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Six new ETFs from iShares launched on Xetra
First ETFs on the MSCI Japan and MSCI World indices with currency hedge
February 18, 2011--Six equity index funds issued by iShares (BlackRock Inc.) have been tradable on Xetra since Friday.
ETF name: iShares MSCI Japan Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53P0
Total expense ratio: 0.64 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI Japan 100% Hedged to EUR Index Net
ETF name: iShares MSCI World Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53Q8
Total expense ratio: 0.55 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI World 100% Hedged to EUR Index Net
ETF name: iShares S&P 500 Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53N5
Total expense ratio: 0.45 percent p.a.
Distribution policy: non-distributing
Benchmark: S&P 500 Euro Hedged Index
The indices underlying these three ETFs are weighted according to free float market capitalisation. The MSCI Japan Index tracks the performance of the developed equity markets in Japan, the MSCI World Index the international equity markets of industrialised nations, and the S&P 500 Total Return Net Index the 500 largest US stock corporations. These three iShares ETFs are hedged against exchange rate fluctuations between the euro and the US dollar.
ETF name: iShares MSCI Russia Capped Swap
Asset class: equity index ETF
ISIN: DE000A1H53L9
Total expense ratio: 0.74 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI Russia Capped Index
The MSCI Russia Capped Index is weighted by market capitalisation, and comprises components of the Russian standard index MSCI Russia. At present it only covers Russia.
ETF name: iShares S&P CNX Nifty India Swap
Asset class: equity index ETF
ISIN: DE000A1H53K1
Total expense ratio: 0.85 percent p.a.
Distribution policy: non-distributing
Benchmark: S&P CNX Nifty
The S&P CNX Nifty Total Return comprises 50 equities from 22 sectors of the Indian economy and thus approximately 55 percent of the market capitalisation of the National Stock Exchange of India.
ETF name: iShares MSCI USA
Asset class: equity index ETF
ISIN: DE000A1H53M7
Total expense ratio: 0.40 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI USA Index
The MSCI USA Index is weighted according to free float market capitalisation and tracks the performance of the developed equity markets in the USA.
Source: Deutsche Börse
Altering the Structure of Regulation is Fine but it's the Culture That Must Change
The Treasury's latest consultation document on the future of our regulatory system is a welcome development.
February 18, 2011--It tells us something about what the post-crisis future will look like. No system will be perfect but the creation of three interconnected regulatory entities responsible for conduct, individual firms including banks, and the system as a whole, stands a better chance of avoiding a repeat of 2007 than the fractured and discredited tripartite system of Treasury, Financial Services Authority (FSA) and Bank of England.
It is also clear, however, that we have an unrealistic view of what regulators can achieve – the recent crisis is testament to that. If we expect regulators to second-guess management and to be there to anticipate management's every move, we will end up with expensive, ineffective regulation trying to achieve unrealistic aims. The new system must set basic priorities and protect them, but let the cost of failure be borne by those willing to take risk.
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Source: The Telegraph
Economic Survey of Slovenia 2011
February 18, 2011--Slovenia has been deeply affected by the global crisis, but is now recovering gradually along with the rest of the OECD area. As Slovenia is a small open economy within the euro area, it is crucial for it to rapidly rebalance its economy and restore competitiveness. The proposed pension reform is a first step in the right direction to improve fiscal sustainability and boost labour supply. However, a further comprehensive pension reform is needed. To get closer to the technology and efficiency frontiers, reforms of the education system and policies to promote innovation, labour market flexibility and a friendlier environment for foreign direct investment (FDI) would be helpful.
sustainable consolidation of public finances is necessary to maintain investor confidence. The fiscal targets of the government’s consolidation plan are appropriate, but all spending reductions planned through 2013 should be spelled out in full to foster market confidence, and additional measures should be considered if needed. The introduction of an expenditure rule and the establishment of a fiscal council are welcome, but the government should avoid inconsistency of macroeconomic forecasts by making the Institute of Macroeconomic Analysis and Development (IMAD) the only source of the macroeconomic assumptions used for the budget law, as was the case prior to summer 2010. As the proposed pension reform falls well short of expected financing needs by 2060, a further more comprehensive reform is needed to reduce the generosity of the pension system and move it to actuarial neutrality.
view-Overview of the Economic Survey of Slovenia
Source: OECD
IMF Executive Board Concludes Second Post-Program Monitoring Discussions with Turkey
February 17, 2011--On February 11, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the Second Post-Program Monitoring Discussions with Turkey.1
Background
The Turkish economy’s strong post-crisis recovery continued throughout 2010, supported by high levels of capital inflows.
Growth is projected to have exceeded 8 percent in 2010, placing output above its pre-crisis level, with credit-financed domestic demand the main driver. Helped by a drop in volatile food prices, headline inflation came in just below the 2010 target, while temporary factors compressed core inflation.
Push and pull factors are behind Turkey’s intensified capital inflows. Wide interest rate differentials, Turkey’s relatively healthy public- and private-sector balance sheets, strong near-term growth prospects, increased political certainty, and the prospect of a possible upgrade to investment status have all supported inflows.
Yet availability of abundant low-cost foreign savings has also highlighted Turkey’s vulnerabilities. The rapid bounce-back in the current account deficit (to 6¼ percent of GDP in 2010) reveals the high import content of domestic and external demand and growth’s dependence on capital inflows, which are symptomatic of weak external competitiveness. Predominantly short-term capital inflows—mostly intermediated by the banking sector—have increased exposure to capital flow reversal and associated repricing risks.
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Source: IMF
HM Treasury; A new approach to financial regulation: building a stronger system
February 17, 2011--This consultation document provides further detail on the Coalition Government’s proposals for reforming the framework of financial regulation in the UK. It builds on the Government’s earlier consultation A new approach to financial regulation: judgement, focus and stability published on 26 July 2010, and the summary of consultation responses published on 24 November 2010.
The Government welcomes responses from any interested organisations or individuals.
view the A new approach to financial regulation: building a stronger system document
Source: HM Treasury
European Senior Fixed-Income Investor Survey Q111
February 17, 2011--Highlights
Fitch Ratings’ latest quarterly survey (Q111) of fixed?income investors across
Europe signals a continued rise in optimism regarding the outlook for fundamentalcredit conditions across corporates — in investment grade as well as high yield (HY)and emerging market (EM) segments.
However, as a reminder of the root cause of the financial crisis and the massive government support exercised to achieve a recovery, investor views on banks took a nosedive following the uplift in the Q410 survey, and expectations for developed market (DM) sovereign issuers remained
moribund. Meanwhile, asset managers are expecting reduced flows into the fixedincome asset class in 2011, potentially tightening the supply of funds for all issuers.
While a majority of survey participants expect the euro zone to survive the ongoing troubles, views on DM sovereigns expressed in the survey indicate a general worsening of sentiment towards the asset class. Investors are increasingly concerned about the likelihood of further deterioration in DM sovereigns’ credit fundamentals (expected by 56% of participants, up from 52% in Q410) and their refinancing challenges (56%, up from 51%). DM sovereigns is the asset class least favoured by investors (39%, up from 36%). As in recent quarters, investors also felt that contagion from sovereign debt problems was the greatest risk to credit market stability.
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Source: Fitch Ratings
Emerging market volatility? Blame ETF investors, says BlackRock
February 16, 2011--Passive investors shifting cash in and out of exchange traded funds (ETFs) have added to the volatility of stock markets in emerging markets, according to BlackRock’s emerging markets managers,
Will Landers and Dhiren Shah.
Landers, who runs BlackRock’s Latin American investment trust, said BlackRock's combined mutual funds, investment trusts and ETFs - BlackRock owns iShares, the world’s largest ETF provider - made it the biggest investor in the region with about $20 billion under management.
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Source: Citywire
Bank of England under pressure over inflation
February 16, 2011--The Bank of England’s credibility was called into question on Tuesday after official data showed that inflation surging well above the central bank’s stated target.
Britain’s Office for National Statistics revealed that the country’s key inflation rate rose to 4 percent in January, double the official target and prompting a public explanation from bank governor Mervyn King. King and a number of other policymakers on the bank’s nine-strong Monetary Policy Committee have insisted the stubbornly high cost of living is due to temporary price shocks, such as soaring global commodity prices, a fall in the value of sterling, and a rise in sales tax last month.
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Source: Todays Zaman
Sharper teeth for financial watchdogs
February 16, 2011--UK financial watchdogs will be given powers to ban retail products and warn investors about pending enforcement actions when the Financial Services Authority is broken into three bodies late next year.
The government will outline its proposal to strengthen a planned consumer champion and two other regulators, Mark Hoban, the financial secretary to the Treasury, told the Financial Times.
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Source: FT.com
Stoxx and DAX Strategy Indices Licensed to RBS
Monthly Leverage and Short indices to underlie exchange-traded funds
February 16, 2011--STOXX Limited, a global index provider and creator of the leading European equity indices, today announced that the EURO STOXX 50 Monthly Leverage and EURO STOXX 50 Monthly Double Short indices, and the LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices have been licensed to RBS Global Banking & Markets to serve as an underlying for four new exchange-traded funds.
The RBS MARKET ACCESS Euro Stoxx 50® Monthly Leverage Index ETF, RBS MARKET ACCESS Euro Stoxx 50® Monthly Double Short Index ETF, RBS MARKET ACCESS LevDAX® X2 Monthly Index ETF, RBS MARKET ACCESS ShortDAX® X2 Monthly Index ETF will be available on Deutsche Boerse’s trading platform Xetra today. It is the first time that these four indices are being used as the basis for an ETF.
“The EURO STOXX 50 Monthly Leverage and Monthly Double Short indices, and LevDAX and ShortDAX x2 monthly indices offer market participants a way to bypass daily market fluctuations and to take a more long-term approach on bullish and bearish sentiments on European and German equities,” said Hartmut Graf, chief executive officer, STOXX Limited. “We are happy to have licensed these indices to RBS, as this is the first time that they will be used as underlying for ETFs.”
“RBS is proud to introduce long and short monthly leveraged index funds to the European market for the first time,” David Moroney, RBS global head of structured funds said. “Prior to this, only ETFs with daily leveraged indices were available in Europe. Thanks to monthly rebalancing, investors will now have access to a leveraged performance that is consistent for longer than one day.”
The EURO STOXX 50 Monthly Leverage Index is linked to the monthly performance of the EURO STOXX 50 Net Return Index – measured as of the third Friday of the month - in a leveraged way: A positive performance of the EURO STOXX 50 Index results in twice the positive performance of the EURO STOXX 50 Monthly Leverage Index, and vice versa. The EURO STOXX 50 Monthly Double Short Index replicates a short investment strategy that is inversely linked to the monthly performance of the EURO STOXX 50 Gross Return Index, also as of the third Friday of the month. A negative performance of the blue-chip index results in a positive change of twice the performance the EURO STOXX 50 Monthly Double Short Index, and vice versa.
The LevDAX x2 (monthly) also rises and falls twice as much as the performance of the DAX index, thus providing an effective and innovative strategy for magnifying participation in market movements. The leverage factor is adjusted on a monthly basis to ensure that LevDAX x2 (monthly) always achieves twice the performance of the underlying index based on the closing level on the third Friday of the previous month. However, if an investment is made between the monthly adjustment dates the leverage generally deviates from the factor 2.The ShortDAX x2 (monthly) measures double the negative monthly performance of the DAX index. Its performance is positive when the DAX falls.
The four STOXX and DAX strategy indices are calculated in euro. Daily historical index values are available back to December 31, 1991 for the EURO STOXX 50 Monthly Leverage and Short indices and back to December 30, 1987 for the LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices. The cost of borrowing and the benefit of earning interest are also taken into account in the calculation of the new indices.
The EURO STOXX 50 Monthly Leverage and EURO STOXX 50 Monthly Double Short indices are part of the STOXX Strategy Index family. Further information on the new indices is available at www.stoxx.com.
The LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices are part of the DAXplus family. Further information is available at www.dax-indices.com.
Source: STOXX
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