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Target Basic Human Needs. On the Cheap
May 20, 2010--A dramatic global change was accelerated by the economic crisis. A couple of billion people in the Far East, India, and parts of Latin America have joined the economic party. They see everything we have and are willing to work hard to get it, too. They want to look good, eat better, be entertained: basic human desires.
So we like consumer names, and oil. You've got an incremental couple of billion people who want cars and motorcycles. To play on higher oil prices, we try to find oil resources in countries that have good legal systems and also good management. The management of Canadian Natural Resources (CNQ) owns about 4% of the company. CNQ is worth a lot more than 76, which is what it trades for now.
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Source: Business Week
HKEx Publishes Consultation Conclusions on Proposed Changes to Connected Transaction Rules and Requirements for Circulars and Listing Documents of Listed Issuers
May 20, 2010--Hong Kong Exchanges and Clearing Limited (HKEx) today (Thursday) published its consultation conclusions on:
Proposed changes to connected transaction rules set out in the consultation paper of 2 October 2009; and
Proposals to streamline requirements for issuers’ circulars and listing documents set out in the consultation paper of 18 September 2009.
Connected transaction rules
The consultation paper on connected transaction rules included proposals to review the definition of connected person, provide exemptions for connected transactions which are immaterial or involve persons not in a position to exercise significant influence, and amend the Listing Rules to address technical issues.
HKEx received 70 submissions. Overall market feedback indicated strong support on the proposals. HKEx will implement the proposals with minor modifications based on respondents’ suggestions. Two proposals will not be adopted:
HKEx has decided not to proceed with the proposal to exclude persons connected at the subsidiary level from the definition of connected person at this time. While a majority of the respondents supported this proposal, some respondents expressed concerns about possible abuse if a general exemption is granted to all these persons at one time. HKEx will adopt the insignificant subsidiary exemption proposal and exempt persons connected with those subsidiaries from the connected transaction requirements.
view the The Consultation Conclusions for Proposed Changes to Connected Transaction Rules
view the Proposed Changes to Requirements for Circulars and Listing Documents of Listed Issuers
Source: Hong Kong Exchanges and Clearing Limited (HKEx)
ETF Landscape: China ETFs Industry Review Year End 2009
May 19, 2010--This report is a review of the Exchange Traded Funds (ETFs) listed globally providing exposure to various China A Share, H Share etc indices, including an overview of the types of Chinese shares, access products typically used by investors and inside ETFs, and key statistics on the growth in products tracking Chinese benchmarks.
At the end of 2009 there were 53 ETFs globally tracking Chinese benchmarks with US$32.3 Bn in assets under management from 28 providers on 21 exchanges around the world.
The United States has the highest concentration of Chinese ETF AUM with US$12.47 Bn in 21 ETFs, followed by Hong Kong with US$9.97 Bn AUM in 12 ETFs, and China with US$5.87 Bn AUM in eight locally domiciled ETFs. There are now 20 ETFs with US$14.4 Bn tracking A share indices listed in Hong Kong and Singapore.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
ETF Landscape: Asia Pacific Industry Review Year End 2009
May 19, 2010--Highlights
At the end of December 2009 there were 197 ETFs in Asia Pacific, with 278 listings, assets under management of US$63.15 Bn from 48 providers on 15 exchanges.
In Asia Pacific (ex-Japan), there were 129 ETFs, assets of US$38.52 Bn, with 207 listings from 44 providers on 13 exchanges at the end of December 2009.
Asia Pacific (ex-Japan) ETF AUM has increased by 62.1%, while the MSCI AC Asia Pacific ex-Japan Index is up 68.4% YTD in US dollar terms. State Street Global Advisors is the largest provider in terms of assets with US$9.72 Bn in 13 ETFs and 25.2% market share, followed by iShares with US$7.84 Bn in 13 ETFs and 20.3% market share, and Hang Seng Investment Management in third with US$5.29 Bn in three ETFs and 13.7% market share at the end of 2009.
In Japan, there were 68 ETFs, assets of US$24.63 Bn, with 71 listings from six providers on two exchanges at the end of December 2009. Japanese ETF AUM has fallen by 10.2% while the MSCI Japan Index is up 5.41% YTD in US dollar terms. Nomura Asset Management is the largest provider in terms of assets with US$13.37 Bn in 30 ETFs and 54.3% market share, followed by Nikko Asset Management with US$5.74 Bn in 10 ETFs and 23.3% market share, and Daiwa Asset Management in third with US$4.93 Bn in 22 ETFs and 20.0% market share at the end of 2009.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
DB Index Research -- Weekly ETF Market Review - Asia-Pacific
May 18, 2010--Highlights
Market Overview
There are 217 equity based ETFs in the Asia Pacific region with 304 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 42.77% of the whole market, whilst China has the largest market share by turnover with 38.12%.
There was one new listing in the last week. Nikko Asset Management listed one new ETF which offers exposure to high dividend Japanese companies in Tokyo Stock Exchange. All new listings were primary listings.
Turnover
Monthly average daily turnover rose 9.7% in the last week. Turnover for the previous week was USD 1090m. The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 228 m accounting for 21.0% of total turnover.
Assets Under Management
AUM declined 1.1% in the previous week. AUM as of May 14th were USD 60.3 bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 6.4bn.
To request a copy of the report
Source: Aram Flores and Shan Lan -DB Index Research
New Japanese Bond Income Tax Exemption Scheme
May 18, 2010--A new Japanese bond income tax exemption scheme (exempting tax on interest and profits from redemption of corporate bonds, etc. in book-entry form (issued on or before March 31, 2013) received by non-residents, etc., simplification of current procedures for tax exemption for interest, etc. on bonds in book-entry form, etc.) was developed in the fiscal 2010 tax system reform (related to the Act on Special Measures Concerning Taxation, Articles 5-2 and 5-3)
Considering that this system starts on June 1, 2010, we have now prepared and published an outline of the system.
view the New Japanese Bond Income Tax Exemption Scheme
Source: FSA,gov.jp
Monetary Authority Of Singapore Consults On Proposed Amendments To The Code On Collective Investment Schemes
May 17, 2010--The Monetary Authority of Singapore (MAS) has released a consultation paper on proposed amendments to the Code on Collective Investment Schemes (Code).
The Code prescribes best practices in the management, operation and marketing of collective investment schemes (CIS) authorised under the Securities & Futures Act.
2. Since the issuance of the Code in May 2002, MAS has made various amendments in 2002, 2005 and 2006 in response to feedback from the fund management industry. With the increased pace of product development in recent years, MAS is of the view that it is now timely to undertake a comprehensive review of the Code. The current review focuses on investment guidelines and on ensuring that the regulatory regime for CIS keeps pace with product innovation and industry developments, as well as regulatory developments in major fund jurisdictions.
3. The proposed amendments aim to provide clarity and to increase the flexibility for managers in managing their funds, and enhance protection for investors. They include:
i. Introducing a list of permissible investments and accompanying criteria to enhance clarity in the application of the liquidity and diversification limits.
ii. Strengthening safeguards on the use of financial derivatives through prescription of counterparty limits and acceptable forms of collateral used to mitigate counterparty risks.
iii. Introducing additional guidelines on the use of the commitment approach and Value-at-Risk (VaR) method for calculating exposures to financial derivatives.
iv. Enhancing existing guidelines on funds’ securities lending activities through comprehensive requirements on the counterparty, custodian and the use of collateral. This is in the light of the heightened attention on counterparty and liquidity risks as a result of the recent global financial crisis.
v. Establishing new investment guidelines for funds seeking to track indices, introducing principles for the naming of funds and requirements to standardise the methods used for calculating performance fees where the fund manager decides to impose such fees.
vi. Modifying existing operational requirements, including allowing the sending of accounts and annual reports to unitholders by electronic means with certain exceptions as long as unitholders are notified and do not object to it.
4. In developing this set of proposals, MAS has considered the views and comments from market practitioners and industry associations. MAS has sought to balance the need to keep pace with international developments in fund management with that of ensuring that the guidelines continue to afford investors confidence in the regulatory framework for Singapore retail funds.
5. The proposed amendments will also apply to funds offered via an investment-linked life insurance policy (ILP). As a transitional measure, MAS proposes to give fund managers and approved trustees for CIS three months to comply with the revised Code.
6. MAS invites interested parties to give their views and comments on the proposals contained in the consultation paper by 25 June 2010.
Click here to view the consultation paper
Source: Monetary Authority of Singapore (MAS)
India poised to halt rise of rupee
May 14, 2010--India’s finance ministry has shown its preference for currency intervention over new capital controls to check the rising value of the rupee.
Kaushik Basu, the finance ministry’s chief economic adviser, said on Friday that intervention by the Reserve Bank of India was necessary to curb the rupee’s appreciation against other main currencies.
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Source: FT.com
IMF Says Asia Leading World Recovery, Cautions Against External Risks
May 12, 2010--Asia is leading the recovery of the world economy even though the region needs to remain attentive to downside risks, the International Monetary Fund (IMF) said today in New Delhi in its presentation of the Regional Economic Outlook (REO) for Asia and the Pacific.
The IMF also said India is likely to maintain its strong growth momentum driven by the robust domestic demand. Higher corporate profitability and favorable financing conditions in the country will support its private investment while its consumption growth will also remain strong on the back of better employment prospects and lower uncertainty.
“One year after the deepest recession in recent history, Asia is leading the global recovery,” said Anoop Singh, Director of the IMF’s Asia and Pacific Department, at a seminar presentation hosted by Indian Council for Research on International Economic Relations (ICRIER). “Key economic indicators are now growing at or above long-term trends not only in China, but also in emerging Asia’s other economies with a large domestic demand base, like India and Indonesia.” Underpinning Asia’s strong performance are two factors. First, the global and domestic inventory cycle is likely to boost Asia’s industrial production and exports further for most of 2010 as final demand recovers in advanced economies. Second, although macroeconomic policies may become less accommodative in the region, private domestic demand is expected to remain robust thanks to sustained consumer confidence, high asset values, and a return of capacity utilization to more normal levels.
Risks to the baseline forecasts, however, remain tilted to the downside, the REO cautioned. They include the still fragile global recovery and Asia’s strong dependence on external demand. The regional report also noted that a more immediate risk is that market concerns about sovereign liquidity and solvency in the euro zone periphery may turn into a potentially contagious sovereign debt crisis. While Greece’s sovereign debt situation has so far not had a major impact on flows to the region, “the increase in global risk aversion and renewed pressures to deleverage could pose particular risks to Asian corporates and banks” that face relatively higher refinancing needs than in other regions, the report noted.
Chinese Version
Source: IMF
India to set up $11bn growth fund
May 14, 2010--India on Friday said it would set up an $11bn fund to invest in infrastructure in an effort to overcome one of the biggest constraints to the country’s accelerated economic growth.
The government aims to attract at least $4.4bn – about 40 per cent – from international pension funds, insurance funds, sovereign wealth funds and multilateral agencies, while the rest of the money would come from domestic sources.
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Source: FT.com
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