Global ETF News Older than One Year
DECPG Weekly Economic Brief
May 16, 2014--Sovereign bonds have performed well this year, particularly in the "high-spread" Euro Area countries and in developing countries, reflecting still accommodative global financial conditions. The U.S. Department of Agriculture's first assessment for the 2014/15 crop year projects global grain production to remain buoyant; however, the possibility of an El Niño weather event poses upside risks to food prices.
Global tourism receipts rose to nearly $1.2 trillion in 2013, of which emerging economies received $413 billion. China tops the list in tourism expenditure, with Chinese tourists' spending rising 26 percent to $129 billion in 2013.
Sovereign bonds have performed well this year, helped by ample global liquidity and search for yield reflecting still accomodative global financial conditions. The average long-term borrowing costs of Ireland, Italy, Portugal, and Spain has fallen to a record low of 2.58% in May (after climbing above 10% at the height of the region's debt crisis in late 2011) amid prospect of further stimulus from the ECB to bolster a slow economic recovery. The pace of foreign inflows to Euro Area bonds has been accelerating since late last year with purchases by foreign investors reaching record highs in February. This rally suggests that the "highspread" European countries are likely benefiting from easy global financial conditions, and also capital outflows from Russia. U.S. Treasuries yields have remained broadly steady this year, as weakening foreign demand has been offset by growing domestic demand. Meanwhile, differentiation has been a key aspect of the emerging market bonds since February, with Ukraine and Russia selling off severely, while yields elsewhere fell significantly.
Source: World Bank
Despite Concerns About High Frequency Trading, European Financial Industry Participants Have Not Changed How They Interact With Markets
Survey Finds European Worries Echo Those in U.S.
May 15, 2014--ConvergEx Group, a leading provider of global brokerage and trading-related services, has released the results of its European Equity Market Structure Survey, exploring the concerns and actions of financial industry participants regarding high frequency trading (HFT), regulatory oversight and market stability.
The survey found that less than a third (28%) of respondents believe that European equity markets are currently fair for all participants, and almost twice as many believe that HFT is harmful (28%) as believe it is helpful (14%). Despite these concerns, more than two-thirds (67%) report that they have not made any changes to the way they interact with markets.
In April, a survey by ConvergEx Group of U.S. industry participants found similar results.
view the ConvergEx's European Equity Market Structure Survey Results
Source: ConvergEx Group
Local Currency Bonds Catch On as Countries Aim to Catch Up
May 15, 2014--STORY HIGHLIGHTS
Issuing bonds in local currency is one way the World Bank Group helps to build up nascent capital markets in developing countries.
Since 2002, IFC has issued bonds in 14 emerging market currencies around the world, and has frequently been the first international issuer in a domestic bond market.
IFC has just issued local currency bonds in Rwanda and is also in discussions with other countries in Africa, Asia, emerging Europe, and Latin America.
view the inforgraphic IFC Local Currency Bond Issuances as of March 2014
Source: World Bank
Regulators' expenditure increased by nearly 60% in recent years
May 15,2014--Financial services regulators in the US, UK and Hong Kong have increased their expenditure over the last seven years by 59.4%, an average of 8.075% each year, since the end of fiscal year 2006/07 according to new research from Kinetic Partners, the global financial services advisory firm.
The increase may be the product of growing pressure on regulatory agencies to deepen the scrutiny of those working in the financial services industry following the crash in 2008.
Kinetic Partners' research found that the US Securities and Exchange Commission (SEC), the UK Financial Conduct Authority (FCA) and the Securities and Futures Commission of Hong Kong (SFC) had a combined expenditure of approximately $2.4 billion in 2012/13. This was over $900 million more than the total expenditure before the financial crisis in 2006/07 of nearly $1.5 billion.
view the Global Enforcement Review 2014
Source: Kinetic Partners
Historic silver price benchmark bites the dust as banks pull out
Deutsche Bank says postpones resignation from silver fix
Alternatives being sought, customers surprised by its collapse
May 14, 2014--The 117-year old London silver price benchmark-or fix - will cease on Aug. 14, its operator said, as regulatory scrutiny of price-setting intensifies across markets.
The fix is set once a day by banks getting together via telephone to work out a price, based on deals between their clients. It is used by producers, consumers and investors who use it to base contracts on.
Source: Reuters
IMF paper-Bank Size and Systemic Risk
May 14, 2014--Summary: The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or "too big to fail" subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk.
The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on "too big to fail" subsidies, and its policy message is in line with this earlier work.
view the IMF paper-Bank Size and Systemic Risk
Source: IMF
ETFs firms go back to the well for product launches
May 13, 2014--Exchange traded fund providers are treading well-worn paths to success in their 2014 product launches.
Many of the 57 exchange traded products launched in the first four months of this year are variations on several themes that emerged last year: currency-hedged global equity, short-term or less interest rate-sensitive segments of fixed-income, and alternative-beta strategies.
Source: FT.com
OPEC Monthly Oil Report May 2014
May 13, 2014--Oil market highlights
Crude Oil Price Movements
The OPEC Reference Basket in April increased 12¢ to $104.27/b, amid marginal improvements in most component values. Crude prices were supported by firmer refining margins, ongoing supply outages, and the return of some refineries from maintenance. On
average, Nymex WTI gained $1.53 to $102.03/b and ICE Brent increased 34¢ to $108.09/b.
The Brent-WTI spread ended the month with an average of around $6.05/b, the narrowest since September 2013.
World Economy
World economic growth in 2014 remains at 3.4%, following growth of 2.9% in 2013. The
OECD growth forecast remains at 2.0%, with the US revised down and the Euro-zone slightly higher. China’s growth forecast remains at 7.5% and India’s at 5.6%. The main lift
for 2014 growth is seen coming from OECD economies, while emerging markets are slowing. With the most recent weakness in some major OECD economies- mainly the US
and Japan-the risk to the global growth forecast is seen currently skewed slightly to the
downside.
Source: OPEC
ETF Securities-Precious Metals Weekly-Gold Recovers but Remains Within an Increasingly Narrow Range
May 12, 2014--Gold continues to see safe haven buying as Ukraine risks escalate. The gold price and
ETP flows rose last week as the situation in the Ukraine continued to escalate after brief hopes Russia might become more conciliatory. Gold's price gains were limited by a stronger US Dollar, which rallied on the back of strong US economic data and rising
expectations the ECB may be forced to quantitative ease to offset deflation.
While gold appears constrained in a relatively narrow range for the near term, any escalation in geopolitical risk is likely to keep investors positioned defensively and support the gold price.
Silver, the hybrid metal, is looking increasingly attractive. China is playing an increasingly important role in the silver market. Not only is China now the biggest silver user, it is also the dominant player in the futures market. In 2013, silver futures volume on the Shanghai Futures Exchange surpassed that of the COMEX/CME. The silver price has remained in a narrowing range, with 30-day volatility dropping to the lowest level in over a decade. Historically a sharp drop in volatility has presaged a strong price move. With gold the gold price stabilising, industrial demand for silver on the rise, futures net longs low by historical standards and the gold-silver ratios the highest it has been in four years, we believe that the next significant move is likely to be up.
Source: ETF Securities
Asset Managers Adjust to HFT
May 12, 2014--Hedge funds and other asset managers are showing continuing interest in the way that orders get executed, which can make the difference between a profitable trade and an unprofitable one.
"One of the most dramatic evolutions we've seen is involvement by the buy side," said Ronan Ryan, chief strategy officer at IEX Group. "Many were involved before, but post-'Flash Crash' a large majority got involved. They're asking more questions, and they’re taking more control of their order flow based on the answers they are receiving and researching.
Source: Markets Media
