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Commission assesses stability and convergence programmes of ten EU Member States
March 24, 2010--Today the European Commission examined the updated stability and convergence programmes (SCPs)1 of the Czech Republic, Denmark, Hungary, Lithuania, Luxembourg, Latvia, Malta, Poland, Romania and Slovenia. In line with the Commission's assessments of a first group of fourteen Member States last week (see IP/10/288), the evaluation must be seen against the background of the economic and financial crisis which has led to a sharp deterioration of public finances since 2009 and triggered the Council decisions to open Excess Deficit Procedures (EDP) for a large majority of Member States. Within the batch of countries assessed today, only Denmark and Luxemburg have kept their general government deficits below 3% in 2009, although their fiscal situation is set to deteriorate markedly in 2010.
For most countries this year will mark a fiscal consolidation process consistent with the recommendation set out in the EDPs and, in the case of Latvia, Hungary and Romania, with the conditions set out in the international financial assistance programmes. As to the budgetary targets set out in the programmes, the growth assumptions underlying these projections are in several cases optimistic especially in outer years, while the budgetary consolidation strategy is often not sufficiently backed up by concrete measures from 2011 onwards.
"The economic and financial crisis has taken its toll on public finances. Fiscal stimulus was necessary to support the recovery but the past two years have wiped out 20 years of fiscal consolidation. This means that we have to come back gradually to budgetary rigour next year at the latest ", said Economic and Monetary Affairs Commissioner Olli Rehn. Czech Republic The programme foresees a reduction of the headline deficit from 6.6% of GDP in 2009 to 3% of GDP in 2013, in line with the Council recommendation of 2 December 2009. The authorities have started implementing a sizeable consolidation package already in 2010, with a planned budgetary adjustment of around 2% of GDP in structural terms. Despite the expected economic recovery, the improvement in the structural balance is however projected to slow down markedly in 2011 and 2012. The fiscal adjustment in these years relies on expenditure cuts which however are not supported by concrete measures. Moreover, the programme does not provide information on how to achieve the reduction of the deficit projected for 2013.
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Source: European Commission
Eurozone business activity shoots up in March
March 24, 2010--Private sector business activity across the eurozone shot up in March, with the largest increase since August 2007 suggesting that an improvement in dire unemployment figures is in the offing.
The purchasing managers' index (PMI) for the 16 countries that share the currency, compiled by data and research group Markit, jumped to 55.5 points from 53.7 points in February, the researchers said.
Any score above the boom-and-bust 50-point line indicates economic growth.
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Source: EUbusiness
Portugal hit by credit downgrade, euro plunges
March 24, 2010--Portugal's government vowed Wednesday to clean up its public finances after a top ratings agency downgraded the country's creditworthiness, sending a new shockwave through the eurozone.
Fitch Ratings lowered Portugal's long-term debt rating by one notch and gave it a negative outlook, warning that a severe strain on public finances had reduced the eurozone country's creditworthiness.
The move, coupled with persistent concerns about the debt crisis in fellow eurozone member Greece, sent the euro plunging under 1.34 dollars for the first time in more than 10 months while European share dived into the red.
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Source: EUbusiness
HSBC unveils new Japanese ETF
March 24, 2010--HSBC has announced the launch of a new exchange-traded fund (ETF) focusing on large and mid cap Japanese equities.
The HSBC MSCI Japan ETF, available from today (March 24th), is being listed on the London Stock Exchange initially and will see further listings in Europe in the next few months.
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Source: finances.co.uk
EuroCCP Introduces Comparability Of All-In Trading Costs - First European Equities CCP To Provide Clearing Cost Data In Same Format As Trading Fees
-First European Equities CCP to provide clearing cost data in same format as trading fees
March 23, 2010--EuroCCP announced today it has introduced an enhanced billing feature that provides a new level of cost transparency to its customers. The new feature enables customers to easily aggregate trading and clearing costs into a single unit to arrive at an all-inclusive cost of trading, clearing and settlement.
EuroCCP now provides a monthly billing supplement to customers that shows clearing costs on the value of trades cleared. Settlement costs are likewise shown on the value of trades cleared.
Clearing fees are typically based on a fixed fee per trade cleared, irrespective of value, while trading fees are based on the value of the trade. The difference in fee structure has made it difficult for firms to estimate and compare all-in costs on trading venues, particularly if they use different CCPs.
EuroCCP is the first equities central counterparty in Europe to present post-trade and trading costs in equivalent terms to enable an estimation and comparison of all-in costs. Clearing and settlement costs billed to customers are shown in basis points on the value cleared, consistent with fees charged by trading venues on the value of trade executions. A basis point is 100th of one percent.
EuroCCP’s presentation of clearing costs in basis-point terms also facilitates the inclusion of clearing and settlement costs in smart order routers, enhancing trading firms’ ability to manage clearing costs effectively. Cost predictability is essential for trading firms.
Robert Barnes, Managing Director, Equities, at UBS Investment Bank commented, “EuroCCP should be commended for enhancing tariff transparency. Cost-per-ticket trends are subject to bias, for example as electronic trade sizes shrink. By adding value processed on its invoices, EuroCCP enables basis-point comparability, a more meaningful metric for competitive landscape cost analysis.”
Source: About EuroCCP
Turkish construction market to attract European firms
March 23, 2010--Several of Europe’s prominent construction firms will try to find ways to enter the Turkish housing and real estate market in the next five years, Martin Langen, founding partner of B+L Marktdaten GmbH, a European construction and housing markets research firm, has said.
Turkey is one of the countries that European firms have the most interest in, Langen stated, attributing this to the country’s rapid rate of growth. Predicting that construction needs in Turkey will increase in the next five to 10 years, he said: “Several important building firms based in Europe will try to find ways to expand into the Turkish market. Two important factors will lead to this: business opportunities and a growing population.”
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Source: Todays Zaman
Deutsche Börse Group: Next Phase of Program to Optimize Operational Processes and Costs Decided
March 23, 2010--Deutsche Börse AG has completed its review of potential measures to further increase the efficiency of Deutsche Börse Group and resolved today the next phase of a multi-year program to optimize operational processes and structures across the Group. As already communicated, the objective of the program is to improve flexibility and effectiveness of using resources across the Group, to reduce time to market, and to further increase Deutsche Börse Group’s efficiency while at the same time identifying and realizing new growth opportunities.
The company expects additional savings in operating costs of around €100 million per year. This program complements the cost measures initiated between 2007 and February 2010.
Therewith, Deutsche Börse Group is taking another step in addressing structural changes in financial markets as well as new customer requirements. At the same time, the Company steps up investments to seize growth opportunities. Consequently, the budget for growth initiatives has already been increased by more than 50 percent as against the previous year to around €100 million in 2010. As a result of this step, Deutsche Börse Group is well-positioned to assume a leading role amongst the operators of financial markets infrastructure also in the future. This includes in particular the Company’s strengths in technology, risk management and product innovation.
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Source: Deutsche Börse
Eurex to Launch First European Futures on Butter and Skimmed Milk Powder
Launch of the two new agricultural futures planned for end of Q2 2010/ Extension of the agricultural derivatives segment
March 23, 2010-- Eurex, the international derivatives exchange, today announced the expansion of its product range in the agricultural derivatives asset class.
At the end of Q2 2010, the exchange will offer trading of two futures based on butter and skimmed milk powder in Europe. Both futures are based on established reference prices from the respective spot markets and will be settled in cash.
“We along with major market participants believe that the volatility of dairy markets will increase over the next few years. The use of derivatives to hedge against higher prices and fluctuating costs is expected to rise, thus the introduction of our new futures is a logical step,” said Peter Reitz, member of the Eurex Executive Board. “We also want to contribute our known strengths, particularly our global distribution network and central clearing services, to this growing market.”
Eurex has intensively prepared its market launch together with key players in this market segment, including the German and European dairy industry associations (MIV and Eucolait) and important market participants in the European and U.S. dairy industry. The participants in the spot market for these agricultural products have indicated a keen interest in collaborating with a major international derivatives exchange.
Source: Eurex
Qbasis launches ETF managed futures fund
March 23, 2010--Managed futures specialist Qbasis Invest has launched an exchange-traded fund, the Qbasis Futures Fund, which will commence trading on the Hamburg stock exchange on 1 April.
The Qbasis Futures Fund is the only onshore fund that enables retail investors to access the firm’s flagship managed futures strategy.
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Source: ETF Express
Mismatch between performance of commodity ETPs and spot prices
March 23, 2010--Research by Moonraker Fund Management suggests that several of the commodity indexes tracked by exchange-traded products have significantly under-performed the spot prices of their underlying commodities over the last year, sometimes delivering double digit underperformance.
The findings highlight the impact of the “negative roll yield” and raise serious questions about whether investors should find alternative vehicles to invest in commodities over the long term.
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Source: ETF Express
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