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Indonesia Economy: Good first quarter in 2011 but risks lie ahead
March 16, 2011 - Indonesia’s economic development during the first quarter of 2011 seems to be a déjà vu of 2008. Strong economic momentum coupled with a rise in commodity prices resembling conditions three years ago is why the World Bank’s first Indonesia Economic Quarterly for 2011 is titled “2008 Again?”.
The report launched at the Paramadina Graduate School on March 16 has two main messages. First, Indonesia’s economy is growing strong, exceeding expectations made in the fourth quarter of 2010 and well above the average for the last ten years. World Bank growth forecast for 2011 has been upgraded to 6.4 percent, with a possibility of further increase to 6.7 percent in 2012. Balance of payments inflows are strong, foreign direct investment has increased, reaching record levels.
The second main message from the report, despite this bright outlook, Indonesia should take note of risks that lie ahead. Many global commodity prices are back at or above their 2008 peaks. Shubam Chauduri, Lead Economist of World Bank Indonesia, explained that a rise in commodity price may bring a positive impact to the country’s GDP as a whole because Indonesia is a commodity economy. “However, risks lie for poor households who may be greatly affected by the sharp increase of living costs,” he warned. Rising food price inflation also pose a risk to progress on poverty reduction. Shubham added, at the global level the World Bank estimates that recent rises in food prices will lead to 44 million more people entering poverty.
read moreview the IMF Working paper-Indonesia economic quarterly : 2008 again?
Asian Hedge Fund Assets Rise 15% To US$152.3 Bln In 2010
March 15, 2011--Asian hedge funds' assets grew 15% in 2010 to US$152.3 billion, as liquidity flowed into the region, according to a survey conducted by trade publication AsiaHedge. Last year, hedge fund asset growth in Asia in the second half was double growth in the first half, AsiaHedge said in a statement Tuesday.
The allocations have gone not just to large international hedge fund brand names with Asia investments, but also to a much wider base of home-grown Asian managers. "Several of the post-crisis start-ups had built up decent track records by mid-2010, and were well poised for gaining these allocations as the capital moved back into Asia," says Aradhna Dayal, editor of AsiaHedge in Hong Kong. "The result has been nothing short of a cascading effect and many of the mid-size funds have seen very quick scale-ups in the second half of 2010. Hong Kong emerged as the top location choice for Asian hedge funds last year, according to the statement.
SSE Urges Members to Better Investor Protection
March 15, 2011--The Shanghai Stock Exchange (SSE) has recently announced the result of self-examination and visiting research on its members' investor education efforts, which aims to urge its member units to earnestly implement relevant business requirements and share the experience and practical measures of investor education.
Respect for and realization of investors' legitimate rights and interests, including the right to know and the right to choose, are directly related to the implementation of relevant requirements of regulators as well as the efforts in investor suitability management, investor education and customer service by the securities companies and their business departments, which are the backbone of the front-line investor education efforts. The self-examination and visiting research on investor education initiated by the SSE is designed to strengthen the management over and standardize the operation of its members for better investor protection. On the one hand, members of the SSE were urged to well perform their duties to improve investor education and service quality. On the other hand, qualified investors cultivation was speeded up by exploring effective investor education modes and measures, enhancing working experience summarization and communication, and pooling industry-wide efforts.
Message From Atsushi Saito, President & CEO, Tokyo Stock Exchange Group, To All Investors and Trading Participants On Sharp Declines In Tokyo Stock Market
March 15, 2011--The Tokyo stock market has been experiencing sharp drops over the last couple of days. I suspect that this has mainly been caused by increasing concerns about the degradation of social infrastructure following the recent “2011 off the Pacific coast Tohoku Earthquake” and subsequent nuclear power plant accident. Market participants’ concerns have also been further accelerated by the conflicting information on these happenings.
However, the overseas media still appreciate the potential power of the Japanese economy, even after the recent earthquake. In fact, the trend in the stock market today and yesterday showed that foreign investors were the net buyers.
I also believe that Japan’s experience, knowledge and technologies in the area of recovering from earthquakes should not be underestimated and that the stock market will calm down soon.
Under these circumstances, I believe that the Tokyo Stock Exchange in its role as an important social infrastructure should continue to provide opportunities for stock trading. I would appreciate it if all investors and trading participants would respond in a calm and orderly manner.
Atsushi Saito
President & CEO
Tokyo Stock Exchange Group, Inc.
FTSE Wins USD 3.3 billion in Mandates from Two of Taiwan's Largest Pension Funds
March 14, 2011--FTSE Group (“FTSE”), the award winning global index provider, expands its footprint with asset owners in Asia following the announcement of three new mandates issued totalling USD 3.3 billion by two of Taiwan’s largest pension funds, the Public Services Pension Fund (“PSPF”) and the Labour Pension Fund (“LPF”).
FTSE’s core global equities offering, the FTSE All-World Index, has been chosen for the first time by PSPF as the benchmark for a USD 600 million global developed equities mandate. The PSPF is a mandatory defined-benefit scheme for civil servants, teachers and military personnel in Taiwan with assets totalling over USD 16 billion.
LPF, Taiwan’s government pension fund for the labour force with assets totalling over USD 39 billion, has benchmarked their equity investments against the FTSE All-World Index for several years and FTSE now extends this relationship to alternative benchmark solutions. For the first time, LPF has allocated USD 1.8 billion to passively track the fundamentally weighted FTSE RAFI All-World 3000 Index. In Asia FTSE has previously licensed non-market cap weighted indices such as the FTSE RAFI indices in Australia, Hong Kong and Japan as asset owners seek new approaches to diversify portfolios and enhance returns. LPF has also allocated USD 0.9 billion to the FTSE EPRA/NAREIT Global Real Estate Index which has become the benchmark of choice among asset owners globally for real estate investment.
Aussie ETFs Prove Popular with Locals
March 14, 2011--The Australian summer is a notoriously quiet time for financial markets as the nation heads for the beach.
But the season did not stop local investors from piling A$140m ($140m) into four new exchange traded fund products launched on the Australian Securities Exchange by BlackRock iShares in mid-December.
SSE Wealth Mid-Small Index to Debut
March 14, 2011-On March 11, 20011, the SSE anounce the SSE Wealth Mid-Small Index to Debut. The Shanghai Stock Exchange (SSE) and China Securities Index Co., Ltd. (CSI) have recently announced the official release of SSE Wealth Mid-Small Index (hereinafter referred to as SSE Wealth Mid-Small) on April 6, 2011. The new index is the second one of the "Wealth Series" indices (The first one is CSI Wealth Large Cap Index launched on September 25, 2009) developed by CSI upon request of MANULIFE TEDA Fund Management Co., Ltd. (MANULIFE TEDA). Upholding the concept of "wealth", it handpicks 200 SSE-listed small- and mid-cap companies with the fastest wealth growth rate as its constituents.
In terms of weight method, it innovatively takes the financial indicators measuring wealth growth as the basis for weight distribution.
In other words, the faster the wealth growth is, the bigger the weight for an individual stock will be, which well reflects the philosophy of investing in the firms with the fastest wealth growth. It is also learnt that MANULIFE TEDA is planning the development of ETF products based on the new index.
SSE Wealth Mid-Small (whose index code is 000091) adopts December 31, 2004 as its base day and 1,000 points as its base point. Investors can keep themselves informed of the real-time index quotes through the securities quotes terminals. For compilation method and detailed materials of SSE Wealth Mid-Small, please refer to the websites of the SSE (www.sse.com.cn) and CSI (www.csindex.com.cn).
Rising Indian inflation confounds forecasts
March 14, 2011--India’s headline inflation rose in February, increasing the likelihood of the country’s central bank raising lending rates later this week and threatening to wreak havoc with optimistic government forecasts.
Figures released on Monday showed that the wholesale price index had edged up to a year-on-year rate of 8.31 per cent last month compared with 8.23 per cent in January. The data overturned many forecasts by economists who had expected inflation to fall last month
HKEx Announces Plans for Synthetic Futures Trading in its Stock Options Market
March 11, 2011--Hong Kong Exchanges and Clearing Limited (HKEx) announced today (Friday) that it plans to introduce a standard combination trading function in its stock options market on 9 May this year, pending regulatory approval, to allow investors to use synthetic futures strategies in the trading of five active stock option classes: China Construction Bank, China Life Insurance, China Mobile, HKEx and HSBC.
A standard combination trading function has been operating smoothly in HKEx’s stock index futures and stock index options markets for several years.
A synthetic futures strategy is a stock option combination which consists of two option legs. The buyer of synthetic futures buys a call option and sells a put option with the same underlying stock, strike price and expiry date, whereas the seller of synthetic futures sells a call option and buys a put option with the same features. The standard combination trading function allows investors to price synthetic futures as a package, which can reduce execution risk.
The advantages of using synthetic futures are:
1.They can be used by investors to manage delta exposure in stock options portfolios. Economically, their payoff at expiration will be similar to that of equity holdings.
2.As they operate on a net premium basis, they can help investors reduce their initial capital outlay.
Japan weighs economic implications of tsunami
March 11, 2011--Until Friday afternoon the biggest risks for Japan’s economic recovery were high oil prices, uncertain export demand and a looming budget showdown between the faltering government and an emboldened opposition.
The huge earthquake that hit off the coast of northeastern Miyagi prefecture was a harsh reminder of the more elemental dangers that can threaten economic activity on the crowded and seismically vulnerable Japanese archipelago.
