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Overcapacity in China: Causes, Impacts and Recommendations
November 26, 2009--The European Union Chamber of Commerce in China launched a unique new study examining the impact and influence of industrial overcapacity in China on 26th November. Entitled Overcapacity in China: Causes, Impacts and Recommendations, the study is the first ever industry-led report on industrial capacity utilization in China and is published in partnership with Roland Berger Strategy Consultants. The sixty-page study offers a detailed analysis of the causes and effects of overcapacity across six key Chinese industries. The study has found that the recent measures taken by the Chinese authorities to curb overcapacity are a positive first step. However, the European business community in China sees further possibilities for improvement and drawing on the knowledge and experience of the European Chamber’s 1,400 member companies, provides a series of recommendations on how this problem can be curbed.
Said European Chamber President Joerg Wuttke, "Our study shows that the impact of overcapacity is subtle but far reaching, affecting dozens of industries and damaging economic growth not only in China but worldwide. Domestically, excess capacity squeezes profit margins, hampers innovation and prevents the emergence of true local champions, while on the global stage its influence is clearly seen in the rise in trade tensions between China and its major trading partners. This study, then, aims to offer solutions that will benefit not only Chinese companies and Chinese industry in general, but the whole global economic system. When China prospers, we all benefit."
The study concludes that overcapacity is a major factor holding back China's sustainable economic development and traces its impact as a driving force in economic resource waste, a rise in non-performing loans (NPLs) and environmental problems. The study further argues that excess capacity in certain sectors is holding back Chinese innovation by reducing company profits, meaning that less funding is made available for R&D. Moreover, as US and European savings rates rise and imports drop, the study findings show that overcapacity is one of the drivers of the current rise in trade tensions and anti-dumping cases between China and its trade partners.
View Report: Overcapacity in China: Causes, Impacts and Recommendations
Source: European Union Chamber of Commerce China
India could buy rest of IMF gold on offer
November 25, 2009--India is open to buying more gold from the International Monetary Fund following its purchase of 200 tonnes earlier this month, the Financial Chronicle newspaper said on Wednesday, helping to drive gold prices to an all-time high.
But India's central bank governor, Duvvuri Subbarao, declined to comment on whether the bank would buy more gold from overseas, however.
The paper said that subject to acceptable conditions, India's central bank could well buy the balance of the initial 403.3 tonnes, or one-eighth of the IMF's total gold holdings, that the Fund had planned to sell.
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Source: MineWeb
Sri Lanka buys 10 tonnes of IMF gold
November 26, 2009--The International Monetary Fund said on Wednesday it had sold 10 tons of gold to the Central Bank of Sri Lanka, using Monday's market prices for the transaction.
In a statement, the IMF said proceeds were equivalent to $375 million, adding the sale was part of 403.3 tons approved by its executive board in September 2009. The fund has already sold 202 tons of gold to the Reserve Bank of India and the Bank of Mauritius.
Media reports on Wednesday that India was open to buying more gold from the IMF helped push the price of gold to a record. Gold traded at $1,186.30 an ounce at 2 p.m. (1900 GMT) in New York.
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Source: MineWeb
DB Index Research -- Weekly ETF Reports -- Asia-Pacific
November 25, 2009--Highlights
Market Overview
There are 193 equity based ETFs in the Asia Pacific region with 252 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 39.39% of the whole market, whilst China has the largest market share by turnover with 48.01%.
There were 5 new listings in the last week. BGI listed 5 new ETFs on the Hong Kong Stock Exchange.
Turnover
Monthly average daily turnover declined 5.9% in the last week. Turnover for the previous week was USD 962m. The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 263m accounting for 27.4% of total turnover.
Assets Under Management
AUM declined 1.9% in the previous week. AUM as of Nov 23rd were USD 59.9bn. The largest ETF by AUM is the iShares Asia Trust - iShares FTSE/Xinhua A50 China Tracker, managed by BGI, with AUM of USD 6.5bn
To request a copy of the report click here
Source: Aram Flores and Shan Lan -DB Index Research
Barclays Capital Launches Global Stimulus Fund
November 20, 2009--Barclays Capital, the investment banking division of Barclays Bank PLC and a leading provider of retail structured products globally, has launched the Global Stimulus Fund in Singapore on November 4, 2009.
The Fund aims to provide long-term capital appreciation by investing in a diversified pool of exchange traded funds (“ETFs”) comprising the Global Stimulus Portfolio (“Portfolio”).
The selected ETFs represent sectors and/or markets that are expected to appreciate in the long-term, including as a result of economic policies of governments globally.
Following the financial crisis, governments around the world have introduced large fiscal stimulus packages to aid in the recovery of the global economy. These packages include tax cuts and investments in various sectors to encourage continued workforce employment and consumer spending.
The Global Stimulus Fund’s investors have the potential opportunity to participate in the global recovery story. Barclays Capital estimates that global growth approached 4% in Q3 2009 and forecasts 4%-plus growth to be sustained in Q4 2009 and Q1 2010. This would represent one of the fastest periods of sustained growth in the past two decades.
The Fund’s broad coverage of ETFs under various sectors will provide investors with diversified portfolio risk and the advantages of continuous liquidity and transparency in pricing.
Indicative initial weights of sectors and/ or markets in the Portfolio
China banks prepare to raise capital
November 24, 2009-China’s banks are preparing to raise tens of billions of dollars in additional capital to meet regulatory requirements following an unprecedented expansion of new loans this year, according to people familiar with the matter.
China’s 11 largest listed banks will have to raise at least Rmb300bn ($43bn) to meet more stringent capital adequacy requirements and maintain loan growth and business expansion, according to estimates from BNP Paribas.
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Source: FT.com
China calls for stepped up climate cooperation with EU
November 24, 2009-China called on the European Union Tuesday to step up cooperation on climate change, saying global warming would be at the top of the agenda at next week's China-EU summit.
"Soon after the summit the international community will have the Copenhagen conference on climate change," Vice Foreign Minister Zhang Zhijun said, referring to the meeting in Denmark to agree a new UN pact on global warming.
"China and (the) EU should strengthen coordination and have closer cooperation on climate change because it serves the common interest of both sides and will help advance international efforts to tackle climate change."
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Source: EU Business
China's Haitong Securities buys Hong Kong rival
November 23, 2009--Haitong Securities is set to become the first mainland brokerage to acquire an overseas rival after it agreed a deal to buy a controlling stake in Hong Kong’s Taifook Securities for HK$1.8bn (US$232m).
Mainland Chinese securities firms are keen to get a foothold in Hong Kong in preparation for the relaxing of rules that will allow investors north of the border to invest directly in the territory’s stock market.
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Source: FT.com
Sebi may widen PMS scope
November 21, 2009--The Securities and Exchange Board of India (Sebi) is examining the possibility of allowing inclusion of currency and interest rate futures in portfolio management services (PMS).
:“We are looking at allowing exchange-traded derivatives to be part of PMS. However, no decision has been taken yet,” Sebi Executive Director RK Nair said
On the derivatives side, PMS are allowed to use only equity-related derivatives products such as stock futures for hedging their portfolios.
Hinting at further PMS reforms, Nair said PMS was not as tightly regulated as the mutual fund (MF) industry.
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Source: Business Standard
iShares S&P India Nifty 50 Index Fund Starts Trading Today
November 20, 2009-Barclays Global Investors, N.A. (BGI), the world's largest Exchange Traded Funds (ETFs) provider(1), announced today that the iShares S&P India Nifty 50 Index Fund (NASDAQ: INDY) began trading today.
The new iShares Fund is designed to track the S&P CNX Nifty Index that represents the 50 largest and most liquid Indian securities listed on the National Stock Exchange (NSE) of India. iShares offers investors the widest selection of emerging market ETFs with 18 regional and single country emerging market funds, including the iShares S&P India Nifty 50 Index Fund. As of October 31, 2009, 30% of iShares total net asset flows or US$9.8 Billion has gone into emerging market and single emerging countries.(2)
"We're pleased to provide investors with an iShares ETF that tracks one of the most investable and well-known India indexes. Demand for Indian equities continues to be strong as India has a differing set of companies and industries. In addition, the index, like other emerging market indexes, has a low correlation with U.S. equities, which offers the important added benefit of portfolio diversification," said Noel Archard, head of U.S. iShares Product Research and Development.
1) Source: Morgan Stanley Investment Strategies and Bloomberg as of 12/31/2008. Based on number of ETFs, AUM, and market share.
(2) Source: Bloomberg, FactSet and BGI.
SOURCE: Barclays Global Investors
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