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DB Global Equity Index & ETF Research : European ETF Market Weekly Review :A quiet May with near-flat ETP flows
June 1, 2011-Investment Outlook: Lack of directionality in May
Equity non-DAX inflows for the month of May were close to €600 million, well below what we typically would observe during a busy month. Total European ETP cash flows for the month of May, excluding DAX, totaled close to €100 million.
The lack of ETP directionality which has characterized flows for most of May extended to the week that finished on May 27th. Most of the European equity benchmarks ended the week lower than the previous week’s close: DAX, Stoxx 50, CAC & FTSE 100 lost 1.4%, 1.2%, 1% and 0.16% respectively.
During the week just passed, there were some minor re-allocations within the equity space with broad regional benchmarks gaining preference over country ETFs; however this was more pronounced with the developed market ETFs. European developed market country ETFs witnessed outflows of €196 million while regional European/euro-zone benchmarks together collected €176 million in inflows over the past week. ETFs tracking emerging country benchmarks also registered net outflows of €197 million.
Fixed Income ETFs witnessed outflows of €26 million in the last week. Sovereigns received cash inflows of €63 million while money market and Corporate ETFs registered outflows of €54 million and €43 million respectively.
Commodity ETPs received €121 million of net cash flows in the last week taking their YTD flow figures to €2.1billion. Crude Oil and gold ETPs collected €86 million and €35 million in cash inflows over the past week.
Assets Under Management (AUM): Assets remain unchanged
Total European ETP assets increased by 0.2% and ended the previous week at €242.3 billion. Commodity assets increased by close to €1 billion, largely on account of rising precious metals spot prices. Silver registered weekly gains of 7.81 % (USD/oz) while gold appreciated by 1.74 %( USD/oz).
Equities registered a decline in assets of €663 million to end the week at €155.8 billion. Within equities, ETFs tracking European developed country ETFs witnessed the largest asset decline (€411 million) from the previous week’s closing numbers. Declining equity markets and cash outflows from this segment contributed towards this decrease in assets. Developed non-European ETFs also witnessed a moderate decline of €153 million and ended the week with €22.2 billion in assets.
Fixed Income ETF assets gained 0.2% and ended the last week at €41.9 billion. Sovereigns were the biggest beneficiary adding close to €200 million in assets over the past week.
On-Exchange Total Weekly Turnover: Flat weekly turnover levels.
Weekly on exchange European ETP total turnover increased by 0.7% to end the past week at €10.8 billion. Trading activity across the European ETP markets was muted without any noticeable change in turnover levels across all the asset classes. Equity and commodity turnover registered almost equal and opposite changes of close to €100 million each. Overall weekly total turnover levels increased by a modest €78 million week over week.
New ETP Product Launch Calendar: 7 product launches, 8 Cross-Listing.
State Street continued its European march by launching 3 new ETFs in the last week. These fixed income ETFs focused on a range of Barclays Capital Indices tracking Euro corporates, sovereigns and aggregate bonds respectively. These ETFs were listed on the Deutsche Borse.
Deutsche Bank launched 3 ETC products, tracking physical Rhodium and Brent Crude Oil respectively. These products were listed on the Deutsche Borse and the London Stock Exchange.
Lyxor introduced one new equity ETF tracking French mid-cap stocks. This was launched on the NYSE Euronext Paris.
There were 8 ETFs which were cross-listed on European ETP exchanges in the last week. Please see Figure 10 for more details.
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Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
Boerse Stuttgart achieves a turnover of EUR 9.8 billion in May
Turnover in securitised derivatives and bonds rises by roughly one quarter/ strong demand for German government bonds (Bunds)
June 1, 2011--In May 2011 Boerse Stuttgart, according to its order book statistics, had a turnover of around EUR 9.8 billion. This meant an increase of more than 24 percent in comparison with the previous month; in a year-on-year comparison trading volumes were up by 10.7 percent.
After April, when turnover was weaker, trading volumes in May were therefore back up to the level of the first three months of 2011.
The lion's share of trading volume was accounted for by securitised derivatives. With more than EUR 5.1 billion, turnover in May was more than 24 percent higher than in the previous month. Leverage products accounted for EUR 2.5 billion of trading volume, while investment products contributed more than EUR 2.6 billion.
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Source: Boerse Stuttgart
BlackRock ETF Landscape: European STOXX 600 Sector ETF Net Flows for Week Ending 27-May-2011
June 1, 2011--For the week ending 27 May 2011, there were US$70.9 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in banks with US$85.8 Mn followed by construction and materials with US$37.8 Mn net outflows while insurance experienced net inflows of US$35.0 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$406.7 Mn net inflows. Healthcare has seen the largest net inflows with US$334.7 Mn, followed by oil and gas with US$218.8 Mn net inflows while utilities experienced the largest net outflows with US$168.5 Mn.
As of 27 May 2011, there is US$10.8 Bn AUM invested in the STOXX sector ETFs which is greater than the US$7.2 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 16 out of 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
Market News Update May 2011
June 1, 2011--Exchange Traded Funds
Specialist exchange-traded fund provider Source has joined forces with investment bank Nomura to launch a
volatility-linked product. Ted Hood, chief executive of Source, said the European-based Nomura Voltage Mid-
Term Source ETF will help investors to capture returns from volatility spikes while reducing the costs associated
with a constant long-term position.
Mr Hood said the ETF complements Standard & Poor’s 500 Vix Futures
Source ETF, which was launched last year as the first European ETF offering exposure to volatility.The fund tracks the Nomura Voltage Strategy Mid-Term 30-day USD TR index. The allocation to the index can be up to 100 per cent and depends on volatility – the higher the relative volatility, the higher the allocation. It will be based on a tactical model which will be rebalanced each day to smooth out the effects of wild volatility. Financial
Times 3 May
2 - EPA chief executive Christopher Aldous distinguished between low-cost ETFs tracking well-establishedindices and those which leverage, sell short, track illiquid assets and use active management. He said: "EPA wants this second group of products to be clearly labelled to inform investors of the difference in structure." EPA pointed out ETFs remained strong throughout 2008 when a number of hedge funds and investment banks faced difficulties. However, the firm said regulators are right to raise their concerns and argued the first step towardsaddressing these should be "a clearer, less confusing classification" of different types of ETPs. IFA Online 16 May
3 - Flows into exchange-traded funds rose strongly in April as the global ETF industry continued on its growth
course. Worldwide, ETFs pulled in $25.3bn (€17.6bn) from investors last month, up from just under $17bn in
March, according to industry leader BlackRock. Inflows for the first four months of the year reached $67.2bn.
Inflows into funds that track indices in the developed world rose most in the first four months of the year. The
totalled $46.8bn, compared with $65.1bn for the whole of 2010 and $29.4bn for 2009. Meanwhile, flows into
emerging markets ETFs recovered in April, with these funds collecting $5.2bn from investors last month. Russia
was still the most popular single emerging market country for ETF investors, registering inflows of $442.7m last month alone. So far this year, Russian ETFs have pulled in $2.8bn, more than 2009’s whole year inflows of
$1.9bn. Financial Times 10 May
request update
Source: Bank of Ireland
130 billion euro turned over on Xetra in May
June 1, 2011--Order book turnover on Xetra and on the trading floor of the Frankfurt Stock Exchange stood at €136.5 billion in May – a decrease by 16 percent year-on-year (May 2010: €163,5 billion). Of the €136.5 billion, €130.8 billion was attributable to Xetra which registered a decline of 16 percent y-o-y (May 2010: €155.5 billion).
€5.7 billion was attributable to floor trading in Frankfurt, a decrease of 29 percent y-o-y (May 2010: €8 billion). Order book turnover on Tradegate Exchange totaled €2.4 billion in May, making it 50 percent higher y-o-y (May 2010: €1.6 billion).
In equities, turnover reached €118.8 billion on Deutsche Börse’s cash markets (Xetra: €115.7 billion, Frankfurt trading floor: €2.3 billion). Turnover in bonds was €1.5 billion, and in structured products €2.8 billion (including Scoach). Order book turnover in mutual funds and exchange-traded funds (ETFs) amounted to €13.6 billion.
A total of 19.3 million transactions were executed on Xetra in May, a decrease of 6.3 percent y-o-y (May 2010: 20.6 million).
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Source: Deutsche Börse
NYSE Euronext announces new ETF on European markets -HSBC MSCI SOUTH AFRICA ETF
June 1, 2011--NYSE Euronext is pleased to announce that HSBC ETFs has listed 1 new ETF on NYSE Euronext's Paris market today:
Name:HSBC MSCI SOUTH AFRICA ETF
Trading name:HSBC MSCI STH AFR
ISIN: IE00B57S5Q22
Symbol: HZAR
Reuters RIC: HZAR.PA
BBG Ticker: HZAR FP
Underlying index: MSCI South Africa
TER: 0,60%
NYSE Euronext has now 654 listings of 563 ETFs based on more than 360 indices. So far this year, a total of 113 new listings of 87 ETFs have taken place on the NYSE Euronext European market.
Source: NYSE Euronext
Average daily volume of 13 million contracts at Eurex Group in May
Eurex Exchange: growing volume of interest rate derivatives segment/Eurex Repo: continues to grow in all markets year-on-year
June 1, 2011--In May 2011, the international derivatives exchanges of Eurex Group recorded an average daily volume of 12.9 million contracts (May 2010: 16.2 million). Of those, 10.0 million were Eurex Exchange contracts (May 2010: 12.2 million), and 2.9 million contracts (May 2010: 4.0 million) were traded at the U.S.-based International Securities Exchange (ISE).
The decline of Eurex Exchange volume y-o-y – which peaked in May 2010 – is due to the lower volatility compared with May 2010 and the adjustment of contract specification of equity derivatives. In total, 219.7 million contracts were traded at Eurex Exchange and 60.6 million at ISE.
Eurex Exchange traded 64.3 million equity index derivatives contracts (May 2010: 101.4 million). The single largest contract was the future on the EURO STOXX 50® Index with 28.3 million contracts. The option on this blue chip index totaled 24.8 million contracts. Futures on the DAX index recorded 3.1 million contracts while the DAX options reached another 5.2 million contracts. The Eurex KOSPI Product achieved a new monthly record with more than 320,000 contracts, an ADV of more than 14,500 contracts.
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Source: Eurex
European banks to resubmit stress test data
June 1, 2011--European banks are being forced to resubmit their information for the latest round of “stress tests” because of concerns that some countries and institutions made mistakes or used overly rosy assumptions.
The results of the stress tests, which were to be published this month, are now likely to be delayed by a few weeks, to July, people familiar with the work said.
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Source: FT.com
Private equity lobby warns of EU decline
June 1, 2011--Europe will risk "a further relative decline in the world" if it does not remove barriers that prevent foreign groups from investing on the continent, the new head of Europe’s private equity lobby has warned.
Karsten Langer, who on Thursday becomes chairman of the European Private Equity and Venture Capital Association, called on the European Union to change regulatory rules that prevent overseas investors from deploying capital into private equity funds.
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Source: FT.com
Demand for Rhodium robust after first ETF
June 1, 2011--The price of rhodium, a little-traded metal prized by the car industry for its qualities as a catalyst, has jumped 20 per cent in the past week after the launch of the first investment vehicle to hold physical rhodium.
Deutsche Bank last week launched an exchange traded fund backed by rhodium on the London Stock Exchange, the first product to allow investors exposure to physical rhodium. Similar products for physical gold, silver, platinum and palladium have been hugely successful in recent years, helping drive prices higher. There is currently more than $100bn invested in such products.
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Source: FT.com
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