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Development of Financial Markets in Central Europe: the Case of the CE4 Countries -IMF Working Paper
May 3, 2011-- Summary: Financial markets in the CE4 countries are still shallow compared to other advanced EU countries. While the government bond markets are comparable in size, measured by capitalization in percent of GDP, the private bond, private credit, and equity markets lag behind.
Empirical analysis in this paper helps identify factors that explain this phenomenon. We find that the observed differences cannot be explained by macroeconomic variables only, but incorporating indicators of institutional development and external funding eliminates the gap in the case of the equity and private credit markets. However, for the private bond market a significant gap remains even after accounting for these factors.
view the IMF working paper-Development of Financial Markets in Central Europe: the Case of the CE4 Countries
Source: IMF
ECB: challenges to financial integration in 2010
May 2, 2011--After the improvement observed in 2009 in many market segments and despite continuous equity market integration in 2010, the financial environment with the worsening fiscal situation in some euro area countries posed challenges for European financial integration, the European Central Bank’s Financial Integration report published today concluded.
The main policy-relevant messages of the report can be summarised as follows:
Euro area capital markets continued to increase in size in recent years, and cross-country differences in size declined.
The worsening of the fiscal situation in some countries posed serious challenges to financial integration in 2010. The money and bond markets were particularly affected.
The sharp divergence of yields in some European government bond markets reflected an increase in the perception of sovereign risks as well as liquidity risks, in some cases exacerbated by market overreaction.
The euro area equity markets were less strongly affected by the recent developments. Most available indicators suggest that the equity market integration actually strengthened in 2010.
view the report-Financial Integration in Europe May 2011
Source: ECB
The Autorité des marchés financiers calls for the greatest vigilance regarding non-financial products1
May 2, 2011--After the stock market crises of the dot-com bubble in 2000 and subprime mortgages in 2007, retail
investors have become more wary of financial investments and are increasingly tempted to place their
savings in other types of investments, notably due to the current low level of interest rates.
Over the last few years, the AMF has noted growth in offers from market players proposing investments,
sometimes with highly attractive yields, in sectors as varied as works of art, solar panels, stamps, letters
and manuscripts or other niche sectors.
The AMF would like to remind investors that these sectors are not all subject to any specific regulations
other than the Consumer Code and the Civil Code.
Whenever an adviser or intermediary offers an investment in a product other than financial products, ask them or the AMF whether the product in question has an information document approved by the AMF, which is mandatory in certain cases.1 If there is no such information document, the product they are offering is not regulated by the AMF. In such cases, your adviser or intermediary is not bound by the following rules:
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Source: AMF
Average daily volume of 10.5 million contracts at Eurex Group in April
Eurex Exchange: stable volume year-to-date in 2011/Eurex Repo: continues to grow in all markets year-on-year
May 2, 2011--: In April 2011, the international derivatives exchanges of Eurex Group recorded an average daily volume of 10.5 million contracts (April 2010: 12.7 million). Of those, 7.6 million were Eurex Exchange contracts (April 2010: 9.4 million), and 2.9 million contracts (April 2010: 3.3 million) were traded at the U.S.-based International Securities Exchange (ISE).
The decline of Eurex Exchange volume y-o-y is due to the lower volatility compared with April 2010 and the adjustment of contract specification of equity derivatives. In total, 145.1 million contracts were traded at Eurex Exchange and 58.3 million at ISE.
Eurex Exchange traded 49.9 million equity index derivatives contracts (April 2010: 58.1 million). The single largest contract was the future on the EURO STOXX 50® Index with 20.8 million contracts. The option on this blue chip index totaled 20.2 million contracts. Futures on the DAX index recorded 2.3 million contracts while the DAX options reached another 4.3 million contracts. The Eurex KOSPI Product recorded approximately 167,000 contracts, an ADV of almost 8,800 contracts. On 13 April, a new daily order book volume peak was recorded with 17,688 Eurex KOSPI contracts.
The equity derivatives (equity options and single stock futures) segment at Eurex Exchange recorded 54.3 million contracts (April 2010: 80.2 million). Thereof, equity options totaled 19.6 million contracts and single stock futures equaled 34.7 million contracts. The decrease of equity derivatives volume y-o-y is mainly due to the change of contract specifications. In Q1 2011, Eurex Exchange increased the contract size of most equity options and single stock futures to match international standards, with the effect of lower turnover in these products. The adjusted figure of monthly volume in the equity derivatives segment is 73.4 million contracts.
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Source: Eurex
Flash estimate - April 2011 Euro area inflation estimated at 2.8%
April 29, 2011--Euro area1 annual inflation2 is expected to be 2.8% in April 2011 according to a flash estimate issued by Eurostat, the statistical office of the European Union. It was 2.7% in March3.
Computation of flash estimates
Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP).
To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.
The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (19 times exactly anticipating the inflation rate and 5 times differing by 0.1 over the last two years).
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Source: Eurostat
Ukrainian Exchange launches options trading
April 28, 2011--Ukrainian Exchange has launched trading in options contracts on April 26 2011, representing a futures-style quarterly option on UX Index Futures, i.e. the Ukrainian stock index.
The Exchange said presently options with settlement on 15 June 2011 and 15 September 2011 are being traded.
The options are American style contracts, i.e. early exercise is possible.
According to the Exchange, the 17 strike prices with intervals of 100 points have been introduced in the trading system. The initial strike price range is from 1900 to 3500 points.
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Source: BBR
DB- Equity Research-Europe-Equity cash flows continue to propell the ETF market forward
April 28, 2011--Investment Outlook: Q2 2011 continues to bring in healthy cash inflows into the European ETP markets
For the third week in a row, cash inflows into the European ETP markets stayed above the €1 billion mark. Last week witnessed a total of €1.2 billion inflows with equities and commodities sharing the bulk among them. Equities received €952 million cash flows with European developed country ETFs collecting €849 million week on week.DAX ETFs received almost the entire flows in this segment pushing their YTD inflows to €5 billion. Regional equity ETFs focused on Eurozone lost €225 million in outflows in the past week. Most of these outflows were from ETFs tracking the Euro Stoxx 50 Index.YTD flows out of Euro Stoxx 50 ETFs now stand at €2.7 billion.
Commodities received €320 million inflows in the past week taking their overall YTD flows to €2.5 billion. Broad commodity ETFs, platinum and gold were the primary beneficiaries collecting inflows of €246 million, €55 million and €45 million respectively.
Fixed Income ETFs witnessed the exit of €110 million with money market ETFs alone accounting for the majority of outflows. The recovery in equity markets and asset price increase in commodities seems to have triggered an exit from the fixed income ETFs into the relatively risky albeit higher return generating asset classes. The first few weeks of Q2 2011 have seen a cumulative cash outflow of €405 million from fixed income ETFs.
Assets Under Management (AUM): Equity & Commodity led increase
Total European ETP assets increased by 1.3% and ended the previous week at €242.9 billion. Equities gained €2.2 billion in assets aided by healthy cash inflows and rising markets. Most of the European equity benchmarks ended higher than the previous week’s close: DAX, CAC, Euro Stoxx 50 & the FTSE 100 gained 1.63%, 1.19%, 0.59% and 0.37% respectively. This was the most pronounced in the case of European developed country ETFs (which include DAX ETFs) where AUM increased by €1.3 billion week on week.
Overall Commodity AUM increased by close to €1 billion in the past week. Rising prices of precious metals notably gold and silver added close to €0.5 billion in assets, compensating for the rather modest weekly cash flows into the segment. Fixed Income AUM remained flat in the last week with €42 billion in overall assets.
On-Exchange Total Weekly Turnover: Modest weekly increase but lower than 2010 levels
Weekly on exchange ETP total turnover increased by 3.5% to end the week at € 9.5 billion. Equity turnover gained moderately by 6.2% to end the week at €7 billion. Commodity turnover declined by more than 10% (€167 million) and had a weekly total figure of €1.4 billion. Fixed Income turnover gained a modest 7.4% to reach €945 million.
New ETP Product Launch Calendar: 5 new launches, 18 listings.
UBS launched the EUR, CHF and GBP versions of their existing ETF on DJ-UBS Commodity Index .These were offered in both A and I share classes and were listed on the Swiss Stock Exchange.
Deutsche Bank introduced an ETF tracking the MSCI BRIC Net Total Return index. This ETF provides exposure to the large and midcap companies in Brazil, Russia, India and China. A leveraged short ETF tracking the FTSE 100 Super Short Strategy Index was also launched. The Index is linked to two times the daily inverse performance of the FTSE 100 Index These ETFs were listed on the London Stock exchange.
Overall there were 13 equity and 5 commodity ETFs that were cross-listed in the European exchanges over the last week. Please see Figure 10 for more details.
To request a copy of the report
Source: Christos Costandinides, ETF Strategist of Deutsche Bank Global Equity Index & ETF Research
Deutsche Börse AG achieves best quarterly results since 2008
Positive business development in all segments/Sales revenue up 8 percent to €558.6 million/Costs down 9 percent to €271.3 million/Earnings per share up 36 percent to €1.14/Implementation of efficiency measures leading to annual cost savings of €150 million accelerated by one year/2011 guidance for operating costs reduced to €890 million
April 28, 2011--Deutsche Borse AG published its figures for the first quarter of 2011 on Thursday. Sales revenue rose by 8 percent year-on-year to €558.6 million due to the positive business development in all segments. At the same time, the Group again reduced its total costs. At €271.3 million, expenses were down 9 percent on the prior-year period. Earnings per share increased 36 percent to €1.14 (Q1/2010: €0.84 per share).
In addition, the Company announced that it was accelerating the efficiency measures that have been running since 2010. The full cost effects of €150 million per year will now be reached from 2012 onwards, instead of 2013 as originally planned. For 2011, the Group is expecting savings of €115 million instead of the budgeted figure of €85 million. Thanks to its strict cost discipline in the first quarter and the accelerated implementation of its efficiency measures, Deutsche Börse is cutting its operating cost guidance for 2011 by €35 million to €890 million.
Gregor Pottmeyer, Deutsche Börse AG’s CFO and Executive Board member for Human Resources: “Our progress since we announced our efficiency measures in the first quarter of 2010 has exceeded expectations, thanks among other things to our highly successful Voluntary Leaver Program. This will enable us to achieve the €150 million in annual cost savings a year ahead of schedule. Thanks to our strict cost discipline in the first quarter and the accelerated implementation of our efficiency measures, we are reducing our guidance for operating costs in 2011 by 4 percent to €890 million.”
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Source: Deutsche Borse
Financial Markets Survey - 2010 update
April 28, 2011--The annual Financial Markets Survey (FMS) collects basic quantitative financial market information (market size and activities) on securities for non-euro area EU countries
The combination of the euro area securities issues statistics and the FMS makes it possible to analyse the structure of the securities market within the European Union. On an annual basis, non-euro area EU national central banks provide the ECB with statistics on outstanding amounts and gross issues of debt and equity securities. These national data (presented in euro as well as in domestic currencies) give an indication of how financial and non-financial sectors within an economy are seeking direct finance on the securities market.
The aggregation of the securities issues statistics for euro area countries and the FMS allows for the compilation of EU aggregates of short-term and long-term debt securities issued for various sub-sector breakdowns including Monetary Financial Institutions, Other Financial Institutions and Non-Financial Corporations. In the same way, it also allows for the compilation of an EU aggregate for equity securities issued.
view data
Source: ECB
Assessment of securities settlement in Sweden
April 27, 2011-Finansinspektionen and the Riksbank jointly assessed securities settlement in Sweden in 2010. On the Swedish securities market, Euroclear Sweden is responsible for account operations in its role as a central securities depositary and manages securities transactions after closing in its role as a clearing organisation and settlement system for securities.
The assessment is based on ESCB-CESR's 19 recommendations regarding settlement systems for securities. In the 2010 assessment, the Riksbank and Finansinspektionen find that Euroclear Sweden observes all of the recommendations except Recommendation 13, which is only broadly observed.
view the Assessment of Securities Settlement in Sweden 2010 report
Source: Finansinspektionen
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