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India's Financial System: Building the Foundation for Strong and Sustainable Growth
July 6, 2023--Summary:
India has experienced a prolonged period of strong economic growth since it embarked on major structural reforms and economic liberalization in 1991, with real GDP growth averaging about 6.6 percent during 1991-2019. Millions have been lifted out of poverty.
With a population of 1.4 billion and about 7 percent of the world economic output (in purchasing power parity terms), India is the third largest economy-after the US and China.
As such, developments in India have significant global and regional implications, including via spillovers through international trade and global supply chains. At the same time, India's economic development has not been linear and has been impacted by external and domestic shocks, some directly related to the financial sector.
Indeed, India was not spared from external regional and global shocks, such as the Asian financial crisis (1997), the global financial crisis (2008), and more recently, the devastating impact of the COVID-19 pandemic (from 2020) and the war in Ukraine (2022). The economy has also been hit by domestic shocks. The book covers how to strengthen the financial system to support growth and reduce vulnerabilities by discussing the linkages between the financial sector and growth, improvements in bank lending to foster productivity, and measures to further develop India's corporate bond market. The book reflects on India's success in leveraging digitalization to foster financial inclusion and highlights how the financial system can help to address climate issues. This book digs deeper into the various facets of India's financial sector to understand its strengths and opportunities and to elicit policy actions that could help the financial sector better support India's growth potential.
Indonesia: Selected Issues-Not All Investors Are the Same: Lessons for a Changing Investor Base in Indonesia
June 30, 2023--Against the backdrop of a significant shift in the investor base of local currency (LC) sovereign debt in Indonesia, this paper finds that: (i) NR holdings of LC debt in Indonesia are mostly driven by global factors, while Bank of Indonesia (BI) acts as a residual financier;
(ii) higher NR holdings support the bond market and domestic credit, but increase exchange rate volatility; and episodes of rapid and large declines in the NR share of LC debt in EMs are associated with higher future market volatility and lower credit to the private sector; and (iii) domestic nonbanks play a key role in absorbing new LC debt, especially during episodes of large and rapid nonresident outflows. These results call for a further deepening of the investor base, especially domestic nonbanks, to support market depth and reduce volatility.
Van Eck moves to match BlackRock in Australia ETF price war
June 29, 2023--The reduced fees will affect a global infrastructure and an international property fund
US-based exchange traded fund provider VanEck has announced huge fee cuts for its Australia-listed global infrastructure and international property ETFs, after BlackRock undercut its rival by rolling out similar low-cost ETFs last month.
VanEck, the fourth-argest ETF provider in Australia as of the end of May, with A$12.7bn ($8.7bn) in funds under management, is the latest to join the escalating price war in the market.
The A$808mn VanEck FTSE Global Infrastructure (Hedged) ETF will be available to investors for an annual rate of 0.2 per cent, down 32 basis points from 0.52 per cent.
Thai Economy to Accelerate in 2023 as Demand from Major Economies Picks Up, Tourists Return
June 28, 2023--Addressing Flood, Drought Risk Key to Sustaining Robust Growth
Thailand's economy is projected to accelerate to 3.9 percent in 2023 from 2.6 percent last year due to stronger-than-expected demand from China, Europe, and the United States, private consumption growth, and a recovery in tourism, the World Bank said in its semi-annual Thailand Economic Monitor.
Growth in 2024 is expected to moderate to 3.6 percent and to 3.4 percent in 2025, with tourism and private consumption remaining the primary drivers of growth while external demand weakens, according to the report. Inflation is expected to moderate in 2023 to 2 percent amid easing global energy prices and price caps, although when volatile food and energy prices are stripped out, core inflation has remained higher than before the pandemic. The return of tourists, particularly from China, has strengthened the tourism outlook. Arrivals are projected to reach a greater-than-expected 28.5 million, 84 percent of the 2019 level, and to the pre-pandemic level by the second half of 2024.
BBH 2023 Greater China ETF Investor Survey: Greater China ETF Market Grows as Product Platform Expands and Investors Evolve Usage
June 27, 2023--The number of investors with more than 25% of their portfolio invested in ETFs is up 11% from 2022
Greater China ETF investors are expanding their usage of ETFs and accessing new and diverse products, despite challenging market conditions, according to the findings of the 6th Annual Greater China ETF Investor Survey from Brown Brothers Harriman & Co. (BBH), a global ETF custodian and administrator.
The report, released today, is a subset of BBH's 10th Annual Global ETF Investor report, and represents the opinions of more than 100 institutional investors, financial advisors and fund managers from the Mainland, Hong Kong and Taiwan. In total, 59% of respondents manage over USD 1 billion in assets.
Key Findings:
ETFs are integral components of investors' portfolios: Investors in Greater China continue to allocate capital to ETFs and 75% of investors expect their use of ETFs to increase this year.
view the 2023 Greater China ETF Investor Survey
Indonesia Growth Seen Moderating in 2023 as Pandemic Rebound Fades
June 26, 2023--Economic growth in Indonesia is projected to moderate to 4.9 percent in 2023 from 5.3 percent last year with the normalization of domestic demand following the post-pandemic jump last year, and the projected global economic slowdown, according to the < a href="https://openknowledge.worldbank.org/server/api/core/bitstreams/e276a12e-4a4c-4429-812f-fd14f77337c5/content" TARGET="_blank">World Bank's semi-annual Indonesia Economic Prospects report.
Inflation is easing more quickly than initially anticipated thanks to the decline in global oil prices, an improved harvest, government interventions to ease supply bottlenecks, notably for food, and the appreciation of the Rupiah. As inflationary pressures subside, growth is expected to be supported by private consumption, while exports are projected to decelerate with easing commodity prices and global demand. Declining inflation helps restore monetary policy space to support the economy.
Kiwoom Asset Management Launches Secured Overnight Financing Rate ETF Tracking Solactive Index
June 20, 2023--Solactive is pleased to announce its first engagement with Kiwoom Asset Management as they join forces to introduce a new exchange-traded fund (ETF) that tracks the Solactive SOFR Daily Total Return Index.
The HEROES US Dollar SOFR Active (Synth) ETF, through its daily cumulative return strategy, presents investors with the opportunity to participate in attractive yields offered by the SOFR rate.
With the launch of this ETF, Kiwoom aims to provide financial market participants with a flexible and efficient tool to earn interest in line with the SOFR rate. The newly launched HEROES US Dollar SOFR Active (Synth) ETF has been listed on 20 June 2023 on the Korea Stock Exchange, under the stock code 460270.KS.
The SOFR (Secured Overnight Financing Rate) itself is a benchmark interest rate that is based on transactions in the US Treasury repurchase market. It is considered a more reliable benchmark rate than the London Interbank Offered Rate (LIBOR) since it is based on observable transaction data rather than estimated borrowing rates. The SOFR rate is used for USD denominated derivatives and loans, and it is gradually replacing LIBOR as the benchmark interest rate.
Come July 3, NSE IFSC-SGX Connect to start 21-hour trading in 2 sessions
June 20, 2023--NSE IFSC-SGX Connect of the NSE International Exchange (NSE IX) on Monday unveiled a new and refreshed brand identity of GIFT Nifty as a part of full-scale transition of SGX Nifty to Gift Nifty on July 3, 2023.
The new identity of Gift Nifty signifies the unique opportunity and new direction for the international investors to participate in India’s growth story to access Nifty products through NSE IX at GIFT City. The new look of Gift Nifty is aligned with the flagship index NIFTY 50, which reflects the growth story of Indian equity markets.
Invesco takes the regulatory steps to expand its ETF business in Japan
June 20, 2023--Invesco Capital Management LLC, an investment adviser managing an extensive family of exchange-traded funds (ETFs), announced today that our global ETF business has prioritized an initiative to offer a Japanese investor base better access to five of its leading United States (US) listed ETFs.
Invesco Capital Management LLC (ICM), in partnership with Invesco Asset Management Japan Limited., (Invesco Japan) has expanded the reach of Invesco's ETF & Indexed Strategies business in Japan.
ICM with cooperation from Invesco Japan has completed the required notification process with local Japanese regulators in order to make five US-listed ETFs available to Japanese investors. For this purpose, Invesco has bolstered its client facing service in Japan.
"We are thrilled to have the opportunity to expand Invesco's global ETF business into Japan," said Anna Paglia, Managing Director, Global Head of ETFs and Indexed Strategies, Invesco.
National Bureau of Statistics of China-National Economy Continued to Recover in May
June 15, 2023--In May, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments firmly implemented the decisions and arrangements made by the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while maintaining stability, fully and faithfully applied the new development philosophy on all fronts, accelerated efforts to foster a new pattern of development, and focused on promoting the high-quality development of economy.
As a result, the policies and measures to stabilize growth, employment and prices continued to take effect, the production and demand recovered steadily, employment and prices were generally stable and the transformation and upgrading was further advanced. The national economy sustained the recovery momentum.
1. Service Sector Grew Fast and Contact-intensive and Gathering-based Services Continued to Improve.
In May, the Index of Services Production increased by 11.7 percent year on year, 1.8 percentage points lower than that of the previous month. Specifically, that of accommodation and catering, leasing and business services, wholesales and retails and information transmission, software and information technology services grew by 39.5 percent, 14.0 percent, 13.2 percent and 12.9 percent year on year respectively. In the first five months, the Index of Services Production increased by 9.1 percent year on year, 0.7 percentage point faster than that of the first four months. In the first four months, the business revenue of service enterprises above the designated size went up by 6.9 percent year on year. In May, the Business Activity Index for Services was 53.8 percent, and the Business Activity Expectation Index for Services was 60.1 percent. Specifically, the Business Activity Index for railway transportation, water transportation, air transportation, telecommunication, broadcast, television and satellite transmission services, and Internet, software and information technology services stayed within the high expansion range of 60 percent and above.
2. Industrial Production Grew Steadily and Equipment Manufacturing Grew Fast.
In May, the total value added of industrial enterprises above the designated size grew by 3.5 percent year on year, 2.1 percentage points lower than that of the previous month, or up by 0.63 percent month on month. In terms of sectors, the value added of mining declined by 1.2 percent year on year, manufacturing went up by 4.1 percent and the production and supply of electricity, thermal power, gas and water grew by 4.8 percent.
