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BlackRock: China Leading The Way In Commodities Demand – Will The US Pick Up The Baton?
September 24, 2009-BlackRock’s Catherine Raw, fund manager in the natural resources team, believes that commodities are set to make further progress as investors become more confident that the majority of the world economic crisis has passed. While mining equities having rallied in 2009 (up 61% in US dollar terms) valuations are still attractive, being around half what they were in May 2008.
Catherine Raw said: “We expect China to continue to have a significant influence over demand for commodities, given the commodity–intensive stimulus package from the Chinese government and their future growth plans. The nature of China’s command economy has meant that this stimulus has filtered down into the real economy, unlike in the US - so far. In China, government-driven lending has spurred activity. Economic data coming out of China this year has suggested that, despite the global recession, the economy has started to recover and high levels of economic growth may continue in the region, a bullish signal for the mining sector. GDP and industrial production growth rates appear to have bottomed; car sales and retail sales are showing signs of improvement and there has been a strong pick up in fixed asset investment. Steel production has recovered significantly and on an annualized basis is now ahead of 2008”.
DB Index Research -- Weekly ETF Reports -- Asia-Pacific
September 23, 2009--Highlights-
Market Overview
There are 184 equity based ETFs in the Asia Pacific region with 240 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 42.36% of the whole market, whilst China has the largest market share by turnover with 50.11%.
There was one new lisitng in the last week. Samsung Investment Trust Mg launched one new ETF on the Korea Stock Exchange.
Turnover
Monthly average daily turnover declined 10.4% in the last week. Turnover for the previous week was USD 1282m.
The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 364m accounting for 28.4% of total turnover.
Assets Under Management
AUM remained at about the same level in the previous week. AUM as of Sep 21st were USD 59.6bn. The largest ETF by AUM is the TOPIX ETF, managed by Nomura Asset Management, with AUM of USD 6.7bn.
To request a copy of the report click here
ICICI Prudential files for Gold ETF with SEBI
September 23, 2009-On September 18, 2009 ICICI Prudential filed with the SEBI (Securities and Exchange Board of India.) for a Gold Exchange Traded Fund
The name of the fund will be:
ICICI Prudential Gold Exchange Traded Fund
Name of the asset management company: ICICI Prudential Asset Management Company Ltd.
HDFC Mutual Fund files for gold ETF with SEBI
September 23, 2009-On september 10, 2009 HDFC Mutual Fund filed an application with the SEBI (Securities and Exchange Board of India) for a gold product.
The fund name will be:
HDFC Gold Fund.
Fund houses try to lure investors with gold ETFs
September 23, 2009--Many mutual fund houses are planning to launch gold exchange traded funds (ETFs) to cash in on the buzz around gold.
At least four fund houses are planning to launch gold funds or gold ETFs.
HDFC Mutual Fund and ICICI Prudential filed draft offer documents with SEBI in September. Religare Mutual Fund is expecting SEBI approval for its gold ETF. Principal PNB Mutual Fund is planning to apply to SEBI for a gold ETF to be launched in three months, said Mr Sudipto Roy, Business Head of Principal AMC.
HKEx Publishes Information Paper on its Proposed Introduction of Flexible Index Options
September 22, 2009--Hong Kong Exchanges and Clearing Limited (HKEx) announced today (Tuesday) plans to introduce Flexible Index Options in the first quarter of next year, pending regulatory approval.
Flexible Index Options are Hang Seng Index and H-shares Index options contracts which allow market participants to request customised strike prices and expiry months, provided the contracts are bought and sold through the block trade facility.
At present, large deals in some over-the-counter (OTC) contracts with the same strike prices and expiry months as exchange-traded contracts are already executed as block trades in HKEx's derivatives market. HKEx is seeking to expand that part of the market by allowing flexibility in strike prices and contract months.
HKEx believes its introduction of Flexible Index Options would provide OTC market participants with an attractive counterparty risk alternative. OTC players using exchange-traded futures contracts to hedge their OTC option positions would realise collateral and margining efficiencies when they book relevant positions with HKEx. HKEx also believes offering Flexible Index Options would help increase market transparency by attracting more OTC deals to its block trading facility. Increased market depth is another potential benefit.
Some key features of Flexible Index Options are listed below:
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Series are created upon the request of an Exchange Participant according to the stipulated procedures and criteria; |
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Strike prices are in whole index points and subject to other limitations (please see Appendix I of the information paper for examples of acceptable strike prices); |
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Expiry must be on the second to the last trading day of any calendar month and is subject to other limitations (please see Appendix II of the information paper for examples of possible expiry months); |
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A series will not be created if there is a standard series with the same strike price and expiry; |
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Transactions must be through block trades of 100 contracts or more; |
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No market making as execution is confined to block trades; |
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Exchange fee, Commission levy, trading hours, exercise style and settlement method are the same as standard series. Position limits and reporting requirements are also the same and in combination with the standard series; and |
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There are appropriate risk management measures in place to safeguard the integrity of clearing house. |
President Zhang Yujun Of The Shanghai Stock Exchang: Great Potential In Indexation Investment Market
September 23, 2009-Indexation investment has a great potential in Chinese market, and efforts should be made to develop the index and indexation products, said President Zhang Yujun of the Shanghai Stock Exchange (SSE) at the "3rd Index and Indexation Investment Forum" on September 21. It is learned that such ETFs as the SSE Mega-cap ETF, SSE 180 Style ETF, SSE Mid-cap ETF, SSE Corporate Social Responsibility ETF and SSE Sector ETF, with the scheme design completed, will be launched in succession. The technical preparation for CSI 300 ETF is pushed ahead following the confirmation of its scheme.
According to Zhang, the indexation investment boom had not only changed the functions of indices but also enormously enhanced their innovative development. With thousands of securities indices globally, index development has become an essential part of financial market's innovative development and a successful business mode. The development of indices has in turn provided rich resources and strong impetus for indexation investment, which has multiple advantages such as clear investment target, long-term stability, synchronization with the market momentum and low trading cost.
Zhang cited the statistics of ETF as an example. At the end of 2000, there were 92 ETFs in the world, with the assets value of US$74.3 billion. At the end of 2008, a total of 1,589 ETFs globally saw the assets value rising to US$711 billion, with the annual increase rate of 34%. From January to July 2009, the assets value of ETFs globally rose to US$860 billion with over 200 new ETFs. ETF assets are no longer limited to stocks and have included more types such as bonds, currencies, bulk commodities and gold. Different kinds of hybrid ETFs and leveraged ETFs also appeared.
In China's securities market, Shanghai and Shenzhen markets ranked No. 3 in market capitalization among the bourses of all countries and regions at the end of August, with the total market capitalization of about RMB19 trillion. However, the amount and scale of the indexation investment products in China do not match the market scale due to the lagged development. Currently, there are 27 index funds in China's market, with the net assets of about RMB210 billion, accounting for 8.8% of the assets scale of all mutual funds. In the US, there were 331 index funds in 2007, with the assets of US$784.3 billion, accounting for 10.3% of the mutual funds' assets. China now has 7 ETFs, with the net assets of RMB40 billion, accounting for 1.6% of the mutual funds' assets scale, in contrast with the proportion of 8.6% in the US in 2007. So, indexation investment has a great potential in China's market.
"We are now witnessing the positive development of indexation investment in China," according to Zhang, 19 index funds and ETFs have been approved of issuance this year, among which 9 index funds and 2 ETFs have completed issuance and 6 index funds and 2 ETF feeder funds are being issued now.
Referring to the efforts in the development of index and indexation products, Zhang pointed out that the SSE had always laid emphasis on this field and achieved good results. In 2002, the SSE launched the first investment index—the SSE 180 Index—followed by the establishment and issuance of the Hua An 180 Index Fund and Tian Tong 180 Index Fund, signaling the burgeoning of indexation investment in China.
ETF, a new indexation product, landed in China at the beginning of 2004 when the SSE launched the SSE 50 Index, followed by the unveiling of China's first ETF product—Hua Xia SSE 50 ETF. At the end of June this year, Hua Xia SSE 50 ETF, with an RMB20.7 billion assets scale, ranked No. 3 in Asia and was listed among top 20 globally. The SSE later launched the Dividend ETF and 180 ETF.
According to Zhang, the SSE is aware of the great development potential of ETF and set it as the major development direction of the bourse's products, considering ETF's characteristics, development process and the drastic progress in recent years. The SSE nailed down the development of ETF in the six main tasks for the bourse in 2009, and made positive achievement by carrying out work in the following aspects:
Firstly, efforts were made in developing the index resources. The establishment of China Securities Index Co., Ltd. (CSI) by the two exchanges in Shanghai and Shenzhen in 2005 for the development of the securities market indices in a professional and market-oriented way aims to lay a foundation for such indexation investment products as index funds and ETFs as well as such exchange index products as stock index futures. So far, CSI has developed over 200 CSI indices, including the CSI 300 Index. From 2007, the SSE entrusted CSI with the management and development of the SSE indices. The number of the SSE indices rose from 15 to 48, with most of them available for developing ETFs and other investment products.
Secondly, the expansion of ETF market was promoted. As the SSE intensified its efforts this year, the issuance of the SSE Central SOEs 50 ETF by ICBC Credit Suisse Asset Management Co., Ltd. was completed. The issuance of the SSE 180 Corporate Governance ETF and its feeder fund by Bank of Communications Schroder Fund Management Co., Ltd. and that of Hua An 180 ETF feeder fund are under way. Besides, the SSE Mega-cap ETF and other ETFs will be launched step by step.
Thirdly, the cross-border ETF development and listing are on a smooth track. To serve the investment and trading needs of mainland investors by introducing important overseas indices and developing ETF products, a major measure for the internationalization of the SSE, is also an important experiment in constructing Shanghai into an international financial center. The SSE is now speeding up the research of implementation scheme.
Fourthly, research and studies are made on ETF products on the bond market and the commodity market.
Fifthly, the SSE is cooperating with fund companies in developing all kinds of index funds and improving the "SSE Mutual Funds Distribution Channel" for providing one-stop services for the issuance, sale and trading as well as supervision of index funds.
Zhang concluded that the "Opinions on Boosting Development of Shanghai's Modern Service and Advanced Manufacturing Industries and Building Shanghai into An International Financial Hub and An International Shipping Center", published by the State Council this year, specifies clearly that Shanghai shall be built into an international financial center matching China's economic strength and international status of Chinese yuan by 2020, which surely requires a strong capital market suitable for Shanghai international financial center. Therefore, the SSE set up the goal of building itself into a world-class exchange by 2020. Faced with the opportunity, apart from improving its hard skills by continuously developing the blue-chip stock market and expanding the market scale, the SSE will also keep an eye on the soft skills by upgrading its market standardization, global influence and product coverage to better serve China's economic development and the construction of Shanghai international financial center.
Goldman arm plans to invest in Geely
September 19, 2009--A private equity unit of Goldman Sachs is poised to invest about $250m in Geely Automobile Holdings, China’s largest privately owned carmaker, according to a person familiar with the matter.
Goldman Sachs Capital Partners will buy convertible bonds and warrants issued by Geely’s Hong Kong-listed subsidiary. People familiar with the matter said that confirmation of the deal could be announced as early as this week.
iShares launches capital markets group in Asia Pacifi
September 21, 2009--iShares, Barclays Global Investors' exchange-traded fund business, has formed a new capital markets group for Asia Pacific.
The group will work closely with iShares participating dealers and market makers across the region to ensure liquidity and competitive pricing for iShares ETFs.
The group will focus on iShares counterparty management and client-service including market-making activities, broker-dealer education, and thought leadership with respect to iShares trading and analytics. It will also work with iShares clients on best-practice execution strategies while partnering with participating dealers to ensure good value for clients during the trading process.
Index Experts Committee Of Shenzhen Stock Exchange Established Officially
September 18, 2009--On Sep 17, the Shenzhen Stock Exchange held the first meeting for the establishment of the Index Experts Committee of Shenzhen Stock Exchange and Shenzhen Securities Information Company Limited. Chen Dongzheng, Council Chairman of the Shenzhen Stock Exchange, Zhou Ming, Deputy General Manager of Shenzhen Stock Exchange, concurrently Board Chairman of Shenzhen Securities Information Co., Ltd. awarded the written appointment to the expert committee members on the behalf of the two companies.
Mr. Chen mentioned in his speech that the Shenzhen Stock Exchange shoulder the historic mission of building the multi-layered market, and the Shenzhen Stock Exchange should activate all parties’ enthusiasm and strengthen the foreign cooperation and make the all-round exploration.
Mr. Zhou also expressed in his address that indexes are strategic resources of the Shenzhen Stock Exchange, indexes must serve the need for the development of the capital markets and the opening-up of the capital markets The Shenzhen Stock Exchange are putting all efforts to build the multi-layered market, and the Shenzhen Stock Exchange shall expedite the improvement of index system, positively push forward the commercialization of indexes, upgrade the influence and the service capacity of the Shenzhen securities market.
Lin Yixiang, Chairman of the Index Experts Committee, pointed out at the meeting that the multi-layered market of Shenzhen Stock Exchange has formed the early shape, and it is greatly potential for improvement of index system, research and development of new indexes and the commercialization of indexes, and the Experts Committee will play the active role and make contribution for the multi-layered market construction.
At the first meeting, the committee members deliberated some issues, such as the development planning for SZSE series indexes and Juchao-series indexes, scheme for design of ChiNext index, and put forward many constructive opinions.
