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European Senior Fixed-Income Investor Survey Q311
Investors Cut Expectations, Reassess Risks
August 18, 2011--Risk Aversion:
Fitch Ratings latest quarterly survey (Q311) of fixed-income investors across Europe shows that, even before the early August market turmoil, investors had already sharply
downgraded their expectations for most fixed-income segments. Responses to the survey, which was conducted in the four weeks ending 29 July, reflected a greater aversion to risk, with more negative expectations about credit fundamentals (Figure 1), issuance volumes ands preads.
Economic Growth Concerns: Investor sentiment remains muted on growth prospects for developed markets, in contrast to the optimism around emerging markets. The survey shows
European investors remain very bearish on the outlook for the European economy in the next year, with almost three-quarters of respondents expecting growth at below 2%. This sharply
contrasts with virtually all respondents expecting expansion by over 2% for emerging markets.
Reduced Risk of Inflation: Expectations of inflation fell to their lowest point since Q410, with 46% of participants expecting an increased risk from higher price levels, compared to a peak of 68% in Q211. The result marks a turning point in expectations about inflation, which has been on an upward path in consecutive quarters since Q310. This switch is likely to reflect increased fears over the likelihood of a double-dip recession, with the proportion of investors ranking this as a high risk threat to credit markets almost doubling to 40% from 21% in the prior quarter.
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Source: Fitch Ratings
BlackRock ETF Landscape: STOXX Europe 600 Sector ETF Net Flows: week ending 12-Aug-11
August 18, 2011--For the week ending 12 August 2011, there were US$397.8 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in healthcare with US$85.3 Mn followed by chemicals with US$70.9 Mn net outflows while telecom experienced net inflows of US$35.2 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$435.9 Mn net outflows. Utilities has seen the largest net outflows with US$249.0 Mn, followed by basic resources with US$241.2 Mn net outflows, while banks experienced the largest net inflows with US$260.9 Mn.
As of 12 August 2011, there is US$8.2 Bn AUM invested in the STOXX sector ETFs which is greater than the US$5.9 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 14 out of 19 sectors..
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
France backs down on short-selling loophole
August 18, 2011--French regulators have failed in an attempt to extend the short-selling ban to major European stock market indices in a climbdown that will allow investors to continue to bet on further falls in financial stocks.
There was confusion among traders on Thursday over whether they could roll over existing short positions on key European indices. Investors were particularly unclear over the status of equity index derivatives, which consist of baskets of stocks from around the continent including shares in banks, and are operated from countries not covered by the short-selling ban.
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Source: FT.com
Europe's financial transactions tax
August 17, 2011-- European policymakers have long toyed with the idea a tax on financial transactions to raise revenue and counter speculation but critics say such a measure could only be effective at a global level.
French President Nicolas Sarkozy and German Chancellor Angela Merkel announced Tuesday at a eurozone crisis summit that they would make proposals next month for an EU-wide financial transaction tax.
The idea of a financial transactions tax traces its roots to Nobel prize-winning US economist James Tobin, who proposed in the 1970s a very small tax on currency transactions to dampen speculation on foreign exchange markets.
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Source: EUbusiness
Banks blast "Tobin tax" proposal
August 17, 2011--Banks blasted Franco-German plans to push again for a Europe-wide tax on financial transactions, saying the tax would be destabilising, ineffective and costly to industry.
Financial markets players have said that even if France and Germany could persuade all 27 European Union member states to adopt the tax - overcoming long-standing UK opposition - it would simply drive many transactions offshore to less-regulated financial centres.
The Association for Financial Markets in Europe, which represents top banks, also worried the tax would hurt companies and crimp economic growth.
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Source: Cityam
EMCF, Chi-X Join Push for Interoperability in European Clearing
August 17, 201-- Suddenly,
"interoperability" is starting to look like a word (and practice) every European clearinghouse will be using.
matters to the effective operation of capital markets.
The European Multilateral Clearing Facility (EMCF), Europe's largest central counterparty for stocks, said it has “decided to engage in interoperability with competitors” servicing electronic venues and exchanges. The clearer also said it was introducing cutting fees as much as 50 percent for large customers, as part of the move.
"The time is now to take the next step in opening up the European clearing landscape. Interoperability will make European markets more efficient and it is a tool to open up the clearing and settlement silos in Europe,’’ EMCF chief executive Jan Booij said.
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Source: Securitites Technoology Monitor
Swiss central bank adds liquidity to weaken franc
August 17, 2011--The Swiss National Bank intensified its measures Wednesday to weaken the strong franc by injecting more of the currency into the money markets.
The SNB said Wednesday it would immediately further expand the deposits of banks held at the central bank from 120 billion Swiss francs to 200 billion, as the currency "remains massively overvalued" despite previous efforts.
As part of its latest batch of measures, its third since August 3, the central bank said it will conduct foreign exchange swap transactions to ease the value of the franc and "will, if necessary, take further measures." The Swiss franc has been buoyed of late by its status as a safe haven for investors to park their cash in times of financial turbulence. Last week, it almost struck parity against the euro for the first time since the single currency was introduced in 1999.
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Source: Todays Zaman
Exchange operators hit by euro tax idea
August 17, 2011-- Shares in the operators of major exchanges took a heavy hit Tuesday after French President Nicolas Sarkozy said he would propose a European tax on financial transactions.
NYSE Euronext, which operates share markets in New York, Paris, Brussels, Amsterdam and Lisbon -- and is awaiting approval for a merger with powerful rival Deutsche Boerse -- sank 8.4 percent on the news.
The IntercontinentalExchange, which operates major global commodities and financial futures markets, dropped 4.5 percent, while The NASDAQ OMX Group that controls markets in northern Europe pared 2.75 percent.
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Source: EUbusiness
Flash estimate for the second quarter of 2011
Euro area and EU27 GDP up by 0.2%
+1.7% in both zones compared with the second quarter of 2010
August 16, 2011--GDP increased by 0.2% in both the euro area1 (EA17) and the EU271 during the second quarter of 2011, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the first quarter of 2011, growth rates were +0.8% in both zones.
Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1.7% in both zones in the second quarter of 2011, after +2.5% in both zones in the previous quarter.
During the second quarter of 2011, GDP in the United States increased by 0.3% compared with the previous quarter (after +0.1% in the first quarter of 2011). In Japan GDP fell by 0.3% in the second quarter of 2011 (after -0.9%).
Compared with the same quarter of the previous year, GDP rose by 1.6% in the United States (after +2.2% in the previous quarter), and decreased by 0.9% in Japan (after -0.7%).
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Source: Eurostat
UBS MTF Announce Plans To Offer Four-Way Interoperability Of Central Counterparties (CCPs)
August 16, 2011--UBS MTF, the multilateral trading facility operated by UBS Limited, today announced plans to offer four-way interoperability of central counterparties (CCPs) for cash equity trades executed on UBS MTF, subject to regulatory approval.
UBS MTF, which is live with two interoperating CCPs, EuroCCP and SIX x-clear Ltd, is the first MTF to offer full interoperability for cash equities. UBS MTF plans to expand its selection by adding EMCF and LCH Clearnet. This will allow members of UBS MTF to choose between the four interoperating CCPs when clearing and settling their trades in European cash equities.
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Source: Mondovisione
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