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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.
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Source: Deutsche Bank - Equity Research - Asia
Thai bourse to launch SET High Dividend Index on July 4
June 15, 2011--The Stock Exchange of Thailand (SET) has scheduled to launch the SET High Dividend 30 Index (SETHD), consists of 30 listed securities which have consistently paid high dividend. The new index is aimed to be used as a
benchmark for investment and served as the basis of the issuance of other
financial products. The 30 constituents have reported a combined Dividend Yield of 3.66% (as of May 31, 2011). SETHD will be launched from July 4, 2011.
The SET High Dividend 30 Index or SETHD is an addition to the existing SET index
series comprising of SET Index, SET50 Index, SET100 Index and mai Index as well as other Industry and Sectoral Indexes. The SETHD index reflects the price movement of the Thai 30 listed stocks which consistently pay high dividend. The new index is expected to be used as an investment benchmark and used in connection with issuance of new mutual funds as well as new financial products, SET Group Head Products & Business Development Ms. Kesara Manchusree said.
"To be eligible for inclusion in the SETHD index, the stock must be a member of the SET100 index. In addition the company must pay dividend for the last 3 consecutive years. The annual dividend payout ratio in such period must not be greater than 85%. The top 30 stocks ranked by dividend yield will be selected to the SETHD index", said Ms. Kesara.
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Source: SET
ETF due diligence critical: BetaShares
June 15, 2011--Local exchange traded fund (ETF) start-up BetaShares is warning investors to do their due diligence before investing in the high-growth sector.
Australia's ETF market growth is accelerating as low-cost investing attracts investors to the listed funds which comprise baskets of securities that track a specific index.
Market leaders State Street Global Advisers and iShares dominate the sector with market shares of 71 per cent and 20 per cent, respectively, according to research released in April by Tria Wealth Management Research.
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Source: Business Spectator
S&P lowers outlook on China property
Real estate market slows as tighter credit and gov't curbs 'start to bite'
June 15, 2011--Chinese developers' outlook was cut to "negative" from "stable" by Standard & Poor's, which said tighter credit and further government curbs may lead to rating downgrades in the next year.
Property sales may start to slow as the government's policy "starts to bite", leading to price cuts that may drive home prices 10 percent lower in the next 12 months, the credit rating company said. Hong Kong's real estate market faces the risk of a "sharp correction", S&P also said in its statement on Wednesday.
"We haven't seen any encouraging news so far," said Bei Fu, an analyst at S&P. "Inventory and sales pressure have increased, government policy is gradually showing effect, and transactions have been curbed. Many companies issued bonds that will improve their liquidity but put pressure on gearing."
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Source: China Daily
Thai Bourse Announces Constituents Of SET50 And SET100 Indices For H2/2011
June 14, 2011--Thai bourse announces constituents of SET50 and SET100 Indices for H2/2011
The Stock Exchange of Thailand (SET) has selected the constituents of the SET50
and SET100 indices for H2/2011 (July 1- December 31, 2011), SET Group Head,
Products Business & Development Kesara Manchusree said.
The SET50 index will be added one company, The Bangchak Petroleum PCL (BCP),
into its index constituents. There are also five additions in the SET100 index:
A.J. Plast PCL (AJ), KGI Securities (Thailand) PCL (KGI), M.C.S. Steel PCL
(MCS), Polyplex (Thailand) PCL (PTL), and Siam Future Development PCL (SF).
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Source: SET
Korean Investment Corporation Selects FTSE Index Strategies for Diversification
June 14, 2011--FTSE Group (“FTSE”), the award winning global index provider, continues to expand relationships with top-tier asset allocators in Asia and is pleased to confirm that the Korean Investment Corporation (“KIC”) has selected three FTSE index strategies to help diversify its Public Markets investment program. KIC focused on three FTSE developed non market-cap weighted index strategies and is expected to implement some combination of these strategies in 2011.
KIC was established as Korea’s Sovereign Wealth Fund in 2005 with the principle mission to protect and grow capital with an appropriate level of risk for the wealth of future generations of the country. Assets under management were reported to be USD 37 billion as of end of 2010.
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Source: FTSE
India: Further reforms must ensure strong growth is long-lasting and benefits all
June 14, 2011-India’s economy has ranked among the best performers over the past decade, and poverty has been falling faster than in many other emerging economies. India now has the opportunity to move towards sustained and socially inclusive double-digit growth if the right policies are put in place, according to a new OECD report.
Presenting the Economic Survey of India in New Delhi, OECD Secretary-General Angel Gurría said: “Policymakers are to be commended on the remarkable catch-up achieved in recent years, making India one of main driving forces of the global economy.” He added: “The priority given to more socially inclusive economic growth is appropriate and further reforms are needed to achieve it.” Read speech.
To ensure strong growth continues and is sufficiently inclusive, the government needs to target public expenditure better on the poor. Although high growth has reduced poverty, progress could have been faster, the OECD says. Hundreds of millions of people still live below the official poverty line. Malnutrition and poor health are still widespread. Against this backdrop, the report advocates a strengthened welfare system and improved access to health care. Government spending on health is only around 1% of GDP - among the lowest rates in the world. Private health care provision is increasing but quality is highly variable. Better regulation and oversight is needed.
view the Economic Survey of India 2011
Source: OECD
JP Morgan and BlackRock have launched a Same Day Settlement platform in Asia Pacific
June 14, 2011--The Asian Same Day Settlement service, which is provided by JP Morgan's transfer agency business, will provide BlackRock's institutional clients based in Asia with the opportunity to process trades during Asian business hours and to receive the same day use of the funds.
The service will initially be available for BlackRock's two key USD cash funds, the ICS Institutional US Dollar Liquidity Fund and the ICS Institutional US Treasury Fund.
BlackRock head of International Cash Mark Stockley said the Asian Same Day Settlement service is intended to provide their institutional clients with greater flexibility.>read more
Source: BBR
IMF Working paper-ASEAN5 Bond Market Development: Where Does it Stand? Where is it Going?
June 13, 2011--Summary: Since the Asian crisis, ASEAN5 countries have expended considerable effort in trying to develop their domestic bond markets. Yet today these markets are not much larger, relative to GDP, than they were a decade before. How can we explain this? And does this mean that domestic markets have not, in fact, developed? The paper argues that bond market growth has been held back by a sharp fall in investment rates, which has left firms with little need for bond borrowing.
Even so, markets have developed in other ways, to such an extent that substantial amounts of foreign portfolio investment have begun to flow into ASEAN5 bonds. These developments have important ramifications. With the investor base growing and infrastructure investment likely to rise, ASEAN5 bond markets could expand rapidly over the next decade, holding out the prospect that the region could finally achieve "twin engine" financial systems.
view the IMF Working paper-ASEAN5 Bond Market Development: Where Does it Stand? Where is it Going?
Source: IMF
China inflation at 34-month high on rising food prices
June 13, 2011--Inflation in China hit its highest level in 34 months despite the government's efforts to rein in rising prices.
Consumer prices in China rose by 5.5% in May, compared with the same month last year, according to the National Bureau of Statistics.
Food prices continued to be the biggest factor as they surged by 11.7%
The rising cost of food and commodities have pushed up the cost of living and become a hot political issue in China.
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Source: BBC.com
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