, and Short Strategy ETFs had total turnovers of $3.4bn, $1.3bn, $1bn, and $0.6bn respectively. Among the Commodity asset class, turnover in Gold ETPs totaled $83mn.
Assets under Management Review
Last week, Asia-Pacific ETP AUM increased marginally by $534mn and ended at $120bn. On a year-to-date basis, Asia-Pacific ETP market is up by $28.5bn or 31.2% above last year’s closing.
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Source: Deutsche Bank - Global Equity Index and ETF Research - Asia
New pack of yuan ETFs headed to Hong Kong
October 15, 2012--Hong Kong's second batch of renminbi-denominated China stock exchange traded funds is on its way.
Four Chinese fund firms--China Universal Asset Management (Hong Kong), Da Cheng International Asset Management, Bosera Asset Management (International) and HuaAn Asset Management (Hong Kong) -- submitted applications for the launches last month to the China Securities Regulatory Commission, according to an industry source familiar with the situation.
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Source: FT.com