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Fidessa examines impact of liquidity fragmentation on Australia’s broker community
Second white paper in Australia series looks at opportunities and challenges facing local sell-side firms
October 12, 2011--Fidessa group pl provider of high-performance trading, investment management and information solutions for the world’s financial community, has today published the second in its series of white papers looking at issues raised by the new market integrity legislation in Australia.
Entitled Stuck in the Middle with You? A look at the future for brokers in Australia’s new trading landscape, the paper draws on Fidessa’s global experience to consider the challenges and opportunities brokers and banks will face and outlines the changes they need to consider if they are to take advantage of Australia’s new trading environment. It builds on the themes of the first paper in the series, Aussie Rules, which looked at the impact of the arrival of alternative venues in Australia, the role to be played by smart order routing (SOR) technology and the lessons to be learned from other markets.
Steve Grob, Director of Group Strategy at Fidessa and the paper’s principal author, says: “The Australian marketplace is entering a fascinating phase in its history, and there are plenty of clues about what brokers and investment banks can expect from similar developments elsewhere in the world. The journey towards a new shaped marketplace has begun and, as in other countries, although the changes will doubtless begin modestly, the effects on brokers are going to be far reaching.”
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Source: Fidessa Group
Chinese Banks’ Bad Debt May Hit 60% of Equity Capital, Credit Suisse Says
October 12, 2011--Loan losses at Chinese banks may climb to levels equivalent to 60 percent of their equity capital as real-estate companies and local governments fail to repay debts, according to Credit Suisse Group AG.
Nonperforming loans will probably increase to 8 percent to 12 percent of total debt in the “next few years,” causing losses amounting to 40 percent to 60 percent of Chinese banks’ equity, Hong Kong-based analysts led by Sanjay Jain at Credit Suisse wrote in a research report dated Oct. 12. Jain cut 2012 and 2013 profit estimates by as much as 25 percent and maintained an “underweight” rating on the industry.
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Source: Bloomberg
DB - Equity Research - Asia Pacific ETF Weekly Review: - ETP AUM remains flat and activity declines
October 11, 2011--Market Review
Last week, Australia (S&P/ASX 200) gained 3.85% as the Reserve Bank of Australia left its benchmark interest rate unchanged and signaled it has scope to lower the nation’s borrowing costs if necessary as inflation eases. Further, Japan (Nikkei 225) lost 1.09%, Korea (KOSPI2) dropped by 0.06%, Hong Kong (HSI) up by 0.65% and Singapore (FSSTI) declined by 1.3%. Chinese markets remained closed for a week-long holiday.
New Launch Review
In terms of new product launch activity, the Asia-Pacific market remained quiet during the preceding week and no new product was listed in any of the exchanges in the region.
Turnover Review: Activity declines amid shorter trading week
Asia-Pacific ETP turnover totaled $6.6bn for the week ending last Friday, 35.2% below the previous week’s total as Chinese exchanges remained closed for the entire week, while South Korea and Hong Kong had a shorter trading week. South Korea continues to be on top of the turnover ranking with $3.9bn (down 24.4%), followed by Japan ($1.1bn, down 36.7%), Hong Kong ($1.1bn, down 24.4%), Taiwan ($196m, down 20.5%), and Australia ($169m, up 45.6%). Among Equity asset class, Leveraged and Short Strategy ETFs had total turnover of $3.2bn, while Asia Pac Developed and Emerging Country ETFs had combined turnover of $2.9bn. Under the Commodity asset class, turnover on Gold ETPs totaled $158m, 63% down from last week.
Assets Under Management Review
Last week, Asia-Pacific ETP AUM ended at $88.5bn with a small increase of 0.6%over the previous week. On a year to date basis, Asia-Pacific ETP market is $4.3bn or 5.1% above last year’s closing.
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Source: Deutsche Bank - Equity Research - Asia Pacific
Renminbi stages biggest one-day jump in six years
October 10, 2011--The renminbi rose 0.6 per cent against the dollar, the largest jump since July 2005 when China ended a formal peg and ushered in a tightly managed exchange rate float that, for most of the time,
has seen the currency appreciate in steady but tiny
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Source: FT.com
Short selling activities in Hong Kong
October 7, 2011--There has to date been no indication that recent declines in the Hong Kong stock market have been caused by short selling activities, the Chief Executive Officer of the Securities and Futures Commission (SFC), Mr Ashley Alder said, adding that the SFC will not hesitate to take immediate action to deter any manipulative or abusive short selling practices.
Mr Alder pointed out that stock markets around the world have seen significant downward adjustments and increased volatility in recent months against the background of an uncertain global economic outlook and the Eurozone sovereign debt crisis.
“Short selling is a trading and hedging tool commonly and legitimately used by a range of market participants. It is not unusual to see the level of short selling increase significantly in the market environment we have been experiencing in recent months,” Mr Alder said.
“Extreme volatility has reflected global concerns centred on an evolving financial crisis which started three years ago, and which is now centred on sovereigns and exposed banks, particularly in the Eurozone,” he added.
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Source: SFC (Securities and Futures Commission)
Australia; Selected Issues -IMF Report
October 7, 2011--WHY HAS HOUSEHOLD SAVING INCREASED SO SHARPLY IN AUSTRALIA
A. Introduction
1. Australia’s net household saving rate began rising in the mid-2000s and jumped to over 10 percent of gross disposable income after the global financial crisis of 2008–09
(Figure I.1). This was the highest level in nearly 25 years, but was still about 3 percent below the average for the 1970s and early 1980s. The recent spike in saving was higher than
in some other advanced economies. Even though the economy is recovering from the crisis, house prices have declined in real terms and the stock market has not fully recovered to its previous highs. In this environment, consumers have remained cautious and households have continued to save and rebuild their balance sheets.
2. Past staff analysis identified wealth effects, public saving, demography, and the terms of trade as the main factors associated with changes in Australian private sector
saving.2 Cross-country regressions on annual data for 19 advanced economies suggest that private saving is negatively correlated with public saving (interpreted as a Ricardian offset) and old age dependency, and is positively correlated with the terms of trade. Single equation estimates for Australia confirm the negative correlation between private and public saving, and show a quantitatively large co-movement between private saving and the terms of trade. They also show a strong negative correlation between changes in household net worth and
private saving.
view the IMF report-Australia; Selected Issues
Source: IMF
Thai Bourse To List Gold-Based ETF On Oct 11
October 7, 2011--The Stock Exchange of Thailand (SET) will list ThaiDex
Gold ETF, managed by One Asset Management, on its main board on Octotber 11, under the
ticker “GOLD99.”
GOLD99, an open-end exchange-traded fund (ETF), has a policy to invest in gold bars of
99.99 percent purity and store physical bullion domestically. TMB Bank plc. is the fund’s trustee.
“The fund is an attractive alternative and meets investors’ demand for those want to invest in gold through the stock exchange. GOLD99 will move in the same direction as the price of 99.99-percent gold bars in global markets, so investors will get returns similar to investment in gold. In addition, it can be traded conveniently via brokers, with real-time prices through SET’s reliable trading systems,” said SET President Charamporn Jotikasthira.
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Source: Stock Exchange of Thailand (SET)
Tokyo Stock Exchange: Constituent Change In TOPIX New Index Series
October 7, 2011--Tokyo Stock Exchange, Inc. (TSE) will make changes to the constituents of the TOPIX New Index Series, including TOPIX Core30, TOPIX 100, TOPIX 500 and TOPIX 1000, effective on Friday, October 28, 2011
Indices in the TOPIX New Index Series are free-float adjusted market capitalization-weighted indices based on companies listed on the TSE First Section and are widely used as sub-indices of TOPIX. Component stocks of the indices series are reviewed according to free-float adjusted market capitalization and liquidity (trading value) and it will be conducted annually in October.
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Source: Tokyo Stock Exchange (TSE)
Tokyo Stock Exchange: New ETFs Included In Real-Time Dissemination Of "TSE Indicative NAV"
October 7, 2011--Tokyo Stock Exchange, Inc. (TSE) will newly calculate and publish the real-time Indicative Net Asset Value (Indicative NAV) per share for the below Exchange Traded Funds (ETFs) beginning October 17, 2011.
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Source: Tokyo Stock Exchange
DB - Equity Research - Asia Pacific ETF Weekly Review:Strong Cash Flows of $2.3bn amid volatile markets
October 6, 2011--Market Review
Asia-Pacific markets were mixed last week amid global worries on economic slowdown and European debacle threats. In all, Japan (Nikkei 225), South Korea and Australia (S&P/ASX 200) rose by 1.64%, 5.39% and 2.70%, respectively; while China (CSI 300), Hong Kong (HSI) and Singapore (FSSTI) lost 3.30%, 0.43% and 0.88% respectively, during last week.
New ETP launches
In terms of new product launches, last week was relatively active in comparison to the past two months. Fubon Securities Investment Trust Company and SinoPac Securities Investment Trust Company (new entrant) each listed one ETF on the Taiwan Stock Exchange tracking the SSE180 Index and the TSE Capitalization Weighted Stock Index, respectively. Another new entrant in the ETP industry, Harvest Fund Management Company listed the Harvest Shenzhen F120 Index ETF on the Shenzhen Stock Exchange tracking the SZSE Fundamental 120 Index. (See Figure 5 for further details)
ETP Monthly Flows: Strong flows continue in spite of weak equity markets
Asia-Pacific ETP market continues attracting strong monthly cash inflows and totaled $2.3bn for the month of September. With this figure, monthly flows completed five straight months of cash inflows of over $2bn for the Asia-Pac ETP market. From a market perspective, ETPs in Japan led the inflows with $1.3bn, followed by Korea with $669m and China with $433m, while Taiwan experienced outflows of $246m. Year to date, Asia-Pac ETPs have gathered $16bn or 19% compared to last year’s closing AUM level.
Total monthly flows were primarily contributed by Equity ETFs with $2.1bn of inflows. Within Equity products, Asia Pac Developed Country, Strategy (Leveraged and Short) and Emerging Country ETFs recorded $1.5bn, $451m and $218m of inflows, partially offset by outflows of $199m from Thematic ETFs. In the commodities section, Gold ETPs collected total net inflows of $201m during the month of September.
Turnover Review: On-exchange activity soars
Asia-Pacific ETP turnover totaled $10.2bn for the last week, 10.9% up from previous week’s total and 113.6% up from last year’s weekly average. South Korea continues to be on top of the turnover ranking with $5.1bn (up 3.2%), followed by China ($1.8bn, up 47.8%), Hong Kong ($1.4bn, down 14.4%), Japan ($1.1bn, up 59.1%), and Taiwan ($247m, down 6.8%). Among Equity ETFs, Emerging Country, Short Strategy, Asia Pac Developed Country and Leveraged Strategy ETFs had total turnover of $3bn, $2.2bn, $2.1bn and $2bn respectively. Under the Commodity asset class, turnover in Gold ETPs totaled $426m, 70.3% up from last week.
Asset Under Management Review
Last week, Asia-Pacific ETP AUM ended at $87.9bn with a small increase of 1% over the previous week. On a year to date basis, Asia-Pacific ETP market is $3.7bn or 4.5% above last year’s closing.
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Source: Deutsche Bank - Equity Research - Asia Pacific
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