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STOXX Launches Islamic Indexes
First set of Shariah compliant indices for Europe introduced
February 23, 2011--STOXX Limited, the market-moving provider of innovative, solid and global index concepts, today announced the launch of the STOXX Europe Islamic Index and its two blue-chip sub-indices, the STOXX Europe Islamic 50 and EURO STOXX Islamic 50. The three new indices measure the performance of Shariah-compliant companies selected from the STOXX Europe 600 Index.
The STOXX Europe Islamic Indices are designed to act both as a proper benchmark for actively managed funds, and to underlie exchange-traded funds and other investable products that enable investors to participate in the performance of European companies which are in line with the moral and social doctrines of the Islam.
“With the launch of the STOXX Europe Islamic Indices, STOXX takes another step to broaden its faith-based index offering by offering three Shariah compliant indices for Europe and the Euro zone,” said Hartmut Graf, chief executive officer, STOXX Ltd. “The number of market participants who wish to invest in accordance with their religious beliefs, or to participate in the performance of companies which act responsibly in terms of economic, environmental and social directives, is growing constantly. Therefore, STOXX will continuously expand its innovative index offering in this area to meet the demand.”
The index universe for the STOXX Europe Islamic Index is defined as all stocks in the STOXX Europe 600 Index. To be included in the index, stocks must pass two sets of screens. In a first step, all companies with significant activity in one of the following sectors or activities are removed: non-halal food production; tobacco; alcohol; gambling; advertisement; hotels; non-Islamic banks, financial institutions and insurance companies; entertainment and music production; trading of gold and silver, as well as weaponry and arms manufacturers. In a second step, financial ratios of the remaining companies are screened: income from interest and non-Shariah compliant activities cannot exceed 5% of the company’s total income. Furthermore, the ratio of non-Sharia compliant debt to either the company’s total assets or total market capitalization – whichever is greater - cannot exceed 33%. In addition, the total ratio of interest bearing assets to the company’s total assets or total market capitalization can also not exceed 33%.
The STOXX Europe Islamic 50 and EURO STOXX Islamic 50 Index are derived from the STOXX Europe Islamic Index and consist of its 50 largest stocks in Europe and the Euro zone, respectively.
To ensure the quality of the indices and the integrity of the underlying index methodology, an independent Shariah Supervisory Board has been established to define and build the screening criteria, as well as to oversee the process. It is made up from three Shariah scholars specializing in Islamic finance: Dr. Abdul Aziz Khalifah Al-Qassar, Dr. Eissa Zaki Eissa and Dr. Esam Al-Enezi.
The STOXX Europe Islamic Indices are weighted by free-float adjusted market capitalization, available in price, net and gross return versions and calculated in Euro and U.S. Dollars (USD). They are reviewed quarterly in March, June, September and December. Daily history is available back to December 31, 2004. Each component’s weight in the STOXX Europe Islamic Index is capped at 20% of the index's total free-float market capitalization, while the components’ weights for the blue-chip indices are capped at 10% of the respective index’s total free-float market capitalization.
The STOXX Europe Islamic Indices are the newest addition to the STOXX ESG Index family, which also comprises the STOXX Europe Christian and STOXX Sustainability Indices. Please see www.stoxx.com for further information on this index family.
Source: STOXX
Longevity exposes Europe to 'extreme fiscal risk'
February 23, 2011--Governments will increasingly expect the private sector to provide pensions as longevity threatens to bankrupt European economies over the next few decades, according to Maplecroft, a consultancy.
According to a fiscal risk index published today, Italy tops the list of economies categorised as at "extreme" economic risk. Of the remaining 11, only one – Japan, ranked ninth – is outside Europe.
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Source: IP&E
Russia plans Eurobond on back of rising crude
February 22, 2011--Russia is planning to issue a seven-year rouble Eurobond this week, taking advantage of the rise in the price of oil and its effect on the Russian economy.
The issue is expected to take place on Thursday, following a national holiday in Russia today.
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Source: FT.com
Milan bourse outage adds to fears over Libya
February 22, 2011--Confusion marred the trading of Italian shares on Tuesday after Borsa Italiana, the Italian exchange, was hit by an outage that delayed the opening of trading for more than five hours amid wider concerns over turmoil in Libya.
The outage, which left brokers unable to process orders, came a day after the main Italian stock market index had closed down 3.6 per cent, making it the worst performing European market on Monday.
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Source: FT.com
EU economic reform plan too timid: ECB
February 22, 2011-- The European Central Bank Tuesday criticised proposed European Union economic reforms as too timid and said that countries breaking debt rules should be punished quickly and automatically.
"For the euro area, a more ambitious governance structure must be foreseen, to ensure the smooth functioning of economic and monetary union," the ECB said regarding the European Commission's proposed economic reforms.
The European Union's executive body has laid out a project aimed at warding off the kind of debt crisis now faced by Greece and Ireland, and EU leaders are expected to approve at least some of the measures at a summit in late March.
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Source: EU Business
Wrap platforms see retail ETF uptake double
February 22, 2011--Assets in iShares ETFs held on wrap platforms have more than doubled in 2010 to reach £557.9m.
The ETF issuer's overall growth of 106% across six wrap platforms includes a 373% asset growth on Ascentric and 301% on Novia.
ETFs now account for 26% of all dealing volume on Ascentric, and CEO Hugo Thorman says he expects ETF assets to continue their dramatic growth. "Advisers and discretionary fund managers are becoming increasingly interested in using ETFs in client portfolios, and regulatory changes like the RDR are accelerating interest."
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Source: IFAonline
BlackRock * New Report * ETF Landscape: United Kingdom Industry Review - Year End 2010
February 22, 2011--This report provides an overview of the United Kingdom's Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry, as at end year end 2010.
Assets increased 49.0% in 2010 in ETFs/ETPs with their primary listing in the United Kingdom to US$93.4 Bn, which is more than the 5.2% increase in the
FTSE 100 Index in US dollar terms over the same period.
The number of ETFs/ETPs increased 77.5% in 2010, from 293 primary listings in 2009 to 520 at year end 2010.
11 new providers listed their first ETF/ETP in the United Kingdom in 2010.
The average daily reported trading volume increased 24% in US dollar terms in 2010 for all United Kingdom listed ETFs/ETPs to US$550.4 Mn, compared to US$445.3 Mn at the end of 2009. Most ETF trades are not required to be reported in Europe as ETFs are not covered by the European Union Directive on Markets in Financial Instruments (MiFID).
The first ETF in the United Kingdom was listed on the London Stock Exchange’s Main Market in April 2000. This was followed by steady growth in the number of funds listed, but it was not until the abolition of stamp duty on ETFs incorporated overseas in February 2007, that this already flourishing market transformed into a leading European centre for ETFs.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
BTP futures hit record volumes in early 2011
February 21, 2011--The international derivatives exchange Eurex released today that its Euro-BTP Futures product suite had a very successful start into 2011. These futures are based on notional long and short-term debt instruments issued by the Republic of Italy (Buoni del Tesoro Poliennali, or BTP). The average daily volume (ADV) for the long-term Euro-BTP contract (FBTP) in January 2011 has grown about 25 percent year-on-year (y-o-y), totaling 6,800 contracts.
The ADV of the Short-term Euro-BTP futures was 2,400 in January and continues to rise. Both contracts also had daily record volumes due to Ireland’s credit downgrade, with the Euro-BTP future at 18,289 contracts on 2 February and the Short-term Euro BTP future at 6,829 contracts on 3 February 2011 (excluding daily volumes during roll period).
The open interest on the two contracts has also grown steadily. As of 17 February 2011 open interest on the FBTP is 30,175 compared to an open interest of nearly 20,000 in January 2010. This represents a growth rate of approximately 50 percent y-o-y. For the short-term BTP futures, open interest is 13,124 as of 17 February 2011.
The main users are Italian and Spanish customers as well as institutional clients (asset managers) who run European bond portfolios that are partially hedged with a mixture of German and Italian government bond futures.
Launched in September 2009, the long-term BTP future is part of Eurex’s benchmark interest rate derivatives segment and aims to offer an appropriate hedge for all non-triple A-rated European government bonds and potentially other interest rate bearing instruments (i.e. swaps). Furthermore, the futures add value to the Italian government bond market by enriching the basis and repo trading opportunities. In October 2010, Eurex introduced the short-term BTP contract to further complement its interest rate derivatives offering.
Source: Eurex
Singaporean funds available for settlement in Clearstream
First Asian funds on the Clearstream systems/ Other Asian jurisdictions to follow after regulatory approval
February 21, 2011-- Clearstream, the global liquidity provider of Deutsche Börse Group, announced today that Singaporean investment funds are eligible for order routing, settlement and custody through its existing infrastructure. The Singaporean funds are made available on the Clearstream order routing platform Vestima+ and its post-trade infrastructure for funds, the Central Facility for Funds, for settlement. Investment funds from other Asian jurisdictions will follow after regulatory approval.
Philippe Seyll, Member of the Executive Board of Clearstream and Head of Investment Funds Services, said: “We are happy to include the first Asian funds on our systems and to allow international investors easy access to these financial instruments. Through our order routing platform Vestima+, we bring more than 82,000 investment funds to investors around the globe. We observe a tremendous appetite by Asian investors for investing into the funds that we hold on our platform.”
Clearstream and the Deutsche Börse cash market Xetra recently launched the trading of mutual funds via stock exchange. The new service is especially interesting for investors in non-European timezones as stock exchange execution will allow individual funds units to be priced and monetized immediately and not, as currently the case, the next business day once the net asset value of a funds share has been calculated. Once traded on stock exchange and pooled in the Clearstream systems, funds can also be re-used as collateral.
Clearstream has its headquarters in Luxembourg. With more than €2,200 billion (December 2010) of assets under management, Luxembourg is the second-largest funds market in the world after the US. There are more than 3,500 collective investment schemes administered and distributed globally out of the Grand Duchy. The average daily net inflows into Luxembourg funds reached approximately €1 billion in 2010.
Source: Clearstream
Risk aversion hits the euro
February 21, 2011--Euro bulls were disappointed after early gains for the single currency were pared as tumbling European markets reflected heightened risk aversion to political unrest across north Africa and the Middle East.
The single currency had moved higher on mounting speculation that the European Central Bank might raise interest rates sooner than expected due to rising inflationary pressures.
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Source: FT.com
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