Global ETF News Older than One Year
Deciphering Developing Markets-The African Decade?| The snap Greek presidential elections| Africa and the current price of oil
December 16, 2014--The African Decade?
Every decade or so I'm reminded that this is going to be the decade for sub Saharan Africa, and I'm always disappointed. I have no doubt their time will come, but until then I feel there are many other countries in the developing world outside Africa that are less risky and present the investor with higher possible returns.
I would love to see the countries in sub Saharan Africa get their act together and embrace capitalism and democracy, but as an article in Saturday’s Wall Street Journal made so clear, that is not happening. So many of these countries, even those with an emerging middle class, are ruled by dictators and military men who seek to stay in power whether through sheer force, amending the constitution, or staging a coup when they are voted out of office. Yes, it's true that China has invested heavily and is very active in this commodity-rich continent. The West has really abdicated their role here, leaving the door wide open for the Chinese, who are eager to convert countries to their way of doing business and their version of capitalism. Of note are two countries, Kenya and Uganda, that are bucking the trend. These are two countries that investors would do well to watch, though access to their markets is limited. The best Africa focused ETF that has some exposure to Kenya (1.5%) is the Van Eck Market Vectors Africa Index Fund (AFK), which has a one year return of 25.65%.
Source: Peter Kohli, DMS Funds
BlackRock ETP Landscape 2014 Year in Review
December 16, 2014--GLOBAL ETP INDUSTRY AUM GROWS 15% TO OVER $2.7 TRILLION DRIVEN BY RECORD INFLOWS AND INCREASED ADOPTION
Global ETP flows of $267.9bn through November surpassed the previous full-year record set in 2012
Increased adoption among institutions, intermediaries and individuals aided unprecedented expansion in the European and US markets
Fixed income ETPs set a new record, gathering $78.6bn as appetite for yield and slower than expected global economic growth helped assets swell 22% to $430bn
ETPs in Europe gathered $60.8bn, triple the amount last year, as market penetration increased and ECB bond purchases boosted fixed income flows
Accelerating US GDP growth propelled US-listed ETP flows to a record $193.5bn as demand for US equities and fixed income proved resilient
Themes to watch in 2015 include smart beta, emerging markets and Japan equity, all of which remain compelling following notable contributions to 2014 flows.
Source: BlackRock
Bearish retreat on equities by S&L investors as crude oil slump triggers global growth uncertainty
December 16, 2014--S&L investors to cut their positions in equities, fixed income and commodities by $3 billion, as the slump in crude oil clouds the outlook on global growth.
Outflows of $1.6 billion from Japanese equities, $451 million from US equities and $335 million from South Korean equities overwhelmed the S&L ETP flows in other asset classes, globally.
S&L investors continue to build up contrarian bets on falling crude oil by selling shorts and buying long ETPs.
$664 million inflows into long ETPs accompanied $809 million outflows from short ETPs tracking oil since July 2014.
At the end of November, the AUM of S&L ETPs globally stood at $58 billion. At the same time, BOOST reached a $155 million AUM, rising 320% from the end of November 2013.
Source: Boost
S&P DJI launches Momentum Indices series
S&P Dow Jones Indices (S&P DJI) has launched a new smart beta index series constructed based on the past relative performance of stocks.
The S&P Momentum Indices series measures the performance of securities in global equity markets, and focusses on those that have exhibited persistent outperformance. This reflects the theory that the relative strength of stocks in the past predicts relative performance over the next three-to-12 months.
Source: Asia Asset Management
Bank licensees under pressure on ETFs
December 15, 2014--Bank-aligned dealer groups are facing internal pressure to add more ETFs to their approved product lists (APLs), says State Street Global Advisors (SSgA).
Speaking to InvestorDaily, SSgA director for ETFs Amanda Skelly said the process of adding ETFs to APLs is almost exclusively 'bottom up'-that is, driven by planner demand.
Source: Investordaily.com
Composite Leading Indicators (CLI), OECD, December 2014
Composite leading indicators point to continued loss of growth momentum in Europe
December 12, 2014--Composite leading indicators (CLIs), designed to anticipate turning points in economic activity relative to trend, suggest that growth will continue to lose momentum in Europe while the outlook is for stable growth momentum in most other major economies and in the OECD area as a whole.
In Europe, the CLI for the United Kingdom points to growth easing, albeit from relatively high levels, while in the Euro Area the CLI continues to indicate a loss of growth momentum, particularly in Germany and Italy.
Stable growth momentum, however, is expected for France.
Source: OECD
IEA releases Oil Market Report for December
Weaker outlook for oil-exporting countries to trim 2015 demand growth
December 12, 2014--The IEA Oil Market Report (OMR) for December cut the outlook for 2015 global oil demand growth by 230 000 barrels per day (230 kb/d) to 0.9 million barrels per day (mb/d) on lower expectations for the Former Soviet Union and other oil-exporting countries.
The monthly report told subscribers that a strong dollar and the lifting of subsidies have so far limited supportive price effects on demand, which is now seen reaching 93.3 mb/d next year, from 92.4 mb/d in 2014.
Source: International Energy Agency (IEA)
DECPG Weekly Economic Brief
December 12, 2014--Strengthening of the U.S. dollar through the course of 2014 has sparked a flurry of warnings that a strong dollar may cause sharp depreciations in emerging markets.
Generally, though, emerging markets have experienced mild exchange rate movements this year compared to those that occurred during previous episodes of sustained U.S. dollar appreciation, and growth in these economies is expected to strengthen through 2017.
Source: World Bank
IMF Working paper-Global Monetary Tightening: Emerging Markets Debt Dynamics and Fiscal Crises
December 12, 2014--Summary: This paper finds that tightening global financial conditions can worsen emerging economies' public debt dynamics through an increasing interest rate-growth differential, particularly if coupled with high global risk aversion.
Latin America and emerging Europe are the regions most likely to be adversely affected. In addition, historical evidence-analyzed by means of a Poisson count model-suggests that the frequency of sovereign debt crises increases in emerging economies at the early stage of U.S. monetary tightening cycles, at times in which the term spread also rises. The timing may be related to abrupt switches of expectations about the future course of policy in the early stages of tightening cycles.
Source: IMF
IMF Working paper-Oil Price Volatility and the Role of Speculation
December 12, 2014--Summary: How much does speculation contribute to oil price volatility? We revisit this contentious question by estimating a sign-restricted structural vector autoregression (SVAR).
First, using a simple storage model, we show that revisions to expectations regarding oil market fundamentals and the effect of mispricing in oil derivative markets can be observationally equivalent in a SVAR model of the world oil market à la Kilian and Murphy (2013), since both imply a positive co-movement of oil prices and inventories. Second, we impose additional restrictions on the set of admissible models embodying the assumption that the impact from noise trading shocks in oil derivative markets is temporary. Our additional restrictions effectively put a bound on the contribution of speculation to short-term oil price volatility (lying between 3 and 22 percent). This estimated short-run impact is smaller than that of flow demand shocks but possibly larger than that of flow supply shocks.
view the IMF Working paper-Oil Price Volatility and the Role of Speculation
Source: IMF
