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India warned over capital inflow risks
October 25, 2010--Economists are warning that New Delhi may be underestimating the risks of excessive capital inflows, as huge foreign portfolio investment into India has helped push both the stock market and the rupee to pre-crisis levels.
Since January, India’s equity and bond markets have attracted a record $33.8bn in foreign funds on the back of the country’s robust economy, which grew 8.8 per cent year-on-year in the second quarter. However, during the same period foreign direct investment – which tends to be more long-term than inflows into the stock market – dropped 35 per cent, down to Rs637bn ($14.4bn) from Rs976bn.
“India’s dependence on foreign capital to grow its economy is a limiting factor,” said Ridham Desai, India equity strategist for Morgan Stanley. “What seems more critical to us is the mix of capital flows, which still are skewed toward capital market sources rather than foreign direct investment.
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Source: FT.com
ASX and SGX combine to create the premier international exchange in Asia Pacific - the the heart of global growth
October 25, 2010--ASX Limited (ASX) and Singapore Exchange (SGX) today announced that they have entered into a merger implementation agreement to combine to enable customers globally to
capitalise on listing, trading, clearing and settlement opportunities created through the expanded platforms, leveraging on the importance of Asia Pacific as the driver of global growth.
This combination will bring together the complementary businesses of two successful exchanges in the Asian time zone, with internationally recognised regulatory standards. The combination leverages the strengths of ASX through its listings, stock options and fixed income franchises, with SGX, the Asian gateway for international listings, equity futures and OTC clearing, to create the region’s pre-eminent exchange group.
The combined group will augment Australia’s financial market and funds management industry through direct participation in Asian growth, and increase ASX’s and SGX’s competitiveness in a changing global markets landscape. As proven platforms for raising capital and managing price risk for the resource sector, ASX and SGX will build on existing distribution and clearing capabilities, and intend to play an important role in establishing price discovery for global commodities in Asia Pacific.
The combined exchange group, ASX-SGX Limited, will have pro forma revenues of approximately US$1.1 billion and pro forma earnings before interest and income tax of approximately US$700 million, based on the audited financial statements of ASX and SGX, each for the financial year ended 30 June 2010 (“FY2010”).
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Source: World Federation of Exchanges (WFE)
HKEx Announces Market Makers, Margin Rates and Information Vendors’ Access Codes for Dividend Futures
October 25, 2010--Hong Kong Exchanges and Clearing Limited (HKEx) has announced market makers, margin rates and information vendors’ access codes for HSI Dividend Point Index Futures (HSI Dividend Futures) and HSCEI Dividend Point Index Futures (HSCEI Dividend Futures), which have received regulatory approval and will begin trading in HKEx’s derivatives market on Monday, 1 November 2010.
Market Makers
HKEx has appointed BNP Paribas Futures (Hong Kong) Ltd, Goldman Sachs Futures (Asia) Ltd and SG Securities (HK) Ltd as market makers for HSI Dividend Futures and HSCEI Dividend Futures to facilitate trading in the new contracts.
Market makers will be quoting prices continuously for at least 70 per cent of the time in a calendar month with a bid / offer spread of not more than 30 points or 10 per cent of the bid price for at least 50 contracts in all listed contract months, or responding to quote requests for at least 70 per cent of the total quote requests in a calendar month within 20 seconds, with a display of at least 10 seconds.
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Source: Hong Kong Exchanges and Clearing Limited (HKEx)
SGX set to launch $6bn offer for ASX
October 22, 2010--SGX, the Singapore exchange, is preparing to launch a takeover offer of more than A$6bn ($5.8bn) for its Australian counterpart, ASX, as early as Monday in a deal that would combine two of Asia’s biggest exchange operators.
Shares in SGX and ASX were suspended from trading on Friday afternoon, with the Australian group adding it was in talks about a “possible business combination”.
ASX did not name the party that had “reactivated confidential discussions” but people close to the situation said Robert Elstone, ASX chief executive, had held merger talks with Magnus Böcker, his SGX counterpart. One of those people cautioned that SGX may hit delays and an offer may not materialise.
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Source: FT.com
FSA extends temporary measures regarding restrictions on short selling and purchase of own stocks by listed companies
October 22, 2010--1.The following regulatory measures on short selling are currently in place, with regard to all listed stocks in Japan:
1) An "uptick rule requirement" which prohibits, in principle, short selling at prices no higher than the latest market price;
2) Requirements for traders to verify and flag whether or not the transactions in question are short selling; and
3) Request the exchanges to make daily announcements on their aggregate price of short selling regarding all securities and aggregate price of short selling by sector (The announcements have been made sequentially since October 14, 2008). (See the FSA press release on October 14, 2008.)
In addition, the Financial Services Agency (FSA) has put in force the following measures, as temporary measures effective until October 31, 2010 (See the FSA press release on October 27, 2008. press release on March 27, 2009. press release on July 28, 2009. press release on October 23, 2009. press release on January 22, 2010. press release on April 23, 2010. press release on July 26, 2010.):
1) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30, 2008); and
2) Holders of a short position of a certain level or more (in principle, 0.25 percent or more of outstanding issued stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (effective since November 7, 2008).
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Source: FSA.go.jp
DB Global Equity Index & ETF Research-- Asia-Pacific ETP Market Weekly Review
October 21, 2010--Market Overview
There are 239 equity based ETFs in the Asia Pacific region with 332 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 40.07% of the whole market, whilst Hong Kong has the largest market share by turnover with 35.39%).
There have been three new listing since October 1st, Samsung Investment Trust launched its third commodity ETP product and the second Gold tracker on the Korea Stock Exchange. Benchmark Asset Management listed a new Infrastructure sector fund, the first of its kind in the National Stock Exchange of India. And last but not least, Vanguard launched a new fund tracking Australian listed Property Securities. This new product, listed on the Australian Stock Exchange, carries Vanguard's low cost approach, and has been implemented as an additional share class of Vanguard's A$2 bn existing index fund, an approach widely used by the firm in the US. The new fund will charge 6 basis points less than its direct competitor, State Street's SPDR S&P/ASX 200 Listed Property Fund.
Turnover
Monthly average daily turnover rose 20.4% in the last week. Turnover for the previous week was USD 1,093m. The largest ETF by turnover was the iShares Asia Trust - iShares FTSE/Xinhua A50 China Tracker issued by BlackRock with USD 199m accounting for 18.2% of total turnover.
Assets Under Management
AUM rose 3.4% in the previous week. AUM as of Oct 15th was USD 78.3bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 10.4bn.
To request a copy of the report
Source: DB Global Equity Index & ETF Research
IMF Regional Economic Outlook: Asia and Pacific
Consolidating the Recovery and Building Sustainable Growth
Regional growth forecast at 8 percent
Emerging signs of inflationary pressures in some economies
Continued large capital inflows may pose challenges for policymakers
October 21, 2010--After leading the global recovery for a second year, Asia’s economic outlook remains positive but, in its latest report on the state of the region’s economy, the IMF cautions that inflationary pressures are emerging.
In view of the strong expansion under way, the report says Asia has reached the threshold to normalize policy stances across the region.
In their twice-yearly overview of the Asia and Pacific region, IMF economists say growth in the first half of 2010 was well above trend in almost all regional economies, prompting the Fund to revise up its growth forecast to 8 percent, nearly 1 percentage point higher than its April forecast.
“The rebound in global manufacturing fueled exports and investment in the region, and private consumption remained strong as labor markets continued to improve, ” said Anoop Singh, head of the IMF’s Asia and Pacific Department, at the launch of the Asia and Pacific Regional Economic Outlook in Jakarta, Indonesia. The report is being launched in Indonesia and Singapore.
Variable growth
Economies across Asia are expanding strongly, with China and India leading the way with projected growth rates of 10.5 percent and 9.7 percent respectively. Indonesia is expected to grow by 6 percent, while growth in Japan is projected at 2.8 percent. The report also predicts that regional growth will moderate to a more sustainable pace of 6.8 percent next year.
Inflationary pressures are continuing to build, according to the analysis, while prices in some property markets are growing at double-digit rates. IMF economists believe the time has come for countries in the region to normalize monetary and fiscal policy stances.
The report highlights the need for further tightening of monetary policy in many countries, including through greater exchange rate appreciation. A faster withdrawal of the fiscal stimulus put in place during the global financial crisis would also help guard against the risks of overheating.
Asian Megacities Threatened By Climate Change – Report
October 21, 2010-- Asia’s coastal megacities will flood more often, on a larger scale, and affect millions more people, if current climate change trends continue, a new report warns.
The report Climate Risks and Adaptation in Asian Coastal Megacities examines the impact of climate change on Bangkok, Ho Chi Minh City, and Manila, under a range of different scenarios through to 2050. The report is the product of a two-year collaborative study by the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA) and the World Bank. It was released here today at the Asia Pacific Climate Change Adaptation Forum.
The report finds that costs from major flooding events on infrastructure and the economy could run into the billions of dollars, with urban poor populations likely to be the hardest hit. It concludes that all three cities need to take targeted, city-specific and cutting edge approaches to meet these challenges.
Bangkok, Ho Chi Minh City, and Manila all have populations close to or over 10 million. Two are capital cities and all three are centers of national and regional economic growth contributing substantially to the GDP of the respective countries. As coastal megacities, all face increased climate-related risks such as rising sea levels and an increased frequency of extreme weather events. While commendable measures to counteract flooding have already been taken by these cities, much more needs to be done, the report argues.
For cities to address future climate related risks, sound urban environmental management is crucial. Land subsidence due to groundwater pumping, dumping of solid waste into city canals and waterways, clogged drainage systems, and deforestation in the upper watershed all contribute to urban flooding. Better management of these urban environmental issues will help manage future climate-related impacts.
view the report-Climate Risks and Adaptation in Asian Coastal Megacities
Source: World Bank
MAS Issues Response to Feedback on Proposals to the Regulatory Regime for Listed and Unlisted Investment Products
October 21, 2010-...MAS has issued its response to feedback on the proposals in the Consultation Paper on the Regulatory Regime for Listed and Unlisted Investment Products, which was published on 28 January 2010.
2. MAS received extensive feedback from consumers and the industry, which we have carefully reviewed and considered. MAS thanks all respondents for their supportive and useful feedback.
3. MAS' response addresses feedback on the following proposals:
(i) Financial advisers to put in place formal policies and procedures on the sale of investment products;
(ii) Intermediaries to conduct a Customer Knowledge Assessment prior to a sale to assess whether a customer who wishes to purchase an unlisted investment product has the relevant knowledge or experience to understand the risks and features of the product;
(iii) Intermediaries to conduct a Customer Account Review to ascertain whether a customer who wishes to purchase a listed investment product has the relevant knowledge or experience to understand the risks and features of derivatives, before approving the customer’s account for trading such products;
view the MAS' response to the feedback received
Source: Monetary Authority of Singapore
Bursa Malaysia Extends CBRS Research Scheme To Address Market's Need For Investment Information - Listed Companies Covered Under CBRS To Enjoy Greater Profiling And Visibility
Listed companies covered under CBRS to enjoy greater profiling and visibility
October 20, 2010--CMDF-Bursa Malaysia Research Scheme (CBRS) has embarked on its third phase this month after a successful run since its inception five years ago. CBRS, which is open to participation by all companies listed on Bursa Malaysia, is aimed at ensuring that under-researched companies get adequate research coverage by analysts. This will ultimately support the Exchange's continuous call to facilitate informed investing via wider research coverage.
Bursa Malaysia's Chief Executive Officer, Dato' Yusli Mohamed Yusoff said, "Research coverage has an impact on trading activity and liquidity as it plays an important role in conveying the company's growth and business plans. As the market places high regard for research reports, we see the value of companies being researched having better opportunities of gaining investor attention."
The market feedback for the scheme has been positive with requests for more in-depth coverage. The CBRS reports will contain analyses and views on company fundamentals including industry prospects, its business and management, performance, earnings outlook and competitive landscape. This will give investors better appreciation of its content while facilitating comparison where applicable.
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Source: Bursa Malaysia
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