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Decision makers meet at the EESC to debate the way out of the debt crisis
June 11, 2012--The search for answers to the EU economic crisis has continued at the European Economic and Social Committee (EESC) with a debate on the sovereign debt crisis.
In an unprecedented event, representatives of the EESC, the European Commission, the European Parliament, the European Investment Bank and the European Central Bank exchanged views with the Italian Minister for European Affairs and the President of the Eurogroup.
Staffan Nilsson, President of the EESC, opened the session with a clear statement on the sovereign debt crisis, calling for a fiscal stability union in the EU and the introduction of Eurobonds. Concrete initiatives are needed, he said, for member states to share fiscal responsibilities and so that interest rates on the public debt of countries that are making fiscal consolidation efforts can fall.
Five new UBS ETFs launched on Xetra
ETFs track indices on Canada, Japan and the UK
June 11, 2012--Five new exchange-listed equity index funds from the issuer UBS Global Asset Management have been tradable in Deutsche Boerse's XTF segment since Monday.
The UBS ETF plc- MSCI Canada TRN Index SF and the UBS ETF plc-MSCI Japan TRN Index SF enable investors to participate in the performance of medium- and large-sized companies from Canada and Japan.
The UBS ETF plc- FTSE 100 SF tracks the performance of the UK's 100 largest blue-chip companies across all sectors. The product offering in Deutsche Börse’s XTF segment currently comprises a total of 986 exchange-listed index funds, while the average monthly trading volume stands at €12 billion. Xetra® and XTF® are registered trademarks of Deutsche Börse AG.
List of the new UBS ETFs with ISIN and total expense ratio (TER)
DB - Equity Research-European ETF Market Monthly Monitor : 2012 fixed income ETF flows overshadow equity as investors deliberate on Euro zone direction
June 11, 2012--Market Direction: What kind of light is there at the end of the Euro tunnel?
Over May 2012, equity markets continued to discount increasing uncertainty, largely driven by the Euro zone crisis but also fueled by news that potentially cast doubt on the strength of the US economic recovery.
In Europe, pressure on the region’s financially weakest countries continued to gather pace, highlighting increasing questions about how to best address Euro zone governance changes that can lead to more stable fiscal management across the single currency area.
Equity markets declined across the board over the month of May, while volatility has risen significantly. EuroStoxx50 fell by 6.7% in May, wiping out all of its 2012 gains and finishing down 6.1% YTD. Germany’s DAX lost 7.4% over this month but it still managed to stay in positive territory for the year, registering a YTD increase of 6.2%. At the same time, equity market volatility continued to rise with the VSTOXX - an index measuring Euro zone equity market volatility as measured by EuroStoxx 50 index options implied volatility - rising by close to a third (29.7%) in May.
The Euro zone storm began to gather pace – once more - in early May as elections in Greece on May 6th failed to produce a stable government. The country’s inability to generate a clear commitment towards continuing to support bailout terms continued to raise investor concerns about the impact of a possible disorderly default. At the same time, at the end of May Spain, the Euro zone’s 4th biggest economy, came under increased pressure to recapitalize its banking sector as well as continue towards reforms to modernize its economy. These latest developments came on the back of a number of measures taken by Euro zone countries that have so far failed to ease concerns about the single currency zone’s ability to effectively manage its collective finances.
It has now become clear that with each set of measures taken by European leaders over the better part of the past three years, the latest of which generated the pledge for a fiscal pact supported in principle by 16 countries back in March 2012, the market follows by questioning the currency zone’s ability to manage its way out of the credit crisis. Balancing austerity and taking decisions to spur growth at a country level has become the most recent criticism. The overarching riddle that European leaders are being faced with is how to form an effective and credible Euro zone fiscal governance mechanism.
That is by no means an easy feat as many of the necessary governance changes are perceived in some member states as ceding sovereignty - both by the continent’s financially strongest as well as weakest - towards a central Euro zone fiscal authority, and could therefore prove unattainable politically. Furthermore, clarifying the role of the European Central Bank as well as the tools at its disposal, remain a challenge.
While contagion concerns from a possible disorderly Greek default remain very material ahead of a second election in Greece on June 17th, the bigger issue that seems to emerge relates to governance changes that the Euro-zone will need to take and how those can impact its ability to enforce economic discipline and manage economic growth effectively over the longer term.
While many opinions exist about the relative strengths and weaknesses of each Euro zone country, the large drop in the DAX over May is pointing to an increasing realization that fortunes of the stronger and the weaker are intertwined. It remains to be seen if the downward pressure from this convergence can lead to decisive measures that could signal turning a corner, or if political differences embedded in systems that were created in isolation over centuries will show the way back to the past.
At the moment, in the European ETF industry, investors seem to be optimistic that that a solution is still possible, given that we have yet to see any significant outflows which could imply a meltdown of long equity positions. European broad equity indexed ETF outflows totaled €1.7 billion YTD, this is equivalent to a 6.8% decline of the relevant ETF assets (€25.0 billion as of 31/12/11). Total broad European equity ETF assets are down €9.1% YTD, reaching €22.7 billion as of the end of May 2012. Similarly, DAX benchmarked ETF outflows for 2012 total €341 million YTD, amounting to 1.7% of the DAX benchmarked ETF assets at the beginning of the year (€19.6 billion). DAX benchmarked equity ETF assets are up 4.2% since the beginning of the year, reaching €20.4 billion as of May month end.
The question that remains unanswered is how long more Europe has to convince markets that there is light at the end of the tunnel and not a train coming from the opposite direction.
This month’s defining European ETF trades:
May was a month driven by fixed income buy trades, yet volatility products also saw some interest. Below we summarize the month’s strongest cash flow signals, which give a good impression of the European ETF investor’s mood over May 2012:
Buy
German, UK and US sovereigns, mostly short duration (+€668 million= €365+€213 +€90)
Investment grade and high yield corporate bonds (+ €316 million = €240 + €76 )
Volatility, especially vol strategies (YTD: Vol strategies: + €443 million)
Money markets (+ €310 billion)
Sell:
Gold (-€571 million)
European broad equity indices, especially EuroStoxx50 (- €304 million)
Emerging markets broad equity indices (-€221 million)
Please also find attached an updated version of our European ETP directory. This document includes all European domiciled exchange-traded funds (ETFs) and exchange-traded commodities (ETCs). The directory is organised by asset class and it has been sorted by benchmark exposure and by ETF issuer, in alphabetical order. A number of key information per product have been included in order to enable the reader to get an overview in their respective area of interest.
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.
ETFGI European ETF/ETP Industry insights, May 2012
June 11, 2012-Summary for European listed ETFs
At the end of May 2012, the European ETF industry had 1,319 ETFs, with 4,612 listings, assets of US$265.6 Bn, from 39 providers on 21 exchanges.
ETF assets have decreased by 8.7% from US$290.9 Bn in April 2012 to US$265.6 Bn in May 2012.
YTD through end of May 2012, ETF assets have decreased by 0.7% from US$267.6 Bn to US$265.6 Bn.
Flows
In May 2012, ETFs saw net inflows of US$3.5 Bn. YTD through end of May 2012, ETFs saw net inflows of US$5.0 Bn.
iShares gathered the largest net inflows in May with US$4.9 Bn, followed by SPDR ETFs with US$0.4 Bn and Source Markets with US$0.2 Bn net inflows.
iShares gathered the largest net inflows YTD with US$4.7 Bn, followed by Source Markets with US$1.7 Bn and SPDR ETFs with US$1.1 Bn net inflows.
ETFlab Investment experienced the largest net outflows in May with US$0.5 Bn.
db x-trackers experienced the largest net outflows YTD with US$1.3 Bn, followed by EasyETF with US$0.7 Bn and Lyxor Asset Management with US$0.6 Bn net outflows.
Summary for European listed ETFs/ETPs
Including other Exchange Traded Products (ETPs), at the end of May 2012, the European ETF/ETP industry had 1,917 ETFs/ETPs, with 5,837 listings, assets of US$297.5 Bn, from 45 providers on 22 exchanges.
Assets
ETF/ETP assets have decreased by 8.8% from US$326.2 Bn in April 2012 to US$297.5 Bn in May 2012. YTD through end of May 2012, ETF/ETP assets have decreased by 0.9% from US$300.1 Bn to US$297.5 Bn. Flows
In May 2012, ETFs/ETPs saw net inflows of US$3.0 Bn. YTD through end of May 2012, ETFs/ETPs saw net inflows of US$5.7 Bn.
iShares gathered the largest net inflows in May with US$4.8 Bn, followed by SPDR ETFs with US$0.4 Bn and HSBC/Hang Seng with US$0.1 Bn net inflows.
iShares gathered the largest net inflows YTD with US$4.6 Bn, followed by Source Markets with US$1.6 Bn and SPDR ETFs with US$1.1 Bn net inflows. ETFlab Investment experienced the largest net outflows in May with US$0.5 Bn.
db x-trackers experienced the largest net outflows YTD with US$1.3 Bn, followed by EasyETF with US$0.7 Bn and Lyxor Asset Management with US$0.6 Bn net outflows.
One in six European ETFs on "death list"- data
241 out of 1,711 ETFs on "death list"-Lipper
Fewer than 50 ETFs account for 50 pct of assets under mgt
Top industry players see need for consolidation
June 11, 2012--Around one in six exchange-traded-funds (ETFs) for sale in Europe may be on a so-called "death list", with fewer than 50 accounting for nearly 50 percent of industry assets, data from Lipper, a Thomson Reuters company, showed on Monday.
Lipper's death list is defined as those ETFs that are more than three years old and have less than 100 million euros ($124.7 million) in assets, which could mean they are under review for profitability reasons.
Markets jump on Spain bank rescue, concern lingers
June 11, 2012--World markets rallied Monday after Spain won a huge rescue loan for its banks, but the deal failed to banish fears over its debt or the risk of a Greek-driven eurozone breakup.
Spain's eurozone partners agreed to extend up to 100 billion euros ($125 billion) to salvage a banking sector weakened by reckless lending in a property bubble that collapsed in 2008.
The rescue, which represented a U-turn by Madrid, eased concern about the risk of a Spanish financial sector calamity, but the sheer size of the loan fed concerns over Spain's fast-growing public debt.
Italian economy shrinks 0.8% in first quarter
June 11, 2012--Italy's economy shrank by 0.8 percent in the first quarter, the official data agency Istat said on Monday confirming an earlier estimate that showed the country's recession deepening.
Istat also revised down to 1.4 percent the contraction on a 12-month comparison compared to an earlier estimate of 1.3 percent.
Italy's economy has been shrinking since the third quarter of 2011.
Spain- Financial System Stability Assessment
June 8, 2012--EXECUTIVE SUMMARY
1. The past four years have witnessed a crisis in the Spanish financial sector
unprecedented in its modern history. While external factors contributed to the turmoil, a domestic real estate boom-bust exposed weaknesses in the savings bank sector, shortcomings
in the policy and regulatory framework, and an over-reliance on wholesale funding.
2. A major and much-needed restructuring of the banking sector is now under way (Figure 1). This has involved an important reform of the savings banks’ legal framework
together with financial support from the state-owned recapitalization vehicle Fondo de Reestructuración Ordenada Bancaria (FROB). Substantial progress has been made in
addressing balance sheet weaknesses and recently announced measures show promise of further progress.
3. The team’s stress tests show that while the core of the system appears resilient, vulnerabilities remain. Although important caveats attach to the team’s assessment, including the extent to which lender forbearance—which the supervisory authorities have indicated they are monitoring closely—may have affected the underlying data and the risk of an even more severe downside shock than embodied in the analysis, the results suggest that:
view the IMF Country Report-Spain Financial System Stability Assessment
Statistical release: UK Official holdings of international reserves May 2012
June 7, 2012--This monthly press notice shows details of movements in May in the UK's official holdings of international reserves, which consist of gold, foreign currency assets and International Monetary Fund assets.
These reserves are maintained primarily so that the UK Government’s reserves could be used to intervene to support Sterling, or the Bank of England’s reserves could be used to support the Bank’s monetary policy objectives. If such interventions were to occur, then they would be shown and explained in this release. The Background note at the end of this release explains more about the reserves, and about these statistics.
In summary this month's release shows that, in May 2012: No intervention operations were undertaken.
NYSE Euronext Monthly ETF Activity Report-May 2012
June 7, 2012--Listings
In May, there were no new ETF listings. At the end of the month NYSE Euronext had 686 listings of 590 ETFs from 16 issuers.
Trading activity
The average daily value traded on-book last month was €267.3 million, down 34.4% vs. May 2011. The total value traded on-book amounted to €5.8 billion, up 3.9% month-on-month;
An average of 6,852 on-book trades (single-counted) was executed daily last month, a decrease of 15.1% vs May 2011, but up 0.1% month-on-month;
A total of €842.1 million was exchanged in block trades in May, up 2.7% from the €819.9 million in the previous month. Overall, block trade volume represented 14.3% of total regulated market ETF trading activity on NYSE Euronext.
Assets Under Management (AUM)
At the end of May 2012, the combined AUM of all ETFs listed on the NYSE Euronext European markets totalled €129.9 billion.
Market Quality
Last month, NYSE Euronext welcomed Citigroup Global Markets as a new Liquidity Provider; Citigroup now officially provides liquidity on two EasyETF products.
Our high-capacity, low-latency technology, combined with the flow from client orders, competitive market makers and our 23 first-class Liquidity Providers, contributed to a median spread for all listed ETFs of 31.15 bps.
