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Shanghai Stock Exchange: ETFs To Bloom On A-Stock Market
Actively-managed ETFs, inverse ETFs and leveraged ETFs will be the goal of innovation in future.
November 18, 2010--China Securities Index Co., Ltd. (CSI) held the 4th Index and Indexation Investment Forum in Shanghai on November 15, where experts made in-depth discussion on the topic of "indexation investment in the backdrop of financial innovation" and agreed that the indexation investment in China is facing a great development opportunity, with actively-managed ETFs, inverse ETFs, leveraged ETFs and long/short strategic ETFs being the main goal of ETF innovation in future.
Delivering keynote speeches at the forum were Tong Daochi, Director of International Cooperation Department of the China Securities Regulatory Commission, Fang Xinghai, Director of the Shanghai Financial Service Office, Zhou Qinye, Vice President of the Shanghai Stock Exchange, and Zhou Jiannan, Assistant to President of the Shenzhen Stock Exchange.
The past two years witnessed the unprecedented development and innovation of index products, particularly ETF products, on the capital market in China's mainland. The year of 2009 was nicknamed "The Year of Index Fund" as the number of index products introduced to the public went beyond the total in the past seven years. Among the 29 index products, four were ETFs. The upsurge of indexation investment is gaining momentum this year. By November 12, 10 out of 38 issued index products had been ETFs, indicating a dramatic rise in proportion.
Besides, the types of index products are diversified as thematic index funds, strategic index funds, thematic ETFs, strategic ETFs and other new products vie to make their debuts. By the end of October, there had been 79 index products (including 53 index funds) as well as 15 ETFs and 11 feeder funds, boasting net asset values of about RMB240 billion and RMB80 billion, respectively. The number of index products had accounted for about 12% of that of all mutual funds, with the net asset values accounting for about 13% of that of the total.
Financial system innovation provides a favorable environment for further development of indexation investment. Strategic indices based on quantitative strategy and derivatives are prevalent, while actively-managed ETFs, inverse ETFs, leveraged ETFs and long/short strategic ETFs are becoming the main goals of ETF innovation in the days to come. The introduction of ETF options and warrants and other derivatives in future will in turn boost the growth of ETFs.
Source: Shanghai Securities News
IMF Working paper-Emerging Asia’s Impact on Australian Growth: Some Insights From GEM
November 18, 2010--Summary: Over the last decade, GDP growth in emerging Asia was roughly twice as fast as average world growth. The IMF’s Global Economy Model (GEM) is used to estimate the impact that emerging Asia’s growth differential has had on Australia. The simulation analysis, which replicates some key features from the last decade, suggests that roughly 25 percent of Australia's growth over the last decade has been from emerging Asia’s growth differential over that period.
Looking ahead, the analysis suggests that should emerging Asia continue to grow in a similar fashion, Australia’s growth dividend could almost double. On the other hand, if growth in emerging Asia remained strong, but became more balanced across the tradable and nontradable goods sectors then Australia’s growth dividend would be slightly lower than the estimate for the last decade.
view working paper-Emerging Asia’s Impact on Australian Growth: Some Insights From GEM
Source: IMF
New measures to raise investors’ awareness of synthetic ETFs
November 18, 2010--The Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEx) announced today (Thursday) a new effort to raise investors’ awareness of Exchange Traded Funds (ETFs) that primarily adopt synthetic replication strategy (synthetic ETFs). A traditional ETF (also known as physical ETF) invests in securities that replicate or represent the composition of the index it tracks, and a synthetic ETF uses financial derivative instruments to track index performance (Note 1).
Synthetic ETFs’ managers have agreed to adopt new measures aimed at helping investors to better differentiate between index tracking strategies of ETFs. The new measures, supported by the SFC, HKEx and the industry following extensive discussions, are in line with ongoing efforts to strengthen protection for investors.
Addition of marker to stock short names of synthetic ETFs
Effective from 22 November, 2010, a marker X will be placed at the beginning of the English and Chinese stock short names of all synthetic ETFs listed on The Stock Exchange of Hong Kong (SEHK), a wholly-owned subsidiary of HKEx.
The marker will make synthetic ETFs more visible on the stock pages of HKEx’s securities trading system and on the HKEx website and the HKExnews website. The stock short names of traditional ETFs will remain the same (Note 2).
Annotation of names of synthetic ETFs
Building on the preceding measure, by 16 January 2011, managers of synthetic ETFs will be required to put an asterisk (*) and an annotation in English “(*This is a synthetic ETF)” and in Chinese “(*???????????????)”, as the case may be, right after the name of a synthetic ETF whenever it appears in offering documents and marketing materials for a synthetic ETF issued by the manager or on the manager’s behalf to investors in Hong Kong (Note 3).
This requirement will also be applicable to all notices and other communications with Hong Kong investors in respect of synthetic ETFs whenever the name of the synthetic ETF is mentioned, including information on the corporate websites for Hong Kong investors run by or on behalf of synthetic ETFs’ managers.
The SFC and HKEx believe these new measures will allow investors to easily identify synthetic ETFs from other ETFs before making any investment decisions.
Investor education initiatives
The SFC will continue its investor education efforts to help investors better understand synthetic ETFs.
HKEx is updating its product education material to explain the purpose of the stock short name marker and the risks of ETFs using synthetic replication.
HKEx will also enhance the HKEx website to highlight disclosure of ETF product features. For example, it will indicate which ones use synthetic replication and which ones do not. This will help investors find ETFs by their product features more easily.
HKEx has enhanced the hyperlinks to ETF websites from the HKEx website to provide easier navigation to ETF websites.
Other measure to enhance transparency of ETFs
To assist managers of ETFs in complying with the ongoing disclosure obligations under the Code on Unit Trusts and Mutual Funds and/or Listing Agreement, the SFC and HKEx today jointly issued a circular containing a list of potential events that may trigger such disclosure obligation.
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Source: Hong Kong Exchanges and Clearing Limited (HKEx)
Indonesia’s middle class comes of age
November 18, 2010--Dini Shanti, a web marketer, struggled for years to pay the rent and put food on the table for her two children
Yet in the past 24 months she has moved into a new home, bought her retired father a car and begun paying into investment funds and a life assurance policy.
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Source: FT.com
South Korea to reimpose tax on bonds
November 18, 2010--South Korea will reimpose a withholding tax on foreign investors’ earnings from government bonds in a move that mirrors
initiatives in many other countries trying to stabilise their currencies. The decision on Thursday to restore the 14 per cent tax comes days after
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Source: FT.com
India needs ‘quantum step’ in investment
November 17, 2010-India’s central bank governor has warned that the country needs a "quantum step" in investment to achieve the ambitious double-digit economic growth rate forecast by Manmohan Singh, the Indian prime minister.
The warning from Duvvuri Subbarao flies in the face of the growing belief in India and overseas that the country can outpace China by moving from its current 8.5 per cent growth to 10 per cent growth over the next three to five years.
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Source: FT.com
China eyes price controls to fight inflation
November 16, 2010--China is considering a package of price controls and other measures to contain inflation which rose sharply last month and has become the principal risk to the economy.
The National Development and Reform Commission, China’s main economic planning body, is putting together a “one-two punch” of policies to ...P>read more
Source: FT.com
DB Global Equity Index & ETF Research : Asia Pacific ETP Market Weekly Review
November 16, 2010--Market Overview
There are 243 equity based ETFs in the Asia Pacific region with 336 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 38.96% of the whole market, whilst China has the largest market share by turnover with 41.70%. There was no new listing last week.
Turnover
Monthly average daily turnover rose 5.5% in the last week. Turnover for the previous week was USD 1,660m. The largest ETF by turnover was the iShares Asia Trust - iShares FTSE/Xinhua A50 China Tracker issued by BlackRock with USD 328m accounting for 19.8% of total turnover.
Assets Under Management
AUM declined 2.8% in the previous week. AUM as of November 12nd was USD 76.5bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 9.2bn.
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
Gold ETF volumes almost double in Oct on yr
November 16, 2010-- India's gold collections under exchange traded funds almost doubled in October to 13.999 tonnes on year, indicating sustained interest in the yellow metal from investors , data from the funds showed
Gold on the Multi Commodity Exchange (MCX) was trading 0.45 per cent lower at RS20,131 per 10 grams on Tuesday, after gaining 16.7 per cent on year.
Though gold collections under ETFs are growing, they remain miniscule against India's imports of about 400-800 tonnes annually.
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Source: The Economic Times
Japan: improve the environment to boost economic growth, says OECD
November 16, 2010--Japan should do more to fight climate change and protect biodiversity, according to a new OECD review of its environment. Tackling these two problems would improve the environment and help boost long-term growth.
OECD Secretary-General Angel Gurrìa commends Japan for addressing environment as part of the response to the economic and financial crisis. Japan has already allocated USD 28 billion – about 16% of the anti-crisis package – to environment related measures.
However, OECD’s Environmental Performance Review of Japan says the stimulus package includes support for agriculture and for the car industry which could have negative effects on the environment and distort competition.
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OECD Environmental Performance Reviews: Japan 2010
Source: OECD
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