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DB Index & ETF Research: Asia-Pac ETF Market Weekly Review :ETP Assets Add $2.2bn as Markets Rally
February 23, 2011--Market Review
In general, last week was a positive week for the markets across the Asia-Pacific region. Early in the week, global markets processed Egypt’s move towards democracy as encouraging, while at a local level the better-than-expected export and inflation data released in China lured investors back to the equity markets fueling a rally across the region. The Hong Kong market (HSI) rose by 3.4%, the Chinese market (CSI 300) gained 2.9%, the Japanese market (Nikkei 225) increased by 2.2%, the Korean market climbed 2.1%, and the Australian market added 1.1%.
There was one new listing in the Asia-Pac ETP markets. Midas AM launched an Equity ETF following an option strategy known as “Covered Call” on the KOSPI 200 index, which can now be accessed at a TER of 0.45%. Total ETPs available in the region stand at 295, with 85% represented by equity products, and the remaining 15% distributed, mainly between Commodity and Fixed Income products.
Turnover Review: Activity surges as markets rally
In the last week, total turnover reached $ 6.2 bn, which is $1.8 bn or 40% above previous week's total of $ 4.4 bn, and 29% above from last year’s weekly average. The on exchange activity surge was mainly due to increased activity in Hong Kong and China. Last week, Chinese exchanges were open for all the days as compared to the previous week when there were two holidays. Equity ETPs activity rose by 42%, totaling $6.0 bn.
The Hong Kong market took the first place with a weekly turnover total of $2.0 bn, with the Chinese markets piggybacking just $6 million behind.
Asset Under Management Review
Good markets globally and positive local economic data underpinned a $2.2 bn or 2.6% WOW growth in the Asia-Pacific ETP AUM. This week’s assets reached $86.4 bn vs. $84.2 bn in the previous week. Year to date, assets are up by 2.7%, $2.2 bn above last year’s close.
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Source: Deutsche Bank Global Equity Index & ETF Research
iShares’ Australian business reaches AU$1 billion assets
February 23, 2011--BlackRock announced its exchange traded fund (ETF) business, iShares, is celebrating a
significant milestone today with its Australian business reaching AU$1 billion assets under management (AUM)1.
iShares, the world’s leading provider of ETFs, launched its first suite of international ETFs in Australia in October 2007 and now has 23 ETFs listed on the ASX, across domestic and international indices.
According to Deborah Fuhr, BlackRock‘s Global Head of ETF Research and Implementation Strategy, the ETF
category in Australia is predicted to grow by 20 - 30% per annum over the next couple of years. Several factors driving this growth include:
Increasing awareness and familiarity of ETFs and the benefits they provide across key investor segments;
Growth in the number of financial intermediaries and direct investors increasing their usage of ETFs to gain costeffective, transparent exposure to international and Australian sharemarkets;
Australian institutions increasingly using ETFs for specific investment strategies such as cash equitisation and portfolio rebalancing;
A move to fee-based advisory models by financial advisers due to proposed regulatory fee reforms, which will make ETFs an increasingly attractive option;
Fund platforms embracing ETFs driven by rising client demands to include them;
Greater choice of ETF products with future expansion across asset classes such as fixed income;
The expectation that new providers of ETFs will emerge;
Research houses in Australia increasing their analysis and rating services to encompass ETFs;
A strong Australian dollar will continue to prompt unhedged exposure to global markets. Mark Oliver, Head of iShares, Australia comments: “Surpassing $1 billion is an important event for iShares in Australia. A number of factors have led to this milestone achievement including the launch of our Australian Equity ETF products last year, the growing appeal of our international ETFs and the commitment of the iShares team here in Australia.
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Source: iShares
Hong Kong set to issue inflation-linked bonds
February 23, 2011--The Hong Kong government is set to issue the city’s first inflation-linked bonds, designed for local retail investors, at a time of heightened worries about a property bubble and rising costs of living.
Strong economic growth of 6.8 per cent in 2010, announced in the financial secretary’s annual budget speech on Wednesday, has come with rising inflation, which last year stood at 2.4 per cent but is forecast to reach 4.5 per cent in 2011.
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Source: FT.com
Singapore Exchange Enhances Securities Clearing Fund Structure
February 23, 2011-- Singapore Exchange (SGX) today announced enhancements to the structure of The Central Depository (CDP) Clearing Fund to cater to market growth and to strengthen further the robustness of the securities market.
The revised Clearing Fund structure is scalable, linking clearing members' contributions more closely to the level of risk they bring to the clearing system. Their clearing fund contributions will change in line with their securities traded values. Previously, the contributions remainfixed in aggregate.
Under the revised structure, CDP only requires a portion of clearing members' increased contributions to be deposited upfront. Clearing members will be called upon to deposit the remaining contributions under conditions of increased risk or to meet losses arising from clearing member default.
In addition to regular clearing requirements, SGX is also introducing collateral on short-term large exposures. The large exposure collateral will better protect the clearing system against the default of individual clearing members with particularly large risks.
An extensive public consultation exercise was conducted in 2009. SGX has incorporated feedback from the market participants and received broad support from its securities clearing members in bolstering the financial resources to safeguard the clearing system against default of securities clearing members.
The enhancements and accompanying changes to the CDP Clearing Rules will take effect from 3 May 2011.Details are available on SGX website at:
http://www.sgx.com/wps/portal/corporate/cp-en/regulation/rulebooks_manuals/cdp_clearing_rules/amendments
Source: Singapore Exchange (SGX)
BetaShares U.S. Dollar ETF debuts as top 10 most traded ETF on ASX
AUM more than doubled in second week of trading
Median trade was A$15,000, indicating pent up demand from retail investors for access to U.S dollar exposure in a simple, transparent and low cost way
Strong interest from small businesses looking to use the ETF to hedge upcoming U.S. dollar purchases
February 21, 2011--BetaShares Capital Limited (BetaShares) today announced its newly listed US dollar exchange traded fund (ASX: USD) was one of the top 10 most traded ETFs on the Australian Securities Exchange in its first two weeks of trading with assets under management doubling in the second week of trading.
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Listed on 1 February 2011, BetaShares US Dollar ETF tracks the performance of the US dollar (US$) relative to the Australian dollar (A$) using a simple, transparent and highly cost-effective
structure backed by US dollars held in a bank account with JP Morgan Chase Bank.
Drew Corbett, Head of Investment Strategy & Distribution at BetaShares said the average trade size of $15,000 indicates strong retail appetite for foreign exchange investment opportunities that were previously unavailable to them.
“Exorbitant fees and poor exchange rates in foreign currency bank accounts mean retail investors have been effectively shut out of the foreign exchange markets up until now. Heavy trading by retail investors in the USD ETF suggests a high level of pent up demand for cost effective and simple foreign exchange investment opportunities,” Mr Corbett said.
“In addition, we are finding that there are a significant number of investors who are investing in this product as a simple way to get exposure to the potential recovery of the U.S. economy”, he continued.
The launch of the USD ETF comes at a time of historic strength for the Aussie dollar, which is currently trading at about 40% above its long run average value. The ETF enables investors to capitalise on any potential weakening in the A$ relative to the US$. For example, if the US$ appreciates 10% against the A$ (i.e. if the A$ falls in value), the price of the ETF should go up 10% too.
This exposure comes at a fraction of the cost of current mechanisms available to most investors. Investing A$10,000 in a US dollar bank account can cost an individual up to $700 over a six month period due to fees, costs and poor exchange rates. The superior rates provided by BetaShares mean the same investment in its ETF would cost around A$70.
BetaShares has also reported strong interest from small to medium business owners which have large US dollar capital expenditures planned in the future and are looking to hedge against a fall in the Australian dollar.
The US Dollar ETF is the third ETF listed by BetaShares after the Resources Sector ETF (ASX: QRE) and Financial Sector ETF (ASX: QFN) listed on the ASX in mid December.
The product launch is further evidence of BetaShares’ commitment to provide Australian investors with
ETFs tailored to the Australian market.
Source: BetaShares
Tokyo Stock Exchange Will Reduce The Minimum Tick Size For Single Stock Options
February 22, 2011--TSE will reduce the minimum tick size for single stock options in the 4th quarter of 2011 to respond to detailed trading needs. Specifically the minimum tick size will be reduced from 0.5 yen to 0.1 yen
TSE will be accepting public comments regarding this matter from the current date until March 24, 2011.
Reducing the Minimum Tick Size for Single Stock Options
Source: Tokyo Stock Exchange
FTSE and Value Partners launch custom FTSE Value-Stocks China A-Share Index
February 22, 2011--FTSE Group (“FTSE”), the leading global index provider, and Value Partners Index Services Limited (“Value Partners”), a wholly-owned subsidiary of Value Partners Group, today launched the FTSE Value-Stocks China A-Share Index. The customised index offers a new and unique investment opportunity for investors looking to benefit from Value Partners’ expertise in value investing, as applied to China’s A-Share market.
The new index uses Value Partners’ unique value investing methodology, and is calculated and maintained using FTSE’s dedicated custom index solutions. The Index* captures the performance of liquid-value stocks selected from the investable universe of companies listed in China’s A-Share market. Performance of FTSE Value-Stocks China A-Share Index since the base date of 31 May 2005 until 31 January 2011 was 396.2%, compared to FTSE China A50 Index’s performance of 173.5% over the same period.
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Source: FTSE
Thai Bourse launches Silver Futures & extends trading hours for Silver & Gold Futures in June 2011
February 22, 2011--The Thailand Futures Exchange Plc (TFEX), part of The Stock Exchange of Thailand, will begin trading silver futures and extend trading hours for gold and silver futures until 22:30 hours, both starting in June 2011.
Silver has been gaining popularity among investors due to its upward price tendency and its relationship with gold prices, TFEX Managing Director Kesara Manchusree reported. Investors in gold can employ similar trading strategies for both precious metals. Moreover, they see more opportunities in silver because of its comparatively low price and high volatility.
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Source: WFE
First Currency ETF To Be Listed on the Korea Exchange
February 22, 2011--KOSEF USD Futures ETF, the first currency ETF listed on the Korea Exchange (KRX), will start trading from February 24, 2011.
KOSEF USD Futures ETF tracks the price of nearest month contract of USD futures (F-USDKRW) and rolls over every month.
The principal value of investment and unit price of KOSEF USD Futures ETF are KRW 10 billion and KRW 12,000, respectively.
It is expected that KOSEF USD Futures ETF would provide the retail investors and investors with small capital with the low risk and low cost investment tools for participating in USD currency market.
During the first two months of 2011, total of five new ETFs, including KOSEF USD Futures ETF, were listed on the KRX, thus raising the total number of listed ETFs to 69.
Source: KRX
Launch of Tokyo Stock Exchange High-Speed Index Service -TOPIX distributed on the millisecond level: one of the world's fastest-
February 22, 2011--Tokyo Stock Exchange, Inc. (TSE), in collaboration with Hitachi, Ltd. (Hitachi), will launch a new "High-Speed Index Service" on Monday February 28, 2011. In addition to the current service in which the TOPIX and other price indexes are disseminated every second, the indexes in the new service will be calculated with each change in the price of a constituent stock and disseminated on the millisecond level.
The new service is one of the world's most advanced, and will feature new "best quote indexes" which are calculated based on the best quotes* for each individual index constituent.
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Source: Tokyo Stock Exchange
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