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Basel proposal for bank ‘bail-ins’
August 19, 2010--Bank debt holders would have to take losses or have that debt converted into equity before any government rescue could take place, under proposals put forward on Thursday by international regulators and central bankers.
Dubbed a “bail-in”, the proposal is a direct response to the recent financial crisis, which saw taxpayers forced to stump up billions of dollars to save big banks while bond holders and creditors were largely protected.
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Source: FT.com
Bank of Scotland pulls out of Ireland
August 19, 2010--Bank of Scotland, one of the most aggressive lenders during Ireland’s property boom, on Thursday became the latest foreign bank to quit the Irish market.
The decision followed a strategic review of its operations by Lloyds Banking Group, its parent. Lloyds said Bank of Scotland (Ireland) would stop offering banking services from the end of December.
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Source: FT.com
German economic growth set to hit 3%
August 19, 2010--Germany’s economy will grow by 3 per cent this year, according to a sharply upward revised Bundesbank forecast issued as investors pushed the cost of borrowing by its government towards fresh record lows.
The economic recovery in Europe’s largest economy was increasingly generating its own momentum, the country’s central bank said on Thursday, with positive ripple effects spreading to other eurozone countries. In June, the Bundesbank had forecast almost 2 per cent growth in 2010.
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Source: FT.com
European Weekly ETP Review: Another quiet week as the Summer draws to an end
Weekly European ETP Market Roundup
August 19, 2010--Highlights
Net Cash flows
Major European market indices largely reversed last week’s gains. The Euro Stoxx 50 index was down 2.6%, the CAC 40 index fell by 2.8%, the DAX fell by 2.4% and the FTSE 100 index dropped by 1.1%. The Euro was down 3.6% against the US dollar and the price of gold (USD/oz) rose by 0.8%.
The somber mood carried in the European ETF market and it almost entirely silenced flows. Total Inflow for the week amounted to just €56 million, compared to €1.1 billion of inflow last week. False start or warm-up, not clear, reality is that investors are still proving to be cautious with the mood clearly undefined.
European ETP cash flow activity was subdued across all asset classes. Equity net inflows totaled: €17 million (€825 million in previous week), fixed Income net inflows totaled €48 million (€210 million last week) and commodity ETPs netted €23 million of outflow ($1 million inflow last week). There were no meaningful cash flow trends within assets classes during the week that ended August 13 2010.
New Listings
Source listed one ETF targeting the Merrill Lynch Factor Model Index. The Merrill Lynch Factor Model is an index designed to track the performance of alternative investments, including hedge funds, funds of hedge funds and hedge fund indices, as represented by the HFRI Fund Weighted Composite Index.
Turnover
On-exchange daily average ETP turnover rose up by 1.8% to €1.73 billion, for the week that ended August 13 2010. This is the first rise in daily turnover in the past three weeks.
More analytically, equity ETF turnover rose by 0.9% to €1.26 billion, fixed income turnover rose by 1% to €203 million and commodity turnover rose by 7.1% to €251 million.
Assets Under Management (AUM)
European ETP AUM remained unchanged finishing the week at €198.1. Year to date, European AUM are up by 18.4%.
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Source: DB Global Equity Index & ETF Research
German pension funds 'absurd' to ditch equities, academics say
August 19, 2010--Equities are vital to maintaining return opportunities in second-pillar pensions, according to a study into the effects of the crisis on the German pension system
The research, commissioned by Union Investment, was carried out by Bernd Raffelhüschen and Johannes Vatter from the centre for intergenerational contracts at the University Freiburg.
In their paper, the academics said: "To deduce a general reduction of risky investments like funds or equities seems absurd because, with those asset classes especially, the return potential has to be taken into account."
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Source: IP&E
Status of the STOXX Sustainability Indices
August 19, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today clarified that it will continue to calculate and publish the STOXX Sustainability Indices, contrary to what was implied in a media statement issued by SAM Group on August 18.
While STOXX Ltd. and SAM Group will end their cooperation, the Sustainability Indices - among them the well-known STOXX Europe Sustainability Index and the EURO STOXX Sustainability Index - will of course be continued to be calculated by STOXX.
The quality and thoroughness with which the STOXX Sustainability Indices are calculated will remain unchanged, and the indices will be provided under the established brand of the index provider STOXX. Going forward, the scope and depth of the research previously provided by SAM – merely the ranking of index components by sustainability standards – will be improved, and delivered by another data provider.
Details on this will be released shortly, but for the users of the indices nothing will change.
Further information on the STOXX Sustainability Indices can be found on www.stoxx.com.
Source: STOXX
Option contracts to double transaction volume at VOB
August 19, 2010--Options contracts, which are set to begin trading in February of next year, are expected to double the transaction volume at the Turkish Derivatives Exchange (VOB), Çetin Ali Dönmez, the general manager of the bourse, has said.
Speaking to the Anatolia news agency yesterday, Dönmez emphasized that the volume of forward foreign exchange transactions will increase significantly once the banking and insurance transaction tax (BSMV) and withholding tax on derivative products are removed. “We hope the BSMV and withholding tax will be lifted on Sept. 1 and Oct. 1, respectively. Once the system settles, daily forward foreign exchange transaction volume might increase to around $0.5 billion,” he said.
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Source: Todays Zaman
Platinum and palladium ETCs with currency hedging from DB ETC Index plc launched on Xetra
August 18, 2010-- Two new exchange traded commodities issued by DB ETC Index plc, the ETC platform of Deutsche Bank, are tradable on Xetra.
The two new db ETCs enable investment in exchange traded commodities on platinum and palladium with currency hedging for the first time. Both db ETCs are physically backed by the respective metal in allocated form.
ETC name: db Physical Palladium Euro Hedged ETC
Asset class: commodities
ISIN: DE000A1EK3B8
Total expense ratio: 0.75 percent
Benchmark: Palladium spot price (London)
ETC name: db Physical Platinum Euro Hedged ETC
Asset class: commodities
ISIN: DE000A1EK0H1
Total expense ratio: 0.75 percent
Benchmark: Platinum spot price (London)
Deutsche Börse’s ETC segment product range currently comprises 176 instruments. The monthly trading volume of ETCs on Xetra averages around 550 million euros.
Source: Deutsche Börse
New Credit Suisse Equity Index ETF Launched on Xetra
August 18, 2010-- Since Wednesday, a new exchange-traded equity index fund from the issuer Credit Suisse Fund Management S.A. has been tradable in Deutsche Börse’s XTF segment.
ETF name: CS ETF (Lux) on MSCI EMU Mid Cap
Asset class: equity index ETF
ISIN: LU0312694234
Total expense ratio: 0.54 percent p.a.
Distribution policy: distributing
Benchmark: MSCI EMU Mid Cap
The CS ETF (Lux) on MSCI EMU Mid Cap enables investors to track the performance of the MSCI EMU Mid Cap Index. The index comprises a total of 150 mid-cap companies from the following eleven euro-area countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 680 exchange-listed ETFs, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 14 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 13-Aug-10
August 18, 2010--Last week saw US$181.4 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF outflows last week were in Basic Resources with US$163.1 Mn and Banks with US$64.6 Mn while Utilities experienced net inflows of US$48.5 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$35.3 Mn net outflows. Basic Resources sector ETFs have seen the largest net outflows with US$171.9 Mn, followed by Food & Beverage with US$75.4 Mn while Media has experienced the largest net inflows with US$235.7 Mn YTD.
The US$8.6 Bn AUM invested in the ETFs is greater than the US$3.7 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in each of the corresponding futures contract in all 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
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