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European Commission 'analysing' EU members' proposal on pension debt
August 17, 2010--Nine countries have sent a letter to the European Commission asking for changes to how private pension debt is included in the calculations of a country's debt levels.
The letter, signed by the finance ministers of Poland, Hungary, the Czech Republic, Romania, Slovakia, Sweden, Bulgaria, Lithuania and Latvia, argues they are disadvantaged due to reforms made to their private pension system.
Commission spokesperson Amadeu Altafaj-Tardio confirmed the letter had been sent.
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Source: IP&E
Deutsche Börse IPO Indicator Shows Increase in Issuing Activity
More IPOs expected
August 17, 2010--Deutsche Börse published the IPO indicator for the 3rd quarter of 2010 on Tuesday. Volatility, which has been going back down for a few weeks, in connection with rising share prices and the improved IPO climate expected by market participants all point to an increase in IPOs over the next few months. All in all, the environment for IPOs appears to be steadily improving. The uncertainties on the markets for European government bonds triggered not least by crisis seem to have abated.
The IPO indicator, which is published each quarter, is an important measuring instrument for companies seeking capital that aim to go public and that are looking for the right moment to enter the capital market. The indicator is compiled from surveys of market participants and calculations by the Technical University in Munich using Deutsche Börse trading data.
“If you take a closer look at the results of the survey, the fact that issuer sentiment has improved much more than that of other market participants particularly stands out. This development is primarily due to the upward movement in the valuation level. That, in conjunction with falling volatility could form a good basis for increasing issuance momentum,” said Professor Christoph Kaserer from the Technical University in Munich.
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Source: Deutsche Börse
European Weekly ETP Review: ETF investors begin to return to the market, mid-summer reprise?
August 16, 2010--Weekly European ETP Market Roundup
Net Cash flows
Overall, it was a good week for European ETFs and for the equity markets in general: almost all major European equity indices finished the week higher. The Euro Stoxx 50 index rose by 1.3%, the DAX rose by 1.82%, the CAC rose by 2.00% and the FTSE 100 rose by 1.42%.
The price of gold/oz (USD) also went up by 2.04%, while the Euro continued to rise against the US dollar, finishing the week 1.64% up.
The positive market mood also carried in ETF flows, the week that finished August 6th signaled what could be the beginning of the return of investors to the market with €1.1 billion of inflows. Cash flows in the European market have been extremely subdued for all of July, lacking any real sense of direction. In fact, weekly net cash flows for the entire month of July hovered very close to zero. Figures this week indicate that we might be turning a corner.
Not only this week experienced strong cash flows, trades proved to have a reasonable sense of direction with equity taking in three quarters of all weekly European ETP market inflows (€788 million) and fixed income almost all of the rest (€288 million). Commodity ETPs continued to experience unusually quiet activity, with total inflows of just €8 million.
Two themes defined equity ETF investor activity: return of investors to the European indices and continuation of healthy inflows into emerging market benchmarks. Almost half of the equity cash flows for the week (€406 million) went into emerging market indices, while the remainder was split between European and other developed market indices, including leveraged and short products (€144 million). Overall flow patterns indicate a renewed interest in the equity market, at a level which is the highest following the May 2010 volatility highs. Whether this mini equity ETF cash flow rally reflects something more substantial than post-holiday blues and whether it will gather pace remains unknown, but it is certainly a good start.
Concurring with an improved equity market environment, fixed income investors began to withdraw from sovereign benchmarked ETFs (€222 million outflows) and for the first time in a long time, money market funds began to register inflows (€317 million). Money market funds became a gravity indicator of sorts over the past six months, outflows gathered pace as spikes in overnight rates largely expressed market counterparty concerns. Simultaneously, corporate bond ETFs continued their positive trajectory with €112 million of inflows. All of the fixed income flow data points align to point to an improved ETF market sentiment.
While the strong inflows that went into gold ETPs over the months of May and June are certainly holding put, incremental cash flows have died down as quickly as the surge of gold ETP investment came to be earlier this past Spring. Gold ETPs, which comprise 61.5% of the European commodity ETP segment finished the week with €11 million of outflows, which are a far cry from the €1.75 billion of inflows observed in more turbulent market conditions back in May 2010. Again, this indicator points to an improvement in market temperature.
New Listings
While flows returned to the ETF market, new product launch activity was quiet with one new product coming to market. Deutsche Bank listed one currency ETF on the London Stock Exchange.
Turnover
Continuing its decline from May and June highs, average daily turnover activity continued to decline the week that finished on August 6th. Daily average ETF turnover fell by 3.4% to €1.70 billion. The decrease in turnover activity and increase in cash flows indicates that while investors are beginning to return to the market, trading activity continues to be subdued, pointing to a smaller number of investors driving most of the trades.
Equity ETF turnover experienced the largest decline, down by 6.1% from the prior week, to €1.25 billion. Fixed income daily average ETF turnover in fact registered an increase of 8%, to €201 million.
Assets Under Management (AUM)
Consistent with rising equity markets and a healthy level of inflows, European ETP AUM rose by 1.1% for the week, to €197.89 billion. Year to date, European AUM are up by 16.3%.
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Source: DB Global Equity Index & ETF Research
First UK Islamic bond launches
August 16, 2010--The first UK Islamic bond has been launched in a significant development that could prompt other British companies to raise money in the niche market.
The issue from a small British manufacturer is likely to be the first of many sukuk fundraisings in the UK, say analysts.
The UK government is also expected to pave the way for the launch of the first sovereign sukuk, a bond that complies with Islamic religious rules, in the next year or two.
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Source: FT.com
EU eyes new rules to supervise financial giants
August 16, 2010-- The European Union's executive arm proposed on Monday to give national supervisors more power to oversee financial conglomerates as part of efforts to prevent any new crisis.
The new rules would give authorities the ability to get better information at an earlier stage when large financial groups "run into trouble" and be better equipped to intervene, the European Commission said.
The proposed rules would affect complex financial groups -- such as Germany's Allianz -- which operate both in the banking and insurance sectors and are often active in more than one country in the 27-nation EU.
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Source: EUbusiness
Eurozone inflation rises to 1.7 per cent in July
EU up to 2.1%
August 16, 2010--Euro area1 annual inflation was 1.7% in July 20102, up from 1.4% in June. A year earlier the rate was -0.6%. Monthly inflation was -0.3% in July 2010.
EU3 annual inflation was 2.1% in July 2010, up from 1.9% in June. A year earlier the rate was 0.2%. Monthly inflation was -0.2% in July 2010.
These figures come from Eurostat, the statistical office of the European Union.
Inflation in the EU Member States
In July 2010, the lowest annual rates were observed in Ireland (-1.2%), Latvia (-0.7%) and Slovakia (1.0%), and the highest in Romania (7.1%), Greece (5.5%) and Hungary (3.6%). Compared with June 2010, annual inflation rose in nineteen Member States, remained stable in one and fell in six.
The lowest 12-month averages4 up to July 2010 were registered in Ireland (-2.4%), Latvia (-1.8%) and Portugal (0.0%), and the highest in Hungary (5.1%), Romania (4.8%) and Poland (3.3%).
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Source: Eurostat
STOXX Launches New Set Of Non-Capped Supersector Indices For Europe
August 16, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today announced the launch of the STOXX Europe 600 NC Supersector Indices, a set of non-capped (NC) supersector indices for the European region. The new indices are intended to be used for benchmarking purposes.
The launch of the STOXX Europe 600 NC Supersector Indices follows the decision to cap the component weights in the existing STOXX Europe 600 Supersectors Indices on a quarterly basis to ensure compliance with UCITS III standards for portfolio diversification. This will be implemented with the September Benchmark Review and become effective on September 20, 2010.
“The upcoming methodology change for the STOXX Europe 600 Supersector Indices in regard to capping of the component weights will allow passive investment products to follow the performance of the well-known supersector indices, while complying with the regulatory requirements of UCITS III,” said Hartmut Graf, chief executive officer, STOXX Ltd. “We are launching the STOXX Europe 600 NC Supersector Indices today to accommodate those market participants who prefer an un-capped benchmark, thus taking a further step to strengthen STOXX’s product offering for the buy-side business.”
The STOXX Europe 600 NC Supersector Indices aim to represent the largest European companies in each of the 19 ICB supersectors, and currently cover Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The 19 supersectors are: Automobiles & Parts, Banks, Basic Resources, Chemicals, Construction & Materials, Financial Services, Food & Beverage, Health Care, Industrial Goods & Services, Insurance, Media, Oil & Gas, Personal & Household Goods, Real Estate, Retail, Technology, Telecommunications, Travel & Leisure and Utilities.
The STOXX Europe 600 NC Supersector Indices are weighted by free-float adjusted market capitalization, without capping of component weights. They are reviewed quarterly in March, June, September and December. Daily history is available back to December 31, 1986. The indices are available in price and net return versions, and are calculated in Euro and U.S. Dollar (USD).
Further information on the STOXX Europe NC Supersector Indices is available at www.stoxx.com.
Source: STOXX
CESR holds seminar for CRA on CEREP reporting instructions
August 16, 2010-- In order to facilitate the tasks of all Credit Rating Agencies’ organisations CESR will conduct a one-day seminar on the “CRAs Reporting Instructions” on 9 September 2010 at its Paris premises in France.
This seminar is indented to support credit rating agencies’ understanding of how to technically comply with the CEREP reporting requirements. It is addressed to persons in charge of the technical implementation of CEREP reporting project, including IT business analysts and/or IT specialists with knowledge of their internal ratings databases. Participants of this training will gain insight in how to develop the technical facilities and procedures needed to comply with the CEREP reporting requirements.
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Source: CESR
The Futures And Options Association Publishes Response To CESR OTC Standardisation Paper
The Futures and Options Association supports CESR’s targets for managing more closely the risks
associated with the trading of OTC derivatives – but not without reservations
August 16, 2010--In its response, published today, to the CESR Consultation Paper, “Standardisation
and Exchange Trading of OTC Derivatives”, the FOA welcomes CESR’s recognition of the advantages
of exchanges in terms of transparency, centralised supervision and post?trade processing.
On the other hand, the FOA does not accept that the trading of standardised contracts on organised trading
platforms (or the standardisation of OTC contracts) should be the subject of a regulatory mandate.
Regulatory concerns surrounding bilateral execution of OTC contracts are in the process of being
addressed by the industry and there is no reason why end?users should not continue to enjoy the
right to select their preferred execution methodologies for the contracts entered into by them.
The FOA supports CESR’s acknowledgement of the need to preserve the ability of non?financial institutions to use OTC derivatives to hedge their risks, but would urge CESR to consider extending that recognition to cover, for example, the equivalent risk management activities of fund managers.
The FOA notes the recognition given by CESR to market differentiation, particularly in relation to commodity markets, and the importance of sustaining the availability of bespoke contracts. It is important that this recognition is given full practical expression in developing new regulatory standards for the markets.
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Source: FOA
MiFID: CESR publishes responses to consultation on client categorisation
August 16, 2010-- CESR published today the responses received on its consultation on CESR's advice in the context of the MiFID Review – Client Categorisation.
view responses
Source: CESR
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