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China - Concerns over growth slowdown are overdone
April 12, 2012--China has been a growth story for global equity investors for decades. Generally speaking, in good years driven by bull markets, it has tended to outperform other stock markets. The reverse has been true in bear markets.
Amid the domestic tightening, as well as weakening external demand, investors have been increasingly worried about the potential sharp slowdown of GDP growth in China in 2011. As a result, the Hong Kong/China market declined to trough level during the third quarter of 2011.
We believe that domestic macro conditions in China are improving and that the chance of a hard landing is very low. Inflation is under control and is expected to cool off gradually. On the policy side, we have already seen selective, supportive movement on Small- and Medium-sized Enterprises (SMEs), local government debt, railway funding and pilot tax reforms. 2012 will be the transitional year of next-generation political leaders, and also the second year of the current 12th Five-Year Plan. As a result, we expect the policy stance to become more supportive going into 2012.
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Source: Mirae Asset Management
Korea - Economy: slow but moderate
April 12, 2012--Despite deteriorating global conditions, Korea’s economy has maintained resilience on the back of double-digit export growth in 2011. Such growth was possible as dwindling demand in the developed markets was largely offset by that of emerging markets. While 2011 GDP growth is forecast at 3.8% year-over-year, we are expecting a modest growth slowdown in 2012, as uncertain global conditions may adversely impact export and domestic consumption.
A key concern regarding exports is a possible slowdown in demand of emerging market countries due to developed market conditions. For example, if China’s exports to developed markets slow, this, in turn, may reduce overall EM Asia’s demand, hurting Korean exports. However, considering China’s economic transition to a consumption-led economy, and although export growth may not be as great as in 2011, we expect the aforementioned adverse impacts to be limited.
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Source: Mirae Asset Management
China Aims for Soft Landing, Says World Bank
New Report says China can lay foundation for sustainable long-term development
April 12, 2012-A new World Bank report projects GDP growth in China will be 8.2 percent in 2012 and 8.6 percent in 2013. The China Quarterly Update, released today, says that the prospects for a gradual adjustment of growth remain high.
"China’s gradual slowdown is expected to continue into 2012, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak," says Ardo Hansson, Lead Economist for China. "The risks of overheating are moderating, increasing the prospects to achieve a soft landing."
The China Quarterly Update, a regular assessment of China’s economy, identifies as the key near-term policy challenge the need to facilitate a soft landing and sustain growth. Key risk factors include the weak and uncertain growth prospects of high-income economies and the evolution of the ongoing correction in China’s property markets. Sufficient policy space exists to respond to downside risks, but any policy response would need to be carefully crafted keeping in mind longer-term effects and objectives.
view the China Quarterly Update - April 2012
Source: World Bank
FTSE licences FTSE 100 Index to National Stock Exchange of India Limited for launch of FTSE 100 futures and options
April 12, 2012--FTSE Group ("FTSE"), the award winning global index provider and the National Stock Exchange of India, today announce a new partnership resulting in the licensing of futures and options based on the world renowned FTSE 100 Index.
The licensing will see the exchange launching the new product on the 3rd May, following recent regulatory approval granted by the Indian regulator.
For the first time, Indian investors will gain access to the UK equity market through new rupee-denominated derivative contracts based on one of FTSE’s headline indices. The new contracts will be tradable by all equity derivatives members of the NSE through existing infrastructure, with no additional investment required.
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Source: FTSE
ETP Market in Singapore Poised for Strong Growth, Says SSgA Report
April 12, 2012--The Exchange Traded Products (ETPs) market in Singapore and the rest of Asia is set for strong growth in the coming years as institutional investors increase their allocations to ETPs, and retail investors become more aware of their investment merits, according to a report by State Street Global Advisors (SSgA).
The report, released on the 10th anniversary of the first Singapore-domiciled Exchange Traded Fund (ETF) - the SPDR® Straits Times Index ETF (ticker: STTF) - predicts growth in assets under management, the number and the type of investors employing ETPs in their investment strategies. It points to the experience of the
ETP market in the US where ETP assets already account for around nine percent of mutual fund assets.
“Surveys of investors indicate a strong intent to further increase allocations to ETPs in the near future. One survey in 2011 found that almost 48 percent of asset management firms plan to increase ETP allocations by 2013, with half of those intending to increase allocations by more than five percent. Perhaps most significantly, no managers said they planned to cut ETP allocations1,” the report said.
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Source: State Street Global Advisors
SPDR to launch Asia fixed income ETF
April 11, 2012--SPDR is launching an Asia fixed income ETF, which it says will be the only ETF listed in Europe offering diversified exposure to the sovereign bond market in the region.
The SPDR Citi Asia Local Government Bond ETF will use the Citi Asia Government Bond Investable Index as its benchmark and will invest in domestic sovereign bonds.
Countries included in the index are: China, through its offshore (CNH) market, Hong Kong, Korea, Indonesia, Malaysia, Thailand, Singapore and the Philippines.
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Source: Portfolio Adviser
Investment surge expected for 'gold mine' Myanmar
April 10, 2012--Myanmar's hermit economy could boom on an anticipated influx of foreign investment in a "gold mine" of opportunities once sanctions are lifted, the Asian Development Bank's country manager for Myanmar said on Tuesday.
Growth is expected to be 6 percent this fiscal year and 6.3 percent for 2013-2014, but that is likely to be surpassed if Western sanctions are undone and investment pours in to one of Asia's last remaining frontier markets, much through public private partnerships (PPP), said Craig Steffensen, the ADB's country manager for Myanmar and Thailand. "Myanmar is a gold mine, any way you look at it - natural resources, gas and oil deposits, spatial dimensions, location between China, India, Southeast Asia. It's a huge market waiting to happen and growth will come from everywhere, not one specific sector," he told Reuters in an interview. "The boom that's about to begin has brought people from four corners of the globe. There's tremendous potential ... there's no flight to, or hotel in Myanmar that isn't booked by businesspeople looking at opportunities there to get involved in tourism, banking, telecommunications and construction."
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Source: Todays Zaman
Thai Bourse to allow gold brokers to trade all derivatives products, accepts new members
April 10, 2012--Thailand Futures Exchange (TFEX) is ready to allow precious metal-related members to become full members, so that they will be able to trade all derivatives products listed on the market. It also plans to accept new trading members.
Kesara Manchusree, Managing Director of TFEX, under The Stock Exchange of Thailand (SET) Group, revealed that, in the first quarter of 2012, there have been several inquiries about applying to become TFEX members, particularly from gold brokers, who are currently licensed to trade only precious metal-related futures contracts. Such members notified the Securities and Exchange Commission (SEC) about their interest to trade all types of derivatives. Kesara said that, so far, three companies -- Ausiris Futures Co., Ltd. (AFC); GT Wealth Management Co., Ltd. (GTWM); and Hua Seng Heng Gold Futures Co., Ltd. (HGF) -- have submitted their documents to TFEX, and she believes that other members are also preparing their documentation for the same purpose.
“TFEX and Thailand Clearing House Co., Ltd. (TCH) are now reviewing the system and personnel readiness of all three companies, with a system test expected to take place soon, to make sure that they can provide full service to investors”, said Kesara.
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Source: WFE
It’s back to futures for China government bonds
Government bond futures market could be revived by end of year
April 9, 2012--Seventeen years after regulators responded to an investment scandal by shuttering China’s government bond futures market, institutional traders may be invited back to the trading table.
The China Financial Futures Exchange (CFFEX) started testing Feb. 13 a proposed, electronic version of the market launched in 1992, but abruptly closed in 1995 after a short-seller stung major bond holder, including the Ministry of Finance.
Participants in the latest market experiment included several futures and securities firms as well as banks.
No timetable for a fully functioning exchange has been announced, but optimistic investors and analysts say the State Council may be asked in July or August to give the green light.
“There’s a good possibility of a launch before the (Chinese government) leadership transition late this year,” said a source close to regulators. “It has been considered at the highest levels for a long time.”
Supporters of a revival blame the scandal known as the “327 incident” on a market environment that lacked proper risk management and an immature regulation system. Since then, the bond market and regulatory environment have improved radically.
“China’s government bond market and futures market have undergone fundamental change” since 1995, said Jiang Yang, an assistant to the chairman of the China Securities Regulatory Commission, which oversees futures. “The factors leading to the 327 incident no longer exist.”
Speaking in March at China’s legislative sessions, CFFEX President Zhu Yuchen said the government’s interest rate reforms have contributed to a better environment, too, so that the government no longer has to subsidize bond purchases.
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Source: Market Watch
China Consumer Prices Rise Faster-Than-Estimated 3.6%
April 9, 2012--China's inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth.
Consumer prices rose 3.6 percent from a year earlier, the National Bureau of Statistics said today. That was more than the median 3.4 percent estimate in a Bloomberg News survey of 33 economists. Food-related costs gained 7.5 percent.
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Source: Bloomberg Business Week
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