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The Real Exchange Rate and Employment in China -IMF Working Paper
June 27, 2011--Summary: We examine the impact of real exchange rate fluctuations on sectoral and regional employment in China from 1980 to 2008. In contrast to theoretical predictions, employment in both the tradable and non-tradable sectors contracts following a real appreciation.
Our results are robust across different sub-samples, levels of sectoral disaggregation, and are more pronounced for regions with higher export exposure. We attribute our findings to the importance of services as intermediate input in exportable production. We test this channel of exchange rate transmission using regional input-output tables linked with employment data at the region-sector level. The results of this paper have important implications for China’s labor market adjustment should the Chinese RMB strengthen in the future. To mitigate the costs of short-run labor market adjustment, appropriate demand management and structural reforms in the non-traded sectors should play an important role.
View the The Real Exchange Rate and Employment in China-IMF Working paper
SGX: Banks To Provide Market Making And Brokers To Support Trading Of Singapore Government Bonds
June 27, 2011--Singapore Exchange (SGX) said individual investors can expect transparency in price discovery and competitive trading costs of Singapore government bonds (SGS bonds) when they start trading on SGX from 8 July 2011.
SGX said market makers will be available to increase liquidity and make it easier for individual investors to buy and sell SGS bonds. The liquidity providers include seven out of 13 Singapore Government Securities (SGS) Primary Dealers, which have committed to provide two-way prices for the 19 SGS bonds traded on SGX. These are DBS, Deutsche Bank, HSBC, OCBC Bank, Standard Chartered Bank, The Royal Bank of Scotland (RBS) and United Overseas Bank Limited.
HK to set daily renminbi rate against dollar
June 23, 2011--Hong Kong will start setting a daily benchmark price for the renminbi against the dollar next week, giving a big boost to the fast-growing offshore market in the Chinese currency.
Market participants have been pushing for a daily fixing rate for the renminbi since last summer when the Chinese currency became freely tradable in Hong Kong following landmark reforms.
DB - Equity Research - Asia Pacific ETF Weekly Review:ETP AUM declines while turnover increases
June 20, 2011--Market Review
All the markets in Asia-Pacific region were down last week due to the concerns over faltering U.S. economic growth and Greece’s worsening sovereign debt crisis. From north to south, Japan (Nikkei 225) slid 1.71%, Korea (KOSPI2) declined by 1.05%, China (CSI 300) retreated by 2.36%, Hong Kong (HSI) dropped by 3.23%, Singapore (FSSTI) sank by 2.37% and Australia (S&P/ASX 200) slipped by 1.69%.
Last week, Indian ETP provider Religare Mutual Fund launched an ETF on National Stock Exchange (India) tracking S&P CNX Nifty Index. In the Asia-Pacific region, gradually more and more number of asset management companies are entering into the ETP market as well as increasing their product range.
Turnover Review: Activity soars in Korea
As of the end of last Friday, Asia-Pacific ETP turnover was again back to the $5bn mark after the shorter trading week when total turnover only reached $3.9bn. Korea Stock Exchange witnessed a sharp increase in trading activity with record $1.4bn turnover, followed by Hong Kong ($1.3bn), China ($871m) and Japan ($864m). Significant week-over-week turnover rise were experienced among Emerging Country ETPs ($474m or 30.8%), Leveraged Strategy ETPs ($312m or 74.7%), Asia Pac Developed ETPs ($198m or 16.3%) and Short Strategy ETPs ($160m or 78.6%).
Assets Under Management Review: AUM end lower amid bearish market
Asia-Pacific ETP AUM finally moved last week after almost two months of stickiness. ETP assets could not sustain the $87bn level anymore due to the continuous declining markets in the region and slipped to $85.6bn at the end of last week. However, it was $1.4bn or 1.7% above last year’s closing.
Chi-X okay to use ASX clearing system
Chi-X has signed a five-year deal with ASX to use its clearing and settlement service.
June 20, 2011--ASX Group, the company that operates the Australian Securities Exchange (ASX), has approved an application by Chi-X Australia to use its clearing and settlement service, the trade acceptance service (TAS).
Chi-X has signed up for a five-year term, which means the company has to pay $10,000 as an initial application fee plus $275,000 a year in service fees.
Chi-X, which is set to become the first competitor of ASX Group later this year, is required to have clearing and settlement arrangements in place that are approved by the Financial Services and Superannuation Minister before it can begin operating alternative trade execution venues.
SGX improves product disclosure for structured warrants, debentures and funds
June 20, 2011--Singapore Exchange (“SGX”) introduces new product disclosure templates to enhance the readability of term sheets for structured warrants, debentures and funds. SGX is of the view that consistent presentation of product features and risks will facilitate clear and efficient comparison of competing product offerings by market participants.
These disclosure templates will apply to the term sheets for:
1.Debentures in the form of asset-backed securities, exchange traded notes and structured notes
[Practice Note 3.1];
2.Funds (including collective investment schemes and exchange traded funds) [Practice Note 3.1]; and 3.Structured warrants [Practice Note 5.1].
Issuers are required to apply the guidelines and term sheet formats with effect from 1 August 2011.
With these two practice notes, issuers making an offer that is not accompanied by a Monetary Authority of Singapore (MAS)-registered prospectus are now able to make clearer disclosure of product features and risks in standardised formats. The changes to the listing manual are in line with MAS’ initiative to improve disclosure with the use of product highlight sheets.
The practice notes can be accessed at www.sgx.com under SGX Rulebooks – Rule Amendments.
FTSE and KPMG launch new report on China Capital Markets - The Changing Landscape
June 17, 2011--Shanghai is on track to becoming the world’s largest financial centre within the next decade, as China continues to open up its capital markets and expand its investor base.
In absolute size, China’s equity markets have now grown to a significant level, from USD 400 billion in 2005 to USD 4 trillion in 2010. This growth has been fuelled by over 500 initial public offerings, including the listings of China’s largest banks. Shanghai now has some of the world’s largest companies represented on its bourse.
A joint report by KPMG, FTSE Group and Dagong Global Credit Rating, China’s Capital Markets – The changing landscape, highlights the importance of the internationalisation of the RMB and progress towards the launch of the International Board on the Shanghai stock exchange. The new board aims to enable foreign organisations to access the Chinese markets allowing domestic investors direct access to foreign listed companies for investment purposes.
KINDEX Fundamental Large ETF To Be Listed On The Korea Exchange
June 16, 2011--The Korea Exchange (KRX) plans to list KINDEX Fundamental Large ETF on June 21, 2011, which tracks FnGuide-RAFI Korea Large.
FnGuide-RAFI Korea Large is an index that consists of 100 top stocks in intrinsic value that are listed in the KOSPI Market.
The KRX has listed 31 new ETFs this year, thus raising the total number of listed ETFs to 95.
Thai bourse to launch silver futures trade from June 20
June 16, 2011-- Thailand Futures Exchange PLC (TFEX) will begin trading
silver futures from June 20 and extend the gold and silver futures trading until 22.30 hours, enabling investors to manage risks and improve their profits. TFEX is a part of The Stock Exchange of Thailand,
TFEX has successfully completed systems testing with Thailand's clearing house
and derivative members, and TFEX has held seminars over the past three months to ensure that investors and exchange members understand this new security.
"TFEX is confident that extending gold and silver futures trading hours will boost convenience for investors in managing risks and create better returns. This is particularly true for those who want to trade when the New York market, which is also having a period of high volatility, is open" said TFEX Managing Director Kesara Manchusree.
DB - Equity Research - Asia Pacific ETF Weekly Review: ETP AUM proved resilient to bear markets
June 16, 2011--Market Review
After China, Korea raised interest rates for the third time this year from 3% to 3.25% to rein in inflation. Slowing U.S. economic recovery and inflationary concerns have kept the Asian markets on back foot during the last week. Japan (Nikkei 225) was the only market which recorded a gain (+0.23%), while Korea (KOSPI2) declined by 3.51%, China (CSI 300) retreated by 0.82%, Hong Kong (HSI) decreased by 2.31%, Singapore (FSSTI) sank by 2.14% and Australia (S&P/ASX 200) slipped by 0.46%.
Last week, one more ETP provider Lion Fund Management Company Ltd entered the Asian ETP market with the launch of a thematic ETF on Shanghai Stock Exchange tracking SSE Emerging Industries Index. Another thematic ETF was launched on Shanghai Stock Exchange by HFT Investment Management Company Ltd tracking SSE Non-Cyclical Industry 100 Index. (See Figure 4 for more details)
Turnover Review: Shorter trading week causes less activity
Asia-Pacific ETP turnover declined to $3.8bn (-27.5%) in the last week due to a holiday in the most active markets of the region – Hong Kong, China, Korea and Taiwan. The top position held by Hong Kong ($959m) was not impacted by the holiday but this time Japan took the second position ($916m), Korea took third ($798m) and China was left behind with the fourth position ($729m). Singapore witnessed a sharp decline of $297m in the turnover dropping to $56m in the last week. Week-over-week, Emerging Country ETPs turnover declined to $1.5bn (-42.4%), while Thematic ETPs climbed to $204m (+ 96.9%).
Assets Under Management Review
Last week again, Asia-Pacific ETP AUM experienced only a slight change contracting by 0.5% over the previous week. ETP AUM stood at $86.7bn which was $2.5bn or 3% above the last year’s closing. This year-to-date change has been mostly supported by inflows due to new products and, apparently, higher ETF adoption rates by investors in the region, as the markets remain deep into the negative sector which would suggest these inflows are not related to a market trend as we have seen in other regions such as in the US.
