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Global Equity Index & ETF Research : Weekly ETP Market Review: All remain quiet on the European ETF Front
August 5, 2010--Weekly European ETP Market Roundup
Net Cash flows
* Most major European equity indices had a generally positive week. The Euro Stoxx 50 index rose by 0.85%, the DAX fell slightly, by 0.30%, and the FTSE 100 rose by 2.5%. The price of gold/oz (USD) registered a small fall, -0.64%, while the Euro continued to rise against the US dollar, finishing the week 1.57% up.
Cash flows in the European ETP market continued to remain relatively muted. Total European ETP cash flows were negative, registering €59 million of net outflows for the week that ended July 30th. While this week was slightly more active [in terms of cash flow activity] than last week, under the surface turnover remains very subdued due to the summer holiday calendar.
European Equity ETPs gathered €404 million of inflows, compared to the €60 million of outflows observed last week. Fixed income experienced €208 million of outflows this week. Commodity cash flows turned into outflows this week, totaling €236 million, compared to €60 million of inflows last week.
Equity flows remain subdued, and even though they moved into positive territory this week, there was no clear sense of strong direction reflected in the trades observed. On the upside, this equity flow calm has managed to put a stop to outflows associated with major European indices.
The big flows into gold have also taken a break. Pursuant to last week’s €72 million of outflows, this week brought €243 million of additional gold outflows. While these flows do neither represent any major change in the fortune of gold ETPs nor do they denote a gold outflows trend, it is certainly a continuation of a slowing gold flows trajectory. It is also a sharp contrast to the peak observed in May and June of this year. Outflows from gold and a very quiet week in non-precious metals ETPs has contributed to the week finishing with negative commodity flows.
New Listings
Deutsche Bank listed four new precious metals ETCs this week. The ETCs track the price of gold (1), silver (1) and palladium (2). Two of these newly listed ETCs offer Euro hedged returns.
The same provider also cross listed on Borsa Italiana five additional ETFs tracking the Mexican, Canadian, and US equity markets in addition to two ETFs tracking European real estate indices.
Turnover
Consistent with the general July calm trading environment, average daily on-exchange ETP turnover declined 2.2%, maintaining its downward slope of the previous weeks. Average daily turnover registered at €1.76, down from €1.80 last week. Equity turnover declined at almost twice the rate of total ETP market daily average turnover, decreasing by 3.9%.
AUM
European ETP AUM finished the week almost flat at €195.8 billion, with a slight drop of -0.4% as compared to last week. Slight outflows were netted by mildly upward trending equity markets. The equity segment of the market finished the week exactly flat, with the commodity segment experiencing the biggest relative fall of 2.1% followed by fixed income that experienced a fall of 0.3%. European ETP AUM growth for 2010 YTD remains robust, registering at 15.1%.
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Source: Deutsche Bank Global Equity Index & ETF Research
db x-trackers launches currency ETFs in London
August 5, 2010--db x-trackers, Deutsche Bank’s exchange-traded fund (ETF) platform, has launched two ETFs linked to the DB Currency Returns Index (DBCR). The new funds will be listed on the London Stock Exchange and offer exposure to currency as an asset class in either USD or GBP-hedged share class formats.
The DBCR Index equally weights the three most established currency trading strategies – carry, momentum and valuation. Utilising a rules-based process, the strategies take long and short positions in the G10 currencies with regular rebalancing of the components.
“We have taken a major step today towards giving UK investors the tools they need to harness the potential of the currency markets,” said Manooj Mistry, head of db x-trackers ETFs UK. “The db x-trackers Currency Returns ETF is ideal for investors who are increasingly recognising the benefits of allocating assets to investment classes that show low or negative performance correlation with equity and bond markets, as well as investors looking for an additional way to achieve alpha in a low growth environment.”
Deutsche Bank broke new ground when it launched the DBCR Index in 2007. In-house research shows that long-term systematic returns, or ‘beta’, exist in the currency markets. The DBCR Index was created as a way to monetise those returns and was the world’s first investable benchmark for currency markets.
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Source: db x-trackers
Russia grain export ban sparks price fears
August 5, 2010--The prices of everyday staples such as bread, flour and beer are set to rise sharply after Russia imposed a ban on grain exports, triggering panic in commodities markets and sending wheat prices to their highest since the 2007-08 global food crisis.
Vladimir Putin, Russian prime minister, announced the ban on all the country’s grain exports, effective within 10 days, after a severe drought devastated crops and wildfires spread across the country.
The move, which caught traders and food producers by surprise, pushed the price of wheat to its highest in two years and evoked memories of the last time the then Soviet Union suffered a catastrophic crop failure in 1972. And Moscow introduced export restrictions during the 2007-08 global food crisis, triggering a wave of panic buying from North Africa and Middle East importers
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Source: FT.com
European interbank lending rate hits highest in a year
August 5, 2010--European bank lending rates have risen to their highest in a year, a move that could send the euro higher against the dollar after Jean-Claude Trichet, president of the European Central Bank, signalled his lack of concern.
Though the ECB on Thursday held its key refinancing rate at 1 per cent, as expected, three-month euribor, a closely-followed rate at which banks lend to each other, rose to 0.904 per cent, its highest since July 2009. The bank lending rate has jumped by about a third since the start of May.
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Source: FT.com
Eurozone growth indicator rises, but gaps remain: survey
August 5, 2010--- A leading indicator of economic activity, the purchasing managers' index for the 16-nation eurozone, accelerated for the first time in three months in July, final data showed on Wednesday.
However, those who compiled the latest purchasing managers' index (PMI) saw signs of deepening disparities between the main national economies.
Analysts also warned that consumer spending would hold back growth over the coming months, and that the recovery was being driven by industry and manufacturing.
Compiled by London-based data and research group Markit, the index rose to 56.7 points, from 56.0 in June, in line with an earlier estimate. Any score above the 50-point line indicates economic growth.
However, while growth in France and Germany "accelerated nearer to post-recession peaks," the rate of expansion in Italy was "the weakest since last November, while growth in Spain was little-changed from June's four-month low."
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Source: EUbusiness
DTCC Launches Equity Derivatives Reporting Repository
Derivatives Repository Ltd Receives FSA Regulatory Approval
August 5, 2010--The Depository Trust & Clearing Corporation (DTCC) announced today two significant developments: 1) the launch of its Equity Derivatives Reporting Repository (EDRR) and 2) FSA approval of DTCC Derivatives Repository Ltd subsidiary.
The building of the EDRR repository, follows a competitive request for proposal process (RFP) led by the International Swaps and Derivatives Association (ISDA) last year, and represents the industry's efforts to strengthen its operational infrastructure and improve transparency across all major OTC derivatives asset classes. All of the 14 global market dealers are now live on EDRR.
EDRR’s central registry will hold key position data, including product types, notional value, open trade positions, maturity and currency denomination for participants’ transactions, as well as counterparty type. OTC equity derivatives products the service will initially support include options; equity, dividend, variance and portfolio swaps; CFD (contracts for difference); accumulators and a final category covering other structured products.
By aggregating and maintaining the data, DTCC’s EDRR will generate reports that keep industry participants and regulators up to date on the industry’s outstanding notional and positions as well as other position related information through a single, secure, easy-to-access portal.
"DTCC played an important role in bringing this new service to market over an aggressive timeframe, allowing the OTC derivatives community to meet commitments made to global regulators to have a repository service running for equity derivatives by the end of July," said Patrick Dempsey, managing director and CFO, Global Equity Derivatives Group at J.P. Morgan and chairman of the International Swaps and Derivatives Association's (ISDA’s) Equities Steering Committee, EDRR subgroup.
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Source: DTCC
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 30-Jul-10
August 4, 2010--Last week saw US$284.6 Mn net inflows to STOXX Europe 600 sector ETFs. The largest sector ETF inflows last week were in Banks with US$150.9 Mn and Telecommunications with US$98.2 Mn while Industrial Goods & Services experienced net outflows of US$44.2 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$150.2 Mn net outflows. Basic Resources sector ETFs have seen the largest net outflows with US$144.7 Mn, followed by Telecommunications with US$114.0 Mn while Media has experienced the largest net inflows with US$240.1 Mn net new assets YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in all 19 sectors.
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Source: Source: Global ETF Research & Implementation Strategy Team, BlackRock
EEX trading results for Natural Gas and CO2 Emission Rights in July
August 4, 2010--In the framework of their cooperation, the European
Energy Exchange AG (EEX) and the French Powernext SA integrated their Power Spot
and Derivatives Markets in 2009.
In July 2010, a total volume of 116.1 TWh was traded on the joint subsidiaries EPEX
Spot SE and EEX Power Derivatives (same month of the previous year: 83.6 TWh).
Power trading on the day-ahead auctions on EPEX Spot accounted for a total of 22,318,803 MWh and can be broken down as follows:
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Source: European Energy Exchange (EEX)
Deutsche Börse Publishes Prices For “MiFID Post Trade” - Post-Trade Transparency Product To Be Available As Of 1 December 2010
August 4, 2010--As of 1 December 2010, Deutsche Börse will offer market participants a pure post-trade transparency product for equities, “MIFID Post Trade". The post-trade product is considerably cheaper than existing information products, which usually make a combination of pre- and post-trade data available. The monthly fee is 15 euros for professional investors and 1 euro for private investors.
With this product, Deutsche Börse supports the cost-effective consolidation of stock exchange, MTF and OTC post-trade transparency data in Europe. The new information product contains the last traded prices and volumes for all MiFID-relevant instruments traded on the Frankfurt Stock Exchange (Xetra and the trading floor) and via Tradegate Exchange, without delay and with quality assured.
Source: Online News
UCITS inflows swell to €49bn in first quarter: EFAMA
August 4, 2010-- Investment poured back into UCITS funds in the first quarter, surging to more than €49bn against just €1bn in the fourth quarter of 2009, according to the European Fund and Asset Management Association (EFAMA).
Inflows were even more pronounced when excluding hard-hit money market funds, reaching more than €87bn, their highest level since the first quarter of 2006.
EFAMA reported outflows for money market funds for the fourth quarter in a row, with investors withdrawing more than €38bn in the first quarter alone.
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Source: IP&E
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