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Hong Kong ETFs to Start Trading in China ‘Soon,’ Chan Says
March 15, 2012--China will allow exchange-traded funds of Hong Kong shares to trade on the mainland exchanges “soon,” Hong Kong’s Secretary for Financial Services and the Treasury K.C. Chan said.
The process of getting Hong Kong stocks to trade on the Shanghai and Shenzhen exchanges as ETFs is “almost near completion,” Chan said in an interview in New York yesterday. “The final step would be for the regulators in China” to review companies’ applications to start the funds.
Indian central bank keeps interest rate unchanged
March 15, 2012--India's central bank kept its key interest rate on hold Thursday, warning that inflation remains a risk despite slowing growth in Asia's third largest economy.
The Reserve Bank of India kept its short-term lending rate unchanged at 8.5 percent. The cash reserve ratio, which regulates the proportion of deposits banks must hold as reserves, was held at 4.75 percent. The bank slashed the reserve ratio by three quarters of a percentage point last week. The bank warned that high oil prices and India's growing budget deficit are adding to inflation pressures, even as a sluggish global economy, particularly in Europe, threatens growth. "Upside risks to inflation have increased from the recent surge in crude oil prices, fiscal slippage and rupee depreciation," the bank said in a statement. "Notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions." The Reserve Bank hiked its key interest rate 13 times in a row before pausing in October, as the effects of monetary tightening began to be felt in the wider economy.
Mirae Asset Securities report- RMB: No longer attractive?
March 15, 2012--Prime Minister Wen Jiabao's comment that the RMB may be in its equilibrium triggered renewed market concern on a possible end of RMB appreciation. While it is true that the RMB has depreciated in nominal terms, it was only recently and it was only against the US dollar.
We believe that longer-term fundamentals still argue for RMB appreciation in real terms. Yet it depends on the pace of capital account liberalization in China. And appreciation in nominal terms could be contained as the Chinese government is more tolerant of higher inflation.
Chinese leaders seem to have been trying to anchor market expectation that RMB is no longer under appreciation pressures Prime Minister Wen Jiabao said yesterday that the RMB is possibly close to its equilibrium, renewing market speculation that RMB appreciation may have approached its end. Particularly, weakened exports, slowing FDI inflows, and recent hot money outflows have further raised market concerns that the recent RMB depreciation may persist.
But the depreciation was only recently and was only against the dollar Unlike 2009 when RMB appreciation totally paused against a sharp drop in exports, we still see an annualized appreciation of 5.7% in 4Q. For the past two weeks the RMB has depreciated, but it was mostly because of the stronger dollar, and the RMB still appreciated against other major currencies.
view RMB: No longer attractive? report
New Zealand-FMA to issue revised draft guidance note on effective disclosure in offer documents
March 14, 2012--The Financial Markets Authority will publish a revised draft of its guidance note by 2 April 2012 and invites further submissions from the market.
The first round of market consultation, completed 9 March, consisted of 30 stakeholder meetings. FMA also received over 60 written submissions and is now reviewing and carefully considering all feedback.
FMA CEO Sean Hughes said "We are impressed with the quality and depth of submissions received and considered to date. I think it's important to acknowledge the considerable care and time commitment undertaken by market participants and consumer groups involved in the consultation process.
"The revised guidance note will benefit from the feedback we've received and will be markedly different to the first draft.
SGX offers access to biggest ASEAN economy via MSCI Indonesia Futures
March 14, 2012--Singapore Exchange (SGX) is adding the MSCI Indonesia Index Futures to its suite of Asian equity index derivatives in the second quarter of this year.
The new contract is based on the MSCI Indonesia Index, which measures the performance of the largest and most tradable stocks listed on the Indonesian equity market. It is a widely followed Indonesian benchmark for institutional investors.
Indonesia is one of the largest and fastest growing economies in the Association of Southeast Asia Nations region. Recently upgraded to investment grade by Fitch Ratings and Moody’s Investor Service, Indonesia is expected to grow 6.3% to 6.7% this year, based on its central bank’s report last month.
IMF Working paper-De-monopolization Toward Long-Term Prosperity in China
March 13, 2012--Summary: During the past decade, the average Chinese earns roughly 9 times less and is 10 times less productive than the average American at purchasing power parity. Current consensus attributes large differences in output per worker to differences in total factor productivity (TFP).
Evidence suggests that most of the US-China TFP differences lie in the inefficiency of China’s domestic-oriented service and agricultural sectors. This paper focuses on (1) the evidence of monopoly rights and its influence on work practice improvement at China’s firms and plants and (2) the evidence that policy arrangement there has encouraged more competition in merchandise manufacturing and heavy industries while barriers to market access remain high against new firms in the domestic market (especially in services). A numerical experiment is provided, which suggests that China can enhance long-term income per capita by a factor of 10 largely through TFP gains by implementing reform to weaken protection of monopolies and encourage entry in all industries.
view IMF Working paper-De-monopolization Toward Long-Term Prosperity in China
China hints at halt to yuan rise
March 13, 2012--Chinese central bank officials have suggested the renminbi is no longer significantly undervalued after six years of gradual appreciation, citing the country's large trade deficit in February.
According to recently released government figures, last month China notched up its biggest monthly trade deficit since 1998, with imports outpacing exports by $31.5bn. "This trade deficit is a positive sign that the renminbi exchange rate is close to its equilibrium level," Yi Gang, deputy central bank governor, said at the National People's Congress, the annual session of China's rubber-stamp parliament.
DB-Equity Research-Asia-Pac ETF Market Weekly Review:ETP AUM remains above $100bn despite pressures
March 12, 2012--Market Review
Last week, all the major Asia-Pacific markets, except Japan, remained in negative territory. From north to south, Japan (Nikkei 225) gained 1.56%, Korea (KOSPI2) fell by 0.68%, China (CSI 300) down by 0.58%, Hong Kong (HSI) lost 2.21%, Singapore (FSSTI) declined by 1.01%, and Australia (S&P/ASX 200) fell by 1.43% over the previous week.
New Launch Review
Last week, two new ETFs were launched in the Asia-Pacific region. BetaShares Capital Ltd listed one Fixed Income ETF on the Australian Securities Exchange with an aim of exceeding the 30 day Bank Bill Swap Rate with monthly income distributions. CIMB-GK Securities Pte Ltd launched an Equity ETF on the Singapore Exchange tracking S&P Ethical Pan Asia Select Dividend Opportunities Index.
Turnover Review
Asia-Pacific ETP turnover totaled $6.2bn for last week, 9.2% up from the previous week’s total. South Korea continues to be on top of the turnover ranking with $2.4bn, followed by China ($1.4bn), Japan ($1bn), Hong Kong ($1bn), and Taiwan ($0.2bn). Among Equity ETFs, Emerging Country, Asia Pac Developed Country, Leveraged Strategy, and Short Strategy ETFs had total turnover of $2.9bn, $1.3bn, $0.9bn and $0.6bn respectively. Under the Commodity asset class, turnover in Gold ETPs totaled $158m for the last week.
Assets Under Management Review
Last week, Asia-Pacific ETP AUM was reduced by $1.8bn and ended at $100.3bn. On a year to date basis, Asia-Pacific ETP market is up by $8.8bn or 9.7% above last year’s closing.
China hedge fund to become Ucits compliant
March 12, 2012--Hong Kong-based asset managers Value Partners will launch a Ucits version of its US $1.7 billion Cayman-domiciled Classic fund, subject to regulatory approval, as early as May this year.
The fund will be Dublin-domiciled and replicate the firm's largest fund, the 'Value Partners Classic Fund', which is predominately invested in mainland Chinese equity.
Value Partners oversees US $5.51 billion of assets under management across six funds including the 'Classic' fund.
Certification Received for Nikkei 225 VI Futures
March 12, 2012--Osaka Securities Exchange Co., Ltd. (OSE) is pleased to announce that the U.S. Commodity Futures Trading Commission (CFTC) has certified under CFTC Rule 30.13 that the Nikkei Stock Average Volatility Index Futures (Nikkei 225 VI Futures) may be offered or sold to U.S. persons, as of March 10, 2012 (U.S. EST).
OSE had requested this certification of the CFTC in order to expand investor bases of Nikkei 225 VI Futures launched on Monday, February 27, 2012.
