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The EU's new budgetary 'golden rules'
August 10, 2012--The EU's fiscal treaty, which France's Constitutional Council, ruled Thursday does not require a constitutional amendment, aims to reinforce budgetary discipline in the wake of the debt crisis.
Signed by 25 European Union states minus the Czech Republic and the United Kingdom, the treaty was a German demand as the price of financial solidarity with debt-laden, recession-hit eurozone partners and will introduce "golden rules" making balanced budgets mandatory. En route to winning office, French President Francois Hollande threatened to block ratificaton but settled for agreement on extra measures to boost growth.
Here are the main points of the treaty:
The 'golden rule'
Countries that ratify commit to balanced budgets, ideally in surplus over the course of economic cycles. The structural deficit, which strips out one-off effects such as debt repayments and the economic cycle, should be capped at 0.5 percent of gross domestic product. Countries with debts comfortably below the 60-percent-of-GDP EU threshold will get more leeway, up to 1.0 percent of GDP for the structural deficit.
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Source: EUbusiness
New milestones achieved in Eurex's Futures on French government bonds
August 9, 2012--The international derivatives market Eurex Exchange announced today that it has set several new records in its Euro-OAT Futures.
In August 2012, open interest exceeded for the first time the 100,000 threshold with 104,869 contracts. Trading volume in July also set a new record, both in average daily volume with about 19,600 contracts and in total with 431,000 contracts. Total volume since launch is close to 1.5 million contracts. The OAT futures were launched on 16 April and are based on the notional long-term bonds issued by the French Republic (Obligations Assimilables du Trésor – OAT).
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Source: Eurex
DB - Equity Research-European ETF Market Monthly Monitor : Industry growth review: In the 2012 olympic arena, what medal are ETFs in the running for?
August 9, 2012--The ETF Olympic spirit
In a month where the Olympic spirit, competition, sports and medals are on the forefront it is only appropriate that we review how well the ETF market is doing in terms growth prospects. Our current global ETF industry growth projection (published in January of this year) is for asset growth between 15-20% over 2012.
Asset percentage 2012 YTD growth: Gold for Asia
China and the US are competing head to head for Olympic medals in London currently. It does seem that ETF industry regional growth for the first seven months of this year presents a similar picture. The Asian ETF market has registered asset growth of 23.8% this year and it has been leading the asset percentage growth tables. This strong growth is based on overall strong cash flow patterns throughout the year but it has been given a big lift by two new Chinese product launches that brought close to $8 billion of new flows to the Asian ETF industry over May 2012. The fifth month of 2012 registered flows that accounted for close to 65% of the Asia region’s 2012 YTD new flows.
Cash flows 2012 YTD: Gold for the US
In terms of net new flows, the US ETF industry leads the charts, with $87.9 of new inflows YTD. It is no surprise that the US ETF industry generated the highest flows given that it is home to close to three quarters of global ETF assets. However, US ETF flows for the first seven months of 2012 present a new record. They are the highest absolute level of cash flows ever received by the US ETF industry over a comparable period. The level of flows underpins the US market’s strong capacity to draw new money across asset classes. Close to 60% of the US ETF market’s was received by equity ETFs ($35.5 billion) while fixed income ETFs received almost the remaining 40% ($29.2 billion). This is a very different picture from the Asian market, where equity ETFs received the overwhelming majority of new flows (92%). Asia equity ETFs make over 90% of the region’s total ETF assets. The US ETF market grew by 15.3% in the first seven months of 2012.
European ETF market growth 2012 YTD: Bronze across the board
Europe ranked firmly in the bronze medal position both with regards to new flows and asset growth. The European ETF industry registered $9.9 billion of new flows and 11.6% asset growth for 2012 YTD. The region’s sovereign crisis has undoubtedly impacted equity trading patterns across the board. European cash equities turnover is down 28.2% year over year for the first seven months of 2012. In this month’s European ETF monthly market report we are examining the reasons behind the European ETF market’s slower growth performance and their implications on future growth prospects.
The following link will be available for 90 days. For more information, please click on the link for the full PDF. If you have any trouble viewing the link, copy and paste the link in a browser.
http://pull.db-gmresearch.com/p/595-9E48/26532188/European_ETF_Market_Monthly_Monitor.pdf
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
Financial News: Exchange Rivals Unite to Forge Single Trading Tape
August 9, 2012--Two former executives from rival European trading platforms have joined forces to accelerate the creation of a consolidated tape of European equity data, which would pull together prices from across all trading venues.
Producing a single pricing tape is one of the most pressing issues facing the industry.
Ex-NYSE Euronext data chief Mark Schaedel and Graham Dick, formerly of Bats Chi-X Europe, have co-founded consultancy The Coba Project, according to recent filings with Companies House.
Coba will focus on pan-European market transparency issues, including the creation of a single feed of equities data, according to sources familiar with the situation
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Source: Wall Street Journal
Commerzbank removes agriculture from fund on food fears
Germany's 2nd largest bank gives few details about move
Lobby group Foodwatch says ethical concerns behind decision
Speculation has been blamed for fuelling food price hikes
S&P Dow Jones Indices says not change indexes based on debates
AUgust 9, 2012--Germany's Commerzbank has removed agricultural products from a commodity index fund after accusations that speculation has pushed up food prices and fuelled unrest in some poor countries.
Commerzbank followed at least two other German banks in restricting investments in agriculture, while most banks and fund managers have defended investment in commodities, saying that price jumps have been due to heavy demand and shortages.
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Source: Reuters
Euro area securities issues statistics-June 2012
August 9, 2012--The annual growth rate of the outstanding amount of debt securities issued by euro area residents was 3.9% in June 2012, compared with 4.0% in May.
For the outstanding amount of quoted shares issued by euro area
residents, the annual growth rate decreased from 1.5% in May 2012 to 1.1% in June.
New issuance of debt securities by euro area residents totalled EUR 956 billion in June 2012.
Redemptions stood at EUR 949 billion and net issues amounted to EUR 5 billion.1 The annual growth rate of outstanding debt securities issued by euro area residents was 3.9% in June 2012, compared with 4.0% in May.
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Source: ECB
Analysis: New Eurex platform heralds new age of competition
August 9, 2012--Eurex is set to launch a new platform to trade interest rate derivative products. The gauntlet has been thrown in the next evolution of the markets, says William Mitting.
News that Eurex is considering launching a London-based exchange platform to trade its interest rate product suite, which broke on FOWintelligence.com this morning, sets the cats among the pigeons in the European exchange traded derivatives markets.
The planned launch, on which Eurex has declined to comment but is understood to be at an early stage of development, comes as competition in the European exchange traded interest rates markets, which has been in something of a slumber since the late 1990s, is set increase with the launch of NLX from Nasdaq.
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Source: FOW.com
Embrace morality to regain investor confidence, asset managers told
August 8, 2012--Perhaps the greatest challenge faced by the asset management industry is the European sovereign debt and Euro zone currency crisis, which may give rise to global systemic financial crisis. A new report published online urges asset managers to regain investor confidence by facing up to the moral challenges posed by recent global events.
Based on a 'swift survey' of asset managers, "Success of the Fittest: A Swift Survey of Shifts in Asset Management", assesses the fitness of the asset management sector in the present financial climate.
It looks at five key areas impacting the current and future state of the asset management sector, including the macro-economic and industry environments, and the 'moral issues' confronting those who work in it.
view the report-Success of the Fittest: A Swift Survey of Shifts in Asset Management
Source: CPI
BoE is running out of policy options
August 8, 2012-- Britain's economic recovery is now projected to be weaker and more protracted than had been expected a few months ago, and raises questions about just how far monetary policy can be used to boost demand.
According to the Bank of England’s quarterly inflation report, the economy is expected to be expanding at an annual rate of 2.1 per cent in two years’ time, down from a forecast of 2.6 per cent in May and down from a forecast for early 2015, made just six months ago, of 3.4 per cent.
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Source: FT.com
Time to play ETFs in 'efficient' markets
August 8, 2012--SEB fund selector Andreas Bichler has clear guidelines about when to use active and passive investments. When markets are efficient ETFs are king.
Frankfurt-based Andreas Bichler, head of fund selection at SEB Asset Management, who gives equal weight to the use of active and passive funds.
He believes active managers have a key role in maximising returns from inefficient markets, but where an index is steady and close to unbeatable, funds like ETFs are the obvious choice.
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Source: CityWire
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