Global ETF News Older than One Year
IMF Working paper-Lending Standards and Output Growth
January 26, 2018--While some credit booms are followed by economic underperformance, many are not. Can lending standards help separate good credit booms from bad credit booms contemporaneously?
To observe lending standards internationally, I use information from primary debt capital markets.
I construct the high-yield (HY) share of bond issuance for a panel of 38 countries. The HY share is procyclical, suggesting that lending standards in bond markets are extrapolative. Credit booms with deteriorating lending standards (rising HY share) are followed by lower GDP growth in the subsequent three to four years. Such booms deserve attention from policy makers.
Source: IMF
ETFGI reports that assets invested in Smart Beta ETFs and ETPs listed globally increased by 32.3 percent during 2017 to reach 658 billion US dollars
January 26, 2018--ETFGI, a leading independent research and consultancy firm on trends in the global ETF/ETP ecosystem, reported today that assets invested in Smart Beta ETFs and ETPs listed globally increased by 32.3% during 2017 to reach a new high of US$658.35 Bn at the end of December. (All dollar values in USD unless otherwise noted.)
Highlights
Assets invested in Smart Beta ETFs/ETPs listed globally increased by a record $ 160.61 billion during the year, to reach a new high of $658.35 billion
Year-to-date, through end of December 2017, Smart Beta ETFs and ETPs listed globally saw net inflows of $71.75 Bn.
Assets in market cap ETFs increased by 40.3% in 2017 which is significantly more than the 32.3% increase in Smart Beta assets.
Source: ETFGI
World Gold Council-Cryptocurrencies are no substitute for gold
January 25, 2018--Bitcoin's parabolic price rise was the big story of 2017-putting the spotlight on the cryptocurrency market. While gold's performance was a solid 13%, it was a fraction of the 13-fold increase of bitcoin by the end of the year.
Some commentators went as far as to claim cryptocurrencies could replace gold. Cryptocurrencies may become an established part of the financial system. But, in our view, gold is very different from cryptocurrencies, as gold:
is less volatile
has a more liquid market
trades in an established regulatory framework
has a well understood role in an investment portfolio
has little overlap with cryptocurrencies on many sources of demand and supply
Source: World Gold Council (WGC)
Switzerland overtakes Hong Kong to claim top spot in freedom index, United States rises to 17th
January 25, 2018--Switzerland is the freest country in the world, having replaced Hong Kong atop the Human Freedom Index, released today by the Fraser Institute and a network of international public policy think-tanks.
The United States inched upwards six spots from 24th to 17th in the index, which uses 79 indicators of personal, civil and economic freedoms to rank 159 countries and jurisdictions worldwide.
view the The Human Freedom Index 2017
Source: The Fraser Institute
ETF Securities Commodity Monthly Monitor-US dollar gives transitory boost to commodities Jan/Feb 2018
January 25, 2018--Summary:
Commodities have enjoyed a great start to 2018. From the low point mid-December they have rallied 6.7%. The performance has been broad-based too-driven not only by the Iran issues inflating the oil price-but a rally in industrial/precious metals and agriculture.
Broad global economic growth has supported commodity prices- although we are wary of some who are interpreting this as being a positive sign broadly for commodities this year. Commodities as an asset class are a very heterogeneous group and we expect varied performance from each segment this year in particular.
Source: etfsecurities.com
ETF Securities Investment Insights Commodity Optimism Rises with Reflation
January 24, 2018--Summary
Global manufacturing may push commodity demand higher.
Investors yet to regain previous positions in commodity funds.
Commodities tend to outperform in high growth and inflation periods.
Growth and manufacturing activity points to higher commodity demand
The global economy is in full throttle with synchronized growth
among both developed and emerging economies. Global gross
domestic product (GDP) is expected to rise to 3.9% this year
according to the International Monetary Fund. Further signs of
economic reflation stem from the expansionary levels in global
manufacturing and industrial activity. Recent global manufacturing
Purchasing Managers' Index (PMI) levels are at a four year high
while US manufacturing PMI ending 2017 at 59.7 after hitting a 13
year high in September 2017.
Source: etfsecurities.com
BIS-New report assesses structural change in global banking
January 24, 2018--Bank profitability has fallen from pre-crisis peaks but banks have become more resilient to risks, finds a new report by the Committee on the Global Financial System (CGFS).
Over the past decade, banks' balance sheets, cost base, scope of activities and geographic presence have been shaped by the impact of the crisis, as well as the resulting changes in regulation, competition and the macroeconomic landscape.
The report, Structural changes in banking after the crisis, outlines common trends but also differences across 21 countries.
view the BIS report-Structural changes in banking after the crisis
Source: BIS
STOXX Changes Country Classification Model
January 24, 2018--STOXX Ltd., the operator of Deutsche Boerse Group's index business, and a global provider of innovative and tradable index concepts' today announced that it has changed its Country Classification model.
As part of its continuous improvement process, STOXX has reviewed the existing Country Classification model. Based on the observation of the past years' classification procedures, STOXX decided to update the model with a few key objective in mind:
improve on the quality of the input data, aiming to timeliness and completeness on a constant basis;
stick to the rules-based approach;
Source: STOXX
IMF Working Papers-Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?
January 24, 2018--Summary:
We undertake an extended discussion of the latest developments about the existing and new estimation methods of the shadow economy. New results on the shadow economy for 158 countries all over the world are presented over 1991 to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9 percent.
The largest ones are Zimbabwe with 60.6 percent, and Bolivia with 62.3 percent of GDP. The lowest ones are Austria with 8.9 percent, and Switzerland with 7.2 percent. The new methods, especially the new macro method, Currency Demand Approach (CDA) and Multiple Indicators Multiple Causes (MIMIC) in a structured hybrid-model based estimation procedure, are promising approaches from an econometric standpoint, alongside some new micro estimates. These estimations come quite close to others used by statistical offices or based on surveys.
Source: IMF
IMF Working paper-Can Countries Manage Their Financial Conditions Amid Globalization?
January 24, 2018--Summary:
This paper examines the evolving importance of common global components underlying domestic financial conditions. It develops financial conditions indices (FCIs) that make it possible to compare a large set of advanced and emerging market economies. It finds that a common component, "global financial conditions," accounts for about 20 percent to 40 percent of the variation in countries' domestic FCIs, with notable heterogeneity across countries.
Its importance, however, does not seem to have increased markedly over the past two decades. Global financial conditions loom large, but evidence suggests that, on average, countries still appear to hold considerable sway over their own financial conditions-specifically, through monetary policy. Nevertheless, the rapid speed at which foreign shocks affect domestic financial conditions may also make it difficult to react in a timely and effective manner, if deemed necessary.
