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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.
Source: TSE
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.
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Source: FTSE
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.
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Source: FT.com
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).
Source:Shanghai Stock Exchange
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
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Source: FT.com
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.
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Source: Hong Kong Exchanges and Clearing Limited (HKEx)
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.
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Source: FT.com
Nikko Asset Management And Tokyo Stock Exchange Announce Listing Of The "Listed Index Fund Nikkei China Related 50" Total Of 100 ETFs Are Listed On The Tokyo Market
March 10, 2011-- Nikko Asset Management Co., Ltd. (Nikko AM) and Tokyo Stock Exchange, Inc. (TSE) today announced that the "Listed Index Fund Nikkei China Related 50 (nickname: Listed China Related 50)" (code: 1556) began trading on the TSE market on Thursday, March 10.This ETF is the 20th ETF managed by Nikko AM, and is also the 100th ETF listed on TSE.
ETFs have been widely accepted by a broad range of investors, from domestic individuals to overseas institutions, as financial instruments which meet their asset management needs. TSE has focused on expanding the number of listed issues in order to further increase investor convenience. Additionally, Nikko AM has been pursuing ETFs targeting new areas of investment while developing and managing a diverse lineup. With today's listing of "Listed Index Fund Nikkei China Related 50", TSE has reached its goal of 100 ETFs. As an ETF provider, Nikko AM manages 1/5th of the TSE ETF market, with 20 issues, and 1/3rd of the assets under management for domestic ETFs (JPY 1.7 trillion as of Fubruary 28, 2011), with a balance of approximately JPY 600 billion.
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Source: Tokyo Stock Exchange, Inc. (TSE)
Shanghai bourse to vie for more new listings
March 9, 2011--The bourse will also introduce new financial products such as cross-border exchange-traded funds (ETF) this year, but Geng declined to reveal the timetable for the launch of the product. It was reported that the bourse is proposing as many as 20 exchange-traded funds this year.
When asked about the stock exchange's plan to cooperate with foreign bourses, Geng said the exchange has no plan for mergers and acquisitions or forming alliances with overseas stock exchanges.
The bourse recently signed a Memorandum of Understanding with the Brazilian stock exchange BM&F Bovespa, South Amercia's largest bourse.
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Source: People's Daily On-line
Bank Ownership and the Effects of Financial Liberalization: Evidence from India -IMF Working Paper
March 9, 2011--Do financial sector reforms necessarily result in expansion of credit to the private sector? How does bank ownership affect the availability of credit to the private sector? Empirical evidence is somewhat mixed on these issues. We use the Indian experience with liberalization of the financial sector to inform this debate. Using bank-level data from 1991-2007, we ask whether public and private banks deployed resources freed up by reduced state preemption to increase credit to the private sector.
We find that even after liberalization, public banks allocated a larger share of their assets to government securities than did private banks. Crucially, we also find that public banks were more responsive in allocating relatively more resources to finance the fiscal deficit even during periods when state pre-emption (measured in terms of the requirement to hold government securities as a share of assets) formally declined. These findings suggest that in developing countries, where alternative channels of financing may be limited, government ownership of banks, combined with high fiscal deficits, may limit the gains from financial liberalization.
view the Bank Ownership and the Effects of Financial Liberalization: Evidence from India
Source: IMF
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