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IMF Working paper-Transmission of Financial Stress in Europe: The Pivotal Role of Italy and Spain, but not Greece
May 2, 2014--Summary: This paper proposes a stochastic volatility model to measure sovereign financial distress. It examines how key European sovereign credit default swap (CDS) spreads affect each other; specifically, the paper analyses the volatility structure of Germany, Greece, Ireland, Italy, Spain and Portugal. The stability of Germany is a close proxy for the resilience of the euro area as markets use Germany's sovereign CDS as a hedge for systemic risk.
Although most of the CDS changes for Germany during 2009-12 were due to idiosyncratic factors, market developments in Italy and Spain contributed significantly, likely due to their relative importance in the region. Changes in Greece's sovereign CDS had no significant effect on Germany’s sovereign CDS despite initial widespread concerns about such linkages. Spain and Italy show a notable co-dependence in explaining each other’s volatility while Germany also plays an important role. It is found that extreme bad news led to persistent and nearly permanent effects on the stochastic volatility of European sovereign CDS spreads.
Turnover at Deutsche Borse's cash markets at 96.4 billion euros in April
May 2, 2014-Order book turnover on Xetra, the Frankfurt Stock Exchange and Tradegate stood at €96.4 billion in April (April 2013: €103.0 billion). Of the €96.4 billion, €88.4 billion were attributable to Xetra (April 2013: €95.6 billion). €3.9 billion were attributable to the Frankfurt Stock Exchange (April 2013: €4.3 billion).
Order book turnover on Tradegate Exchange* totalled approximately €4.0 billion in April (April 2013: €3.1 billion).
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Source: Deutsche Börse
EU court dismisses UK challenge to financial sector tax
May 1, 2014--Britain's campaign against a proposed European Union tax on financial transactions suffered a blow on Wednesday, after the EU's top court ruled its suit against the levy was premature.
The European Court of Justice in Luxembourg found London's opposition to the Financial Transactions Tax (FTT) should not prevent a group of 11 EU member countries from proceeding with plans to implement it.
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Source: EUbusiness
IMF-Russian Federation-Concluding Statement for the 2014 Article IV Consultation Mission
April 30, 2014--The Russian economy, already slowing because of pre-existing structural bottlenecks, has been further affected by geopolitical uncertainties arising from conflict between Russia and Ukraine. Growth is expected to ease to 0.2 percent in 2014, with considerable downside risks. To safeguard against risks, the current macro framework should be further strengthened to provide a credible policy anchor. Monetary policy should focus on reducing inflation, and more exchange rate flexibility should provide a buffer against external shocks.
Adherence to the fiscal rule should continue, with additional consolidation in the outer years. Revitalizing the government’s structural reform agenda is essential to provide the needed catalyst to growth.
Geopolitical tensions and structural bottlenecks take a toll on growth
1. GDP growth is slowing down significantly. In 2014, Russia's growth is expected to continue its slowing trend to 0.2 percent, from 1.3 percent in 2013. Investment will further contract due to the uncertainty around the geopolitical situation. Capital outflows increased significantly in Q1 2014 to US$ 51 billion. While still strong, the pace of consumption growth-supported by wage and credit growth-has begun to slow. Net exports are expected to support growth, as imports are weakening, with the current account surplus projected to increase to around 3 percent of GDP. A slight recovery in growth to 1 percent is projected in 2015, on the back of stronger exports and an uptick in investment. However, unaddressed structural bottlenecks and stagnant investment are reducing potential output over the medium term.
2. Short-term risks are squarely on the downside. Current projections are contingent upon a gradual resolution of the geopolitical tensions; continued conflict could lead to additional sanctions and worse outcomes. Even in the absence of further intensification, continued uncertainty and the resulting deterioration of confidence may reduce investment and consumption further. In addition, Russia's economy and public finances remain very sensitive to oil prices. The impact of these risks on external sustainability is mitigated by sizeable buffers, including large international reserves, low headline budget deficits, and low net public debt. However, their materialization would imply a substantial setback to the growth outlook.
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Source: IMF
Two new Amundi ETFs launched in the XTF segment on Xetra
April 29, 2014--ETFs track US small-cap companies and high-yield corporate bonds denominated in euros
April 29, 2014--
Two new listed index funds issued by Amundi have been tradable in Deutsche Börse's XTF segment since Tuesday.
ETF name: Amundi ETF Russell 2000
Asset class: equity index ETF
ISIN: FR0011636190
Total expense ratio: 0.35 percent
Distribution policy: distributing
Benchmark: Russell 2000 Index
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Source: Xetra/Börse
Deutsche Borse AG publishes results for Q1/2014
6 per cent increase in net revenue to €514 million / Result from equity investments contains one-off gain of €63 million / Earnings per share- adjusted for exceptional items-up by 9 per cent to €1.00
April 28, 2014--Deutsche Börse AG published its figures for the first quarter of 2014 on Monday.
The Group generated net revenue of €514.2 million, up 6 per cent on the first quarter of 2013. The increase is attributable to a slight improvement in the business environment and the consolidation of the European Energy Exchange AG (EEX) since the start of 2014.
The Group's operating costs amounted to €243.4 million, adjusted for exceptional items (Q1/2013: €229.5 million).
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Source: Deutsche Börse:
CME Europe to launch this weekend after FX pairs approved
April 25, 2014--European derivatives venue CME Europe is set to formally launch on Sunday, having received regulatory approval for its full product range on Wednesday.
London-based CME Europe plans to offer trading in a range of different asset classes, though it will initially focus on 30 FX futures products and biodiesel futures.
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Source: The Trade
S&P cuts Russia's foreign currency ratings
April 24, 2014--Credit agency Standard & Poor's cut Russia's foreign currency sovereign ratings on Friday, in a move that underscores risks from President Vladimir Putin's policy of intervention in Ukraine.The agency cut both long-and short-term foreign currency ratings, to BBB-/A-3 from BBB/A-2, a decision that pushed Russia's already battered assets further down early on Friday.
"The downgrade reflects the risk we perceive of a continuation of the large financial outflows observed in the first quarter of 2014, during which the size of Russia's financial account deficit was almost twice that of the current account surplus," the agency said in a press release.Central bank data released earlier this month showed an estimated $63.7 billion in net capital outflows in the first three months of 2014, the same as for the whole of 2013
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Source: Today's Zaman
SIX Swiss Exchange launches SPI Select Dividend 20 Index
April 24, 2014--SIX Swiss Exchange today announced the launch of the SPI Select Dividend 20 Index. The new index includes those 20 stocks from the SPI Index which show the highest historical dividend-payments and the most solid profitability.
The SPI Select Dividend 20 Index offers market participants a rules-based and transparent concept, which combines screens for high and stable dividend payments with screens for a company’s superior profitability, measured by return on capital (ROC).
The index universe for the SPI Select Dividend 20 Index is the SPI Index. In order to be included in the new index, stocks must have minimum average daily traded volume (ADTV) of CHF 2,0,million over the past twelve months, and have paid dividends in at least four out of the last five financial years.
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Source: SIX Swiss Exchange
Provision of deficit and debt data for 2013- first notification
April 23, 2014--Euro area and EU28 government deficit at 3.0% and 3.3% of GDP respectively
Government debt at 92.6% and 87.1%
In 2013, the government deficit1 of both the euro area2 (EA18) and the EU282 decreased in absolute terms
compared with 2012, while the government debt1 rose in both zones.
In the euro area the government deficit to GDP ratio decreased from 3.7% in 2012 to 3.0% in 2013, and in the EU283 from 3.9% to 3.3%. In the euro area the government debt to GDP ratio increased from 90.7% at the end of 2012 to 92.6% at the end of 2013, and in the
EU283 from 85.2% to 87.1%.
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Source: Eurostat
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