Global ETF News Older than One Year
IMF Working paper-Real and Financial Vulnerabilities from Crossborder Banking Linkages
July 25, 2014--Summary: This paper looks at the vulnerabilities stemming from banking sector linkages between countries and their macroeconomic effects. It finds that credit risks (from a banking system's claims on other countries) and funding risks (from a banking system's liabilities to another) have declined over the past five years.
It also finds that funding vulnerabilities have real effects. During normal times, funding vulnerabilities are associated with significant positive GDP growth surprises. During crisis times, funding vulnerabilities are associated with significant negative GDP growth surprises. The results tell us that policymakers should pay more attention to understanding crossborder funding risks.
view the IMF Working paper-Real and Financial Vulnerabilities from Crossborder Banking Linkages
Source: IMF
Deutsche Boerse holds onto options market ISE for now
Deutsche Boerse focused on organic growth
Would look at M&A opportunities
No share buyback planned (Adds CFO comment on ISE unit)
July 25, 2014--Deutsche Boerse is open to possible acquisitions and has not hired banks to sell its International Securities Exchange (ISE) unit, the Frankfurt-based exchange operator's finance chief said on Friday.
Sources familiar with Deutsche Boerse told Reuters last month that the group was considering selling ISE, but that valuation levels were currently not attractive enough to pursue a sale in the short run.
Source: Reuters
Legg Mason to Buy International Manager Martin Currie
July 24, 2014--Legg Mason Inc. (LM), the money manager that's struggled with more than five years of net redemptions. agreed to buy Martin Currie to expand into active international stock funds. Terms weren't disclosed.
Martin Currie, founded in 1881 as an accountancy partnership, will add $9.8 billion in assets, Baltimore-based Legg Mason said today in a statement. The acquisition of Edinburgh-based Martin Currie, which will operate as a separate affiliate, is set to close in the fourth quarter.
Source: Bloomberg
Value of broker research comes under increased scrutiny
July 24, 2014--As the value of broker research comes under more scrutiny, so will the individual analysts who write it.
Analysts are rated by Extel's yearly rankings, which determine their sector rankings and in turn carry huge implications for their pay and bonuses.
Source: FT.com
$2.4B-Massive Cash Outflow From High Yield Bond Funds, Largest In 13 Months
Retail-cash outflows from high-yield funds totaled $2.4 billion in the week ended July 23, with an outflow of $1.3 billion from mutual funds expanded upon by an outflow of $1.1 billion from exchange-traded funds, according to Lipper.
The ETF influence was roughly 45% of the total withdrawal.
The outflow follows last week’s outflow of $1.7 billion and is the single largest one-week redemption in 13 months, or since late June, 2013. Last week's outflow was 63% tied to ETF withdrawals.
Source: Forbes
IOSCO Surveys Use of Social Media and Automated Advice by Intermediaries
July 24, 2014--The International Organization of Securities Commissions (IOSCO) today published its Report on the IOSCO Social Media and Automation of Advice Tools Surveys. The paper presents the results of four surveys on the use of social media and automated advice tools in capital markets, and how regulators oversee the use of these tools.
IOSCO undertook the project on social media and automated advice tools because technology, particularly the use of the Internet, is changing the ways in which market intermediaries interact with both potential and existing customers.
view the Report on the IOSCO Social Media and Automation of Advice Tools Surveys
Source: IOSCO
Saudi to Open $531 Billion Stock Market to Foreigners
July 22, 2014--Saudi Arabia, the oil-producing kingdom whose stock market has been off-limits to outsiders, will allow foreign investors to buy and sell shares next year as it seeks to lure capital to the $745 billion economy.
The country's benchmark Tadawul All Share Index climbed to a six-year high after the Riyadh-based Capital Market Authority said today it will open the stock market to foreigners in 2015, and publish the rules for participation next month.
Source: Bloomberg
IMF Working paper-Liquidity Trap and Excessive Leverage
July 21, 2014--Summary: We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited by the zero lower bound, aggregate demand is insufficient and the economy enters a liquidity trap.
In such an environment, agents' exante leverage and insurance decisions are associated with aggregate demand externalities. The competitive equilibrium allocation is constrained inefficient. Welfare can be improved by ex-ante macroprudential policies such as debt limits and mandatory insurance requirements. The size of the required intervention depends on the differences in marginal propensity to consume between borrowers and lenders during the deleveraging episode. In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage.
view the IMF Working paper-Liquidity Trap and Excessive Leverage
Source: IMF
ETF Securities-Precious Metals Weekly-Rising Geopolitical and Market Risk Favours the Precious Metals
July 21, 2014--Global events and equity valuations point to further gold gains. Gold and silver prices
declined 2.1% and 2.2% respectively last week on futures led profit taking. The gold price recovered from a dip below US $1,300/oz. as geopolitical risk buffeted investor confidence.
Contrary to the consensus view at the onset of 2014, gold ended the week still up about $100 on the year.
A key shift has been the widely unexpected decline in real interest rates. Last week, German Bund yields dipped to new historic lows and US 10yr bond yields have also dropped sharply. In addition, recent flows into gold ETF's have been positive. Some equity money has been moving back into gold and the precious metals for diversification purposes as the equity rally becomes increasingly extended. At a time of escalating geopolitical risk in the Ukraine, Russia, and the Middle East, with increasing volatility in equity markets and declining real yields investors are again looking to gold’s defensive properties to offset potential declines in more cyclical assets.
Source: ETF Securities
IMF Working paper-First-Time International Bond Issuance-New Opportunities and Emerging Risks
July 18, 2014-- Summary: International bond issuance by debut issuers has risen in recent years. The uptick was a result of both demand and supply factors. The search for yield and demand for portfolio diversification have resulted in demand-driven easy financing conditions. At the same time,rising financing needs for many debut issuers,coupled with reduced access to concessional financing,relatively undeveloped domestic markets,and a favorable interest rate environment have made international bonds an attractive financing alternative for many countries.
As bonds issued in the international markets are typically denominated in hard currencies,have large volumes and a bullet structure,exposure to exchange rate and refinancing risk has increased. Therefore,risk-mitigating policy actions are needed to prepare for redemption,support debt sustainability,and secure adequate debt management capacity.
Source: IMF
