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Euro ratings agency idea gains ground
May 3, 2010-- Prospects for a European credit rating agency gained ground on Monday among political leaders reeling from a costly, months-long battering from markets over Greece.
But calls by German Chancellor Angela Merkel and French Finance Minister Christine Lagarde only underlined the power of US adjudicators in a hugely influential finance sector over which Europe has no control.
Rating agencies have come under fire for cutting Greece's sovereign debt to junk status and downgrading the credit-worthiness of Portugal and Spain, in turn unsettling investors and sending borrowing costs for those countries soaring on financial markets.
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Source: EU Business
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 30-Apr-10
May 5, 2010--Last week saw US$233.0 Mn net inflows to STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Banks with US$218.2 Mn and Basic Resources with US$85.4 Mn while Industrial Goods & Services experienced net outflows of US$36.9 Mn.
Year-to-date, Media has had the largest net inflows with US$346.1 Mn net new assets, followed by Banks with US$117.6 Mn YTD. Telecommunications sector ETFs have had the largest net outflows with US$229.6 Mn YTD. In total, STOXX 600 sector ETFs have seen US$60.4 Mn net inflows YTD.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
European economy making tentative recovery
May 5, 2010--GDP growth in the EU expected to gradually pick up, though recovery less robust than past upturns.
The recession ended in the third quarter of 2009, thanks largely to fiscal and monetary measures to stimulate the economy. But temporary factors also played a role, says the latest EU economic forecast.
In 2010, the EU economy looks set to expand by 1% – a ¼ percentage point more than the commission had forecast in the autumn. The increase stems in part from the stronger global economy. In 2011, GDP growth of 1¾% is expected.
Increasingly the speed of recovery will vary across EU countries, reflecting their individual circumstances and policies.
Unemployment rose sharply during the recession, although slightly less than initially thought last autumn. This year, EU unemployment is projected to level off at close to 10%.
Public finances have also been hit hard by the crisis. While national budget deficits are projected to peak this year at 7¼% of GDP, the ratio of public debt to GDP is expected to continue to rise.
Inflation has rebounded a bit from very low levels in 2009, but the slack in the economy is likely to keep wage and price gains in check. This year, inflation is expected to reach 1¾% in the EU and 1½% in the eurozone.
The EU recovery continues to be surrounded by a high degree of uncertainty, as illustrated by recent tensions in government bond markets. Overall, however, the risks to the forecast are broadly balanced.
The commission usually publishes economic forecasts 4 times a year - comprehensive spring and autumn forecasts and smaller interim forecasts in February and September.
view the EU economic forecast – spring 2010
Source: European Commission
Europe's main contributors to Greek bailout
May 3, 2010-Here are the main European contributions to the Greek bailout package, approved by finance ministers on Sunday, out of an 80-billion-euro (105.85-billion-dollar) pot topped up by 30 billion euros of IMF funds.
Figures in brackets are for year one in the three-year programme to which only the nations which use the euro currency are contributing:
GERMANY: 22.4 billion euros (8.4 billion)
FRANCE: 16.8 billion (6.3 billion)
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Source: EU Business
ECB announces change in eligibility
of debt instruments issued or guaranteed
by the Greek government,
May 3, 2010--The Governing Council of the European Central Bank (ECB) has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Greek government. This suspension will be maintained until further notice.
The Greek government has approved an economic and financial adjustment programme, which has been negotiated with the European Commission, in liaison with the ECB, and the International Monetary Fund. The Governing Council has assessed the programme and considers it to be appropriate. This positive assessment and the strong commitment of the Greek government to fully implement the programme are the basis, also from a risk management perspective, for the suspension announced herewith.
The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Greek government.
Source: ECB
Average Daily Volume of 12.7 Million Contracts at Eurex and ISE in April
May 3, 2010--At the international derivatives markets of Eurex an average daily volume of 12.7 million contracts was traded in April compared with 11.8 million in April 2009 – an increase of eight percent. Thereof, 9.4 million contracts were traded at Eurex (April 2009: 7.6 million), reflecting a 24 percent increase y-o-y, while 3.3 million contracts were traded at the ISE (April 2009: 4.2 million). In total, nearly 257 million contracts were traded on both exchanges (Eurex: 187.6 million, ISE: 69.2 million), compared to April 2009 with approximately 240 million contracts.
At Eurex, the equity index derivatives segment totaled at 58.1 million contracts (April 2009: 60.0 million). The future on the Euro STOXX 50 was once again the most successful product with 26.6 million contracts. The option on this blue chip index saw another 20.4 million contracts. Launched on 22 March, the VSTOXX option recorded in its first full trading month at 145,000 contracts with an open interest of almost 110,000 contracts.
Equity-based derivatives were the largest segment this month with 80.2 million contracts (April 2009: 58.6 million). Thereof, equity options totaled at 28.5 million contracts (April 2009: 28.1 million). Single stock futures contributed mostly to the growth with a new monthly record of 51.6 million contracts (April 2009: 30.5 million).
Eurex’s interest rate derivatives segment grew by 46 percent y-o-y with 48.8 million contracts (April 2009: 33.3 million). Roughly 18.9 million contracts were traded in the Euro-Bund-Future, 11.7 million contracts in the Euro-Schatz Future, 11.6 million contracts in the Euro-Bobl-Future and more than 114,000 contracts in the Euro-BTP-Future.
Eurex Repo, which operates CHF- and EUR repo markets, totaled a combined average outstanding volume of 171.5 billion euro (April 2009: 195.3 billion euro). The secured money market segment GC Pooling rose slightly and achieved an average outstanding volume of 80.5 billion euro (April 2009: 75.7 billion euro).
The electronic trading platform Eurex Bonds, which rounds out Eurex’s fixed-income product range, saw a volume of 11.6 billion euro (single counting) in April compared with 13.3 billion euro in March 2010 and 7.1 billion euro in April 2009.
Source: Eurex
Xetra Turnover up 27 Percent in April
15.3 million trades executed on Xetra/ Total volume of 140 billion euros traded on all stock exchanges in Germany
May 3, 2010--In April, 126 billion euros were traded on Xetra and on the floor at Börse Frankfurt – an increase of 26 percent year-on-year (April 2009: 100 billion euros). Of the 126 billion euros, 118.8 billion euros were traded on Xetra, an increase of 27 percent year-on-year (April 2009: 93.4 billion euros). 7.2 billion euros were traded on the floor, an increase by 10 percent (April 2009: 6.5 billion euros).
Turnover in German equities on Deutsche Börse’s cash markets amounted to 109.1 billion euros, while foreign equities turnover stood at 13.5 billion euros. Xetra and the floor at Börse Frankfurt accounted for 95 percent of the transaction volume in German equities on all stock exchanges in Germany. 88 percent of foreign equities traded on stock exchanges in Germany were traded on Xetra and on the floor in Frankfurt.
In April, 15.3 million transactions were executed on Xetra, a slight increase of one percent against the same period last year (April 2009: 15.1 million).
According to the Xetra liquidity measure (XLM), RWE AG was the most liquid DAX blue chip in April with 4.8 basis points (bp) for an order volume of 100,000 euros. Heidelbergcement AG was the most liquid MDAX stock with 15.3 bp. The most liquid ETF was DB X-TR.II-EONIA T.R. 1C with 0.3 bp. The most liquid foreign stock was Air Liquide with 11.1 bp. XLM measures liquidity in electronic securities trading on the basis of the implicit transaction costs. It is expressed in basis points (1 bp = 0.01 percent); a low XLM denotes high liquidity in a security.
Deutsche Bank AG was the DAX stock with the highest turnover on Xetra in April at 8.7 billion euros. Heidelbergcement AG was the top MDAX stock at 1.1 billion euros, while A. Springer AG led the SDAX stocks at 32.1 million euros and Aixtron AG headed the TecDAX at 1.1 billion euros. At 1.8 billion euros, the iShares DAX was the exchange-traded fund with the highest turnover.
On all stock exchanges in Germany 139.9 billion euros were traded in April according to orderbook turnover statistics – an increase of 20 percent compared year-on-year (April 2009: 115.7 billion euros). This total includes 131.3 billion euros in equities, warrants and exchange-traded funds, as well as 8.6 billion euros in fixed-income securities.
Source: Deutsche Börse
ECB assesses the Greek economic and financial adjustment programme
May 2, 2010--The Governing Council of the European Central Bank (ECB) welcomes the economic and financial adjustment programme which was approved today by the Greek government following the successful conclusion of the negotiations with the European Commission, in liaison with the ECB, and the International Monetary Fund.
The ambitious fiscal adjustment and comprehensive structural reforms under the programme are appropriate to achieving the programme’s objectives of stabilising the fiscal and economic situation over time and addressing the fiscal and structural challenges of the Greek economy. The programme is comprehensive and supported by strong conditionality. It addresses the relevant policy challenges in a decisive manner. It will thereby help to restore confidence and safeguard financial stability in the euro area. The Governing Council also considers essential that the Greek public authorities stand ready to take any further measures that may become appropriate to achieve the objectives of the programme.
Source: ECB
Turkish economy to grow by 5.5 pct in 2010, report finds
April 30, 2010--The Turkish economy could grow by around 5.5 percent in 2010 over the preceding year, consulting firm Deloitte has predicted.
According to an Economic Outlook Report released by Deloitte on Friday, Turkey’s inflation is expected to hover at around 7.5 to 8 percent in 2010, while the country’s current account deficit would near $30 billion by the end of the same year.
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Source: Todays Zaman
Commission publishes report on removing tax obstacles to cross-border venture capital investment
April 30, 2010--Today the European Commission published a report which outlines the double taxation problems that arise when venture capital is invested cross-border, as well as possible solutions. The report sets out the findings and recommendations of an independent group of EU tax experts, which was set up by the Commission to look at how to remove the main tax barriers to cross-border investment in venture capital. Venture capital is a vital source of growth for small and medium enterprises (SMEs). Therefore, facilitating venture capital investment within the EU is crucial for good economic growth. The Commission will now consider how best to follow up on the findings in the Report, , in line with its broader agenda to eliminate double taxation in the EU.
Algirdas Šemeta, Commissioner for Taxation, Customs, Audit and Anti-Fraud, said: “Venture capital is the lifeblood for many SMEs. And, as recognised in the EU's 2020 goals, improving the business environment for SMEs is crucial if we are to build a stronger, sustainable economy. Therefore, we must make an efficient European venture capital market a reality, and this means eliminating any tax obstacles that still stand in its way."
Today’s report summarises the main findings and conclusions of the Expert Group on Removing Tax Obstacles to Cross-border Venture Capital Investments. The group was set up by the Commission in 2007, as one of a series of measures aimed at facilitating cross-border venture capital investment in the EU, to the benefit of SMEs.
There are two main problems identified in the report, and possible solutions are recommended:
Firstly, the local presence of a venture capital fund manager in the Member State into which an investment is made may be treated as a taxable presence ("permanent establishment") of the fund or of the investors in that State. This could lead to double taxation if the return on the investment is also taxed in the country or countries where the fund or investors are located. The experts propose that a venture capital fund manager should not be considered as creating a taxable presence for the fund or investors in the Member State where the investment is made. This would reduce double tax problems for cross border venture capital investment.
read the Venture Capital Tax Expert Group on Removing Tax Obstacles to Cross-Border Venture Capital Investments report
Source: Eurostat
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