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Singapore Exchange to Start Dual-Currency Trades in April
March 22, 2012--Singapore Exchange Ltd. (SGX) will allow securities, including stocks and exchange-traded funds, to be listed in dual currencies starting next month.
Companies and ETF providers will be able to choose a combination from among the currencies of Singapore, Hong Kong, Australia and the U.S, SGX spokeswoman Loh Wei Ling told Bloomberg News via e-mail today. Investors will be able to buy and sell the security in either currency, with all units held in the same depository pool, the exchange said.
Dual-currency listings mean investors will no longer have to use brokers’ foreign exchange rate at the time of settlement, according to the SGX website. The risk is that price disparities could arise for a security if there is a large imbalance between transactions in different currencies, it said.
TSE to Welcome First Leveraged and Inverse ETFs in Japan -Simplex AM TOPIX Bull 2x ETF / TOPIX Bear -1x ETF
March 20, 2012--Today, Tokyo Stock Exchange, Inc. (TSE) approved the listings of two new ETFs managed by Simplex Asset Management Co., Ltd. These two issues will be listed on Thursday, April 5, 2012.
The two ETFs will be the first listings of leveraged and inverse ETFs in Japan. They will be listed on the TSE market under the new listing rules and frameworks implemented in March this year.
IMF Working paper-Determinants of Corporate Investment in China: Evidence from Cross-Country Firm Level Data
March 20, 2012--Summary: This paper analyzes the evolution of investment in China, its main features, and its key determinants. In recent years, manufacturing, real estate, and infrastructure have been the main drivers of investment.
Investment remains largely concentrated in coastal areas, but there has been a shift to greater investments inland in recent years. The empirical analysis of the determinants of investment indicates that financial variables, such as interest rates, the exchange rate, and the depth of the domestic capital market are important determinants of corporate investment. The results suggest in particular that financial sector reform, including that which deregulates and raises real interest rates as well as appreciates the real effective exchange rate, would lower investment and help rebalance growth away from exports and investment toward private consumption.
Trade and Financial Spillover on Hong Kong SAR from a Downturn in Europe and Mainland China
March 20, 2012--Summary: Hong Kong SAR was hit hard by the global financial crisis, which started out in the U.S. and spilled over to the rest of the world. Three years later, vulnerabilities in the euro area's financial system and concerns over a hard landing in Mainland China have started to weigh on Hong Kong’s growth prospects.
Against this backdrop, this paper aims to quantify the trade and financial spillovers on Hong Kong SAR’s economy from a downturn in the euro area and Mainland China. Based on simulations using a version of the Global Integrated Monetary and Fiscal (GIMF) model and a Global VAR (GVAR) that includes both balance sheet and standard macroeconomic indicators, Hong Kong SAR’s output growth could fall by as much as 1½ times the decline in euro area output growth given its high dependence on external trade and many links with the global financial system. A worsening of the crisis in the euro area could reduce Hong Kong SAR’s output by as much as 4-4½ percent below baseline during the first two years after the shock, pushing Hong Kong SAR back into recession and possible deflation. In the event of a hard landing in China, the model simulations suggest that Hong Kong SAR would be on a sustained downturn with output growth falling by about 3 percentage points below baseline in the first two years. Should these events materialize, countercyclical fiscal response could help cushion, but not fully offset, the impact of slower growth in the euro area or China.
DB-Equity Research-Asia-Pac ETF Market Weekly Review: ETP assets stand at 10% YTD growth
March 19, 2012-Market Review
Last week, all the major Asia-Pacific markets, except China, remained in positive territory. From north to south, Japan (Nikkei 225) gained 2.02%, Korea (KOSPI2) advanced by 1%, China (CSI 300) was down by 1.53%, Hong Kong (HSI) climbed 1.10%, Singapore (FSSTI) increased by 1.60%, and Australia (S&P/ASX 200) surged by 1.52% over the previous week.
New Launch Review
Last week, six new ETFs were launched in the Asia-Pacific region. Russell Investments listed three Fixed Income ETFs on Australian Securities Exchange tracking DBIQ 0-3 year Investment Grade Australian Corporate Bond Index, DBIQ 0-5 year Australian Semi-Government Bond Index and DBIQ 5-10 year Australian Government Bond Index respectively. BlackRock also listed three Fixed Income ETFs on the Australian Securities Exchange tracking UBS Treasury Index, UBS Government Inflation Index and UBS Composite Bond Index.
Turnover Review
Asia-Pacific ETP turnover totaled $6bn for the last week, 2.6% down from the previous week’s total. South Korea continues to be on top of the turnover ranking with $2bn, followed by China ($1.7bn), Hong Kong ($1.1bn), Japan ($0.7bn), and Taiwan ($0.2bn). Among Equity ETFs, Emerging Country, Asia Pac Developed Country, Leveraged Strategy, and Short Strategy ETFs had total turnover of $3bn, $1bn, $0.8bn and $0.6bn respectively. Under the Commodity asset class, turnover in Gold ETPs totaled $215m for the last week.
Assets Under Management Review
Last week, Asia-Pacific ETP AUM added $0.3bn and ended at $100.6bn. On a year to date basis, Asia-Pacific ETP market is up by $9.1bn or 10% above last year’s closing.
IMF Working paper-The Global Welfare Impact of China: Trade Integration and Technological Change
March 19, 2012--Summary: This paper evaluates the global welfare impact of China's trade integration and technological change in a quantitative Ricardian-Heckscher-Ohlin model implemented on 75 countries.
We simulate two alternative productivity growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China’s comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson, 2004), the large majority of countries in the sample, including the developed ones, experience an order of magnitude larger welfare gains when China’s productivity growth is biased towards its comparative disadvantage sectors.
We demonstrate both analytically and quantitatively that this finding is driven by the inherently multilateral nature of world trade. As a separate but related exercise we quantify the worldwide welfare gains from China’s trade integration.
ETF providers look to Asia for growth
March 18, 2012--Last month, when Hong Kong-based fund manager Enhanced Investment Products introduced its new range of exchange-traded funds on its local stock exchange, it hired a George W Bush impersonator to help with the launch. The message: "ETF investment is a no-brainer".
However, predicting the fortunes of the exchange-traded fund market in Asia and particularly synthetic products, which use swaps and other derivatives to replicate the index they track rather than buying the underlying shares, is far from straightforward.
BetaShares Australian High-Interest Cash ETF
March 17, 2012--THE BetaShares Australian High-Interest Cash ETF is an exchange-traded fund that gives investors exposure to a cash account.
The ETF (ASX code: AAA) is designed to generate a return that exceeds the 30-day bank-bill swap rate (after fees and expenses). The aim is to provide regular income distributions and high capital security, competing with term deposit rates. Based on present interest rates, the ETF's initial variable rate of return is 5.2 per cent. The BetaShares Australian High-Interest Cash ETF will invest in bank deposit accounts with one or more banks in Australia. Westpac is the initial primary holder of the money.
COSTS: The annual management fee is 0.18 per cent a year. Investors pay normal brokerage to buy or sell the ETF on the ASX.
Canara Robeco MF Introduces Canara Robeco Gold Exchange Traded Fund
March 16, 2012--Canara Robeco Mutual Fund has launched the New Fund Offer (NFO) Canara Robeco Gold Exchange Traded Fund, an open ended exchange traded fund.
The NFO opens and closes for subscription on March 16, 2012. No entry and exit load charges is applicable for the scheme.
The scheme will be benchmark against Domestic Price of Physical Gold. The minimum application amount is Rs 5000 and in multiples of Rs 1 thereafter.
The scheme will be managed by Akhil Mittal.
The investment objective of the scheme is to generate returns that are in line with the performance of gold, subject to tracking errors.
