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Ireland in the Spotlight
December 1, 2010--Despite the widespread media interest in the economic situation in Ireland at the moment, there has been little coverage of the segments of the Irish economy which performed extremely well during the global recession and will continue to thrive in 2011.
Ireland's ability to attract foreign direct investment (FDI) and provide a world class location for international financial services has been one of Europe's success stories with FDI in 2010 expected to reach a seven year high.
view Ireland in the Spotlight
Source: Walkers
Top 15 banks sign Code of Practice
November 30, 2010--The Government today announced that the top fifteen banks operating in the UK have adopted the Code of Practice on Taxation.
As at the 17 October 2010, only four out of the top fifteen banks had adopted the code since its introduction in 2009
The Treasury therefore asked HM Revenue & Customs (HMRC) to ensure that all the major banks signed up by the end of November 2010.
The top 15 banks that have adopted the code are:
BANK OF AMERICA/MERRILL
BARCLAYS
CITIGROUP (CITIBANK)
CREDIT SUISSE
DEUTSCHE BANK
GOLDMAN SACHS
HSBC
JP MORGAN CHASE
LLOYDS BANKING GROUP
MORGAN STANLEY
NATIONWIDE BUILDING SOCIETY
ROYAL BANK OF SCOTLAND
SANTANDER
STANDARD CHARTERED
UBS
The code of practice states:
Banks should have strong governance around tax, which is integrated into their business decision making.
view the Summary of Responses: A Code of practice on taxation for banks
Source: HM Treasury
Environmental protection is considered an investment theme by 90% of investment management professionals
November 30, 2010--In a new EDHEC-Risk Institute Publication, entitled “Adoption of Green Investing by Institutional Investors: A European Survey”, EDHEC-Risk review the concept of green investing and report the results of a European survey on investment management professionals.
One of the key results of the survey is that green investing is a significant movement in which survey respondents are heavily involved. In fact, nearly 90% of respondents consider environmental protection an investment theme and the same percentage plans to do more green investing in the future.
The results of our survey show that the most popular green theme is climate change: 81.5% of the respondents who take green investing into account are concerned with climate change. Other environmental themes such as water management, anti-pollution measures, and improvement of processes are also frequently taken into account by the majority of respondents.
We also find that investors define green investing in different ways. We focus first on the definitions and concept of sustainable development, and the results show that these may not be entirely clear for respondents. Another widely-used term for making extra-financial information an integral part of investment decision making is socially responsible investment (SRI). For a clear majority (61.9%), sustainable development and socially responsible investment are two identical concepts. Such disagreement on basic definitions may further compound the fundamental difficulty of using extra-financial information in the investment process.
view the Adoption of Green Investing by Institutional Investors: A European Survey
Source: EDHEC
Ten new Deutsche Bank ETFs to start trading on the Spanish Stock Exchange tomorrow
November 30, 2010--Ten new exchange traded funds (ETFs) issued by Deutsche Bank’s asset manager, db x-trackers, will start trading on the Spanish stock exchange tomorrow.
These issues bring the number of ETFs listed on the Spanish stock exchange to 63, thus significantly increasing the number of underlying assets available, with new European, US, Latin American and Asian equity indices.
“The listing of new Deutsche Bank’s exchange traded funds on the Spanish stock exchange is a major step forward in the development of this product in Spain. We are very pleased that the number of ETFs on the stock exchange has grown 50% in a few days. We are working to bring more issuers and ETFs to the Spanish market”, said Beatriz Alonso, Deputy Equity Director.
New ETFs listed on the Spanish stock exchange:
db x-trackers DJ STOXX 600 BANKS ETF
db x-trackers DJ STOXX 600 ETF
db x-trackers DJ EURO STOXX SELECT DIVIDEND 30 ETF
db x-trackers DJ EURO STOXX 50 ETF
db x-trackers DJ STOXX 600 BANKS SHORT DAILY ETF
db x-trackers LPX MM PRIVATE EQUITY ETF
db x-trackers MSCI JAPAN TRN INDEX ETF
db x-trackers MSCI RUSSIA CAPPED INDEX ETF
db x-trackers MSCI MEXICO INDEX ETF
db x-trackers S&P 500 INVERSE DAILY ETF
Source: Bolsas y Mercados Españoles (BME)
Government launches growth review
November 29, 2010--The Chancellor of the Exchequer, George Osborne and Business Secretary, Vince Cable today announced a fundamental review of what all parts of Government are doing to create the best conditions for private sector growth.
Building on the action already taken by Government and outlined in the paper, ‘the path to strong, sustainable and balanced growth’, business is being invited to take part in this work which will challenge every Government department on the measures being taken to tackle barriers to growth.
The growth review will start with an intensive programme of work, based on the evidence provided by business, to report by Budget 2011. Departments will be required to present Action Plans to a Ministerial Ad-Hoc Group chaired by the Chancellor and Business Secretary, on what contribution they will make to:
reform structural barriers across the whole economy in planning, competition, trade and investment, regulation, access to finance and corporate governance
remove barriers in sectors where there are clear opportunities for growth and where Government can make a difference – construction, retail, health and life sciences, professional and business services, manufacturing and digital and creative industries
view The path to strong, sustainable and balanced growth paper
Source: HM Treasury
Euro, peripheral debt hit by contagion fears
Euro/dollar hits fresh 2-mth low
November 29, 2010--Portugal and Spain's bond yields rose sharply and the euro slumped to a two-month low on Wednesday on worries they will be the next victims of Europe's debt crisis.
Spanish and Portuguese government bond spreads to German Bunds both widened on concerns they will not prove able to see off the sort of debt and banking troubles that have pushed Ireland into seeking international aid.
read more
Source: Reuters
Autumn forecast 2010-2012: EU recovery taking hold, but progress uneven
November 29, 2010--The European Commission's autumn forecast foresees a continuation of the economic recovery currently underway in the EU. GDP is projected to grow by around 1¾% in 2010-11 and by around 2% in 2012. A better than expected performance so far this year underpins the significant upward revision to annual growth in 2010 compared to the spring forecast. However, amid a softening global environment and the onset of fiscal consolidation, activity is expected to moderate towards the end of the year and in 2011, but to pick up again in 2012 on the back of strengthening private demand. With the economic recovery taking hold in the EU, labour-market conditions are expected to slowly improve over the forecast horizon, as is the budgetary situation. The unemployment rate is projected to fall to around 9% in 2012, with the public deficit declining to about 4¼% of GDP. Developments across Member States are nevertheless set to remain uneven.
European Commissioner for Economic and Monetary Affairs, Olli Rehn said: "The economic recovery has taken hold. I am encouraged by the prospect that employment is finally set to improve next year in Europe. Public deficits are starting to decline thanks to the consolidation measures taken and to the resumption of growth. However, this recovery is uneven, and many Member States are going through a difficult period of adjustment. A determined continuation of fiscal consolidation and frontloaded policies to enhance growth, are essential to set the sound basis for sustainable growth and jobs. The turbulence in sovereign debt markets underlines the need for robust policy action."
Broadly favourable developments so far
In line with the characteristics of previous recoveries following financial crises, the current upturn is proving rather muted overall. That said, the economic situation in the EU has significantly brightened of late, with GDP growth in 2010 so far exceeding expectations, especially in the second quarter. The recovery also appears to be broadening out. While export growth – the first stage of the traditional recovery pattern – has been solid for some time, the EU economy is now entering the next phase - whereby the pick-up in exports starts to spur (equipment) investment demand.
A gradual and uneven recovery
With the projected slowdown in global activity dampening export growth and temporary supports running their course, near-term prospects for the EU economy appear more subdued. The contribution of net exports to GDP growth is set to diminish over the forecast horizon; whereas the contribution of domestic demand is set to increase, owing to a gradual firming of investment and private consumption growth. On the investment front, improvements in the capacity utilisation rate and the profit situation of firms are among the factors expected to support growth, while ongoing balance-sheet adjustment and fiscal consolidation are set to act as constraints. As for private consumption, a slowly improving employment outlook, moderate income growth and subdued inflation underlie the projected pick-up, though consolidation and deleveraging on the part of households are set to have a dampening effect here too.
view Forecasts for EU Member States
Source: Europa
Use of performance fees to increase again in 2011 according to Skandia Investment Group research
November 29, 2010--Major survey of fund management groups with combined $2 trillion AUM reveals:
Two-thirds expect use of performance related fees (PRFs) on equity funds to increase in 2011
Rise of passive products such as ETFs putting downward pressure on fixed fees
Fee polarisation will occur, says Skandia Investment Group
Almost two-thirds of fund groups (65%) expect the use of performance fees on equity funds to rise again in 2011 according to research by Skandia Investment Group (SIG), a leading provider of research-led investment solutions.
The research - which is part of a broader study by SIG into the future of fund management, to be published on 6th December 2010 - reveals that many global asset management firms believe the use of performance fees will increase across a range of asset classes next year. Equity funds and absolute return vehicles are expected to see the greatest increases, with 65% and 50% of those surveyed predicting rises across these two classes respectively.
The findings come at a time when the industry is also seeing investors change their focus from relative to absolute returns as a performance measure. While the figures show this is felt across the board, the biggest shift is among institutional investors (75%), compared with 58% of retail.
read more
Source: Skandia Investment Group
S&P launches liquidity weighted European equity index
November 29, 2010-- Standard & Poor’s, the index provider, has launched a new liquidity weighted European equity index, designed to provide exposure to 75 of the eurozone’s most heavily traded blue chip companies.
S&P has created its new liquidity index with an eye to appealing to the rapidly growing exchange traded funds market.
read more
Source: FT.com
DB Global Equity Index & ETF Research : European Weekly ETP Review: Strong ETC product launch calendar as ETF investors continue to keep at bay
November 29, 2010--Investment Outlook: At crossroads, investors are pondering the next move
Following Ireland’s financial woes, ETF investors continued to stay out of the market for a second consecutive week, despite small gains in the equity market. The Euro Stoxx 50 index rose by 0.7%, the CAC 40 index: was up by 0.8%, the DAX: rose by 1.6% and the FTSE 100 was down 1.1%. The price of gold (USD/oz) continued to decline, losing 1.2%..
Similar to the prior week, inflows in the European ETF industry lagged well behind those observed in September and October of this year. Total European ETP inflows amounted to just €78 million, compared to €258 million of outflows in the previous week.
* Asset class investment patterns reflected the flat-lining trend that characterized overall ETP cash flows Equity ETFs netted outflow of €1 million vs. €115 million of inflows last week. Fixed Income registered outflows of €25 million, compared to €450 million outflow last week, primarily driven by sovereign benchmarked ETF outflows. Commodities netted inflows of €81 million, versus. €63 million inflow during previous week, primarily attributable to €106 million of gold inflows.
Product launch calendar: A busy week for ETCs
This week was especially busy with 19 new product launches and 2 share class cross-listings.
The new launch calendar was dominated by sixteen new currency ETCs issued by ETF Securities on the London Stock Exchange. The new currency products track a variety of currency pairs and they offer both long and short exposure.
Deutsche Bank launched two additional ETCs on LSE and Deutsche Boerse. The new products track a mean reversion benchmark, an index that is intended to reflect the performance of 12 commodities from 4 broad commodity sectors: energy, precious metals, base metals and agriculture. The weights of the commodities in the index are systematically adjusted depending on the relative richness or cheapness of the commodity.
UBS launched an MSCI Emerging Markets equity ETF on the Swiss Stock Exchange. Two additional share classes of the EM equity ETF were also cross listed on the same exchange
On-exchange ETP turnover: mild gains
Average rolling 22-day on-exchange turnover rose by 1.4% to €2.02 billion. This was supported by moderate rises in all major asset classes. Equity ETF turnover was up by 0.5% to €1.47 billion, fixed income ETF turnover rose by 4.7% to €218 million and commodity was up by 3.7% to €326 million
Assets Under Management (AUM)
The European ETP industry finished the week with €216.7 million, showing a decline of 0.3% from the previous week. The slight decline is attributable to slow weekly flows. Year to date, the European AUM are up by 27.7%.
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Source: DB Global Equity Index & ETF Research
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