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DB Index & ETF Research: Asia-Pac ETF Market Weekly Review :Turnover Picks Up, After the Break
February 16, 2011--Market Review
Local Markets within the region processed the same information in diverse ways as they came out of the Lunar New Year celebrations. Right after the break, the PBOC raised the key interest rate by 25 bps, reaffirming the inflationary concerns in China. Some markets such as the ones in Korea (KOSPI 200) and Hong Kong (HIS) picked the news on the downside losing 4.8% and 4.5% during the week, respectively.
While others such as those in Japan (Nikkei 225) and Australia (S&P/ASX 200) remained indifferent rising by 0.59% and 0.37% in the same period, respectively. The Chinese market processed an overall net positive load of economic news, pushing the A-Share market to the upside (FTSE China A50, 0.75%; CSI 300, 1.42%).
There were no new listings in the Asia-Pac ETP markets. Total ETPs available in the region stand at 294, with 85% represented by equity products, and the remaining 15% distributed, mainly between Commodity and Fixed Income products.
Turnover Review: Activity comes back as markets return from the break
On exchange activity increased as most of the markets came fully back from the Lunar New Year break, total ETP weekly turnover was up by 72% as compared to the previous week, totaling $4.4 bn, a bit lower (-8%) than last year’s weekly average, although still suggesting a significant increase in activity considering that China (the most active market by turnover) was closed for two days. Equity ETPs activity rose by 76%, totaling $4.3 bn.
With the Chinese mainland market partially open for the week, the Hong Kong market took the first place with a weekly turnover total of $1.9 bn, followed by the Chinese with $760 mm.
Asset Under Management Review
Mixed market sentiment in the region and a rising US dollar shaved $1.2 bn in assets at the bottom line, shrinking the industry AUM by 1.4%. On a week over week basis, this week’s assets sat at $84.1 bn vs. $85.3 bn in the previous week. Year to date, assets are practically flat, just $76 mm below last year’s close.
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
China’s consumer price index hits 4.9%
February 15, 2011--Chinese inflation exceeded the government’s target in January despite a lower-than-expected increase in food prices, underlining the pressure on policymakers to continue tightening monetary policy.
The consumer price index rose 4.9 per cent last month compared with a year earlier, up from 4.6 per cent in December. The result remains stubbornly above Beijing’s official inflation target of 4 per cent and included the highest increase in non-food prices in recent years.
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Source: FT.com
New ASX-SGX governance arrangements and commitments to strengthen the merger proposal
February 15, 2011-- ASX Limited (ASX) and Singapore Exchange Limited (SGX) have agreed to make changes to the governance arrangements of, and provide further commitments in connection with, their merger proposal, which will strengthen the development of the financial services sectors and the national interests of both Australia and Singapore.
This follows engagement by both parties with a wide range of stakeholders since the merger proposal was announced on 25 October 2010.
David Gonski AC, Chairman of ASX, said: “Recent developments in global exchange mergers affirm the judgement of the ASX Board that ASX must participate in regional and global consolidation.
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Source: The Financial
The Great Rebalancing Act: Can Investment Be a Lever in Asia? IMF Working Paper
February 15, 2011--Summary: Ensuring stable growth in the postcrisis world economy will require a rebalancing of economic activity in several countries. In Asia’s export-dependent economies, this entails relying more on private domestic demand as a driver of growth.
While some countries need to raise consumption, several need to raise investment or reorient it from tradable to nontradable sectors. These changes in investment could be facilitated by financial reforms that enhance domestically oriented firms’ access to credit, stronger incentives for corporate restructuring, policies to bolster the business climate and reduce uncertainty, and by improvements in infrastructure that raise the returns to private investment.
view the IMF working paper-The Great Rebalancing Act: Can Investment Be a Lever in Asia?
Source: IMF
IMF Staff Report for the 2010 Article IV Consultation-India
February 14, 2011--EXECUTIVE SUMMARY
Context: India’s economy has recovered from the crisis and is performing well, but inflation remains elevated. Robust domestic demand combined with weak growth in advanced countries is widening the current account deficit.
Risks to growth are broadly balanced, with downside risks relating mainly to the global economy. Capital inflows so far are manageable, but could complicate macroeconomic management. The medium-term outlook is favorable,
with growth expected to be underpinned by high investment and productivity gains.
Policy messages:
Robust growth and elevated inflation warrant prompt action in completing the
normalization of the monetary and fiscal stance.
Further monetary tightening is needed to meet the RBI’s inflation objectives and
anchor inflation expectations.
The government’s renewed commitment to fiscal consolidation is welcome. Not only would tighter fiscal policy be the best way of cooling the economy, but this year’s receipts overperformance offers an opportunity to reconstitute fiscal space faster.
Spending reforms will be critical to square the consolidation objectives with the need for higher infrastructure and social spending. Implementing the tax reforms in the works could also contribute.
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Source: IMF
China trade surplus drops as imports rise
February 14, 2011--China said Monday its politically sensitive trade surplus shrank in January but analysts warned the data may have been skewed by a surge in imports leading up to the Lunar New Year holiday.
The data came hours after Tokyo confirmed China had surpassed Japan as the world's second biggest economy and as economists look to the release on Tuesday of January inflation at a time when China is trying to rein in prices.
The trade surplus fell 53.5 percent to $6.45 billion in January as both exports and imports grew strongly ahead of the holiday, the General Administration of Customs said.
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Source: Yahoo
China overtakes Japan as world's No.2 economy
February 14, 2011--
China leapfrogged Japan to become the world's second-largest economy in 2010, according to estimates.
Japan lost its place to China after data from Tokyo overnight showed a decline in output for the last quarter of the year.
Japan's economy was worth $5.474 trillion (£3.414 trillion) at the end of 2010, figures from Tokyo have shown...
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Source: thisismoney.co.uk
OSE’s New Derivatives Trading System, J-GATE, Launched
February 14, 2011--Osaka Securities Exchange Co., Ltd. (OSE) has successfully launched its new derivatives trading system, "J-GATE", compliant with international standards and equipped with new trading functions and the world's highest order processing capacity. The system is powered by NASDAQ OMX trading technology.
OSE decided in 2009 to adopt trading technology provided by NASDAQ OMX for its new trading platform for derivatives products, which has been developed with assistance from NTT Data Corporation as its System Integrator.
The launch of J-GATE delivers improved processing capabilities, such as reduced processing latency, and enables the introduction of market rules and functions employed by major overseas exchanges, which will further enhance the competitiveness of the OSE's market.
Michio Yoneda, President & CEO of OSE said "We would like to express our gratitude and appreciation to all who have contributed to the successful launch of the J-GATE. Through the utilization of the world's highest-level processing capabilities and the global standard trading functions of J-GATE, OSE continues to further enhance the competitiveness of its market, which we hope leads to strengthening competitiveness of the Japanese market."
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Source: Osaka Exchange
New ETF funds buy bullion
February 11, 2011--Instead of investing through gold-backed exchange-traded funds (ETFs) available in the market, investors can now invest directly in gold bullion.
Thanachart Fund Management yesterday launched two gold funds with a passive investment strategy.
The funds will not track the global gold index like other ETFs or engage in short-term speculation in gold prices. However, they will invest the money on gold bullion according to their clients' demands.
The company will buy physical gold from gold refiners that are approved by the London Bullion Market Association (LBMA).
Currently there are 61 gold refiners from 20 countries in the association.
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Source: Bangkok Post
DB Index & ETF Research: Asia-Pac ETF Market Weekly Review : Good Activity, but Flat Flows Across the Board
February 10, 2011--Market Review
Markets within the region have been mixed year to date, with developed countries outperforming emerging countries. So far this year, in the DMs the Nikkei 225, the Hang Seng Index, and the S&P ASX 200 Index have risen by 3.1%, 3.8%, and 2.5%, respectively. While on the EM side, the CSI 300 has declined by 1.6%, and the KOSPI 200 has slightly risen up to 0.8% in the same period. However in the last week returns were more correlated with all of them mixed and within the 0.9% to 1.8% range.
New launch activity was considerably quieter than in the previous weeks, with only 1 new listing during the week ending on Feb 4th. This is probably one of the dimensions, along with the weekly turnover, which suffered the effect of a shorter and silent week due to the Lunar New Year celebrations. The only ETP brought to market last week was listed on the National Stock Exchange of India, and tracks Mid Cap Indian stocks.
ETP Monthly Flows:
Overall flat flows due to offsetting trends
Overall ETP flows were flat at +$26 mm for the month of January vs. +$210 mm in December. This January, Fixed Income products received the largest inflows with $55 mm, while Equity and Commodity ETPs recorded outflows of $17 mm and $19 mm, respectively. Month over month, Fixed Income has gathered the largest amount of new cash with $165 mm inflows.
Within Equity products, Emerging Country had the largest inflows with $296 mm, while Asia-Pac Developed countries had the largest outflows with $492 mm. Outside Equities, Sovereign debt products received interesting inflows of $86 mm, while Gold ETPs experienced outflows of $38 mm. We still believe that the Equity and Fixed Income flow patterns are based on product adoption trends in the region, rather than asset allocation decisions. However Gold flows came in line with what we saw in the underlying precious metal market and in other regions.
Turnover Review: Short week cuts trading activity by more than 40%
Mainly impacted by a short week due to the Lunar New Year Holidays, total ETP weekly turnover was down by 41% as compared to the previous week, totaling $2.5 bn. Equity ETPs took the hardest hit with and almost same-size drawdown of 42%, totaling $2.4 bn. Last week’s turnover was about 47% down from last year’s weekly average of $4.8 bn.
However, other ETP markets not closed due to the festivities such as the Australian and Japanese markets had a very active week. Trading activity was unusually busy in Australia registering growth of $395 mm (380%). In addition, Japan had a normal trading week a bit towards the upside even (6% up).
Asset Under Management Review
Mainly driven by a good equity market, assets rose by 1.5% to $85 bn vs. $84 bn in the previous week. Year to date, assets have increased by $1.1 bn, rising 1.3% above last year’s closing.
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
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