Global ETF News Older than One Year
ETF Securities-Precious Metals Weekly-Fall in US Real Yields Confounds the Consensus and Boosts the Gold Price
May 19, 2014--U.S real yields have declined sharply in 2014, confounding the consensus and supporting the gold price. The US 10yr yield dropped to 2.5% last week, declining 50bps
from 3.0% at the end of 2013. The fall has gone against consensus expectations and also helps explain why the consensus has been so wrong on the performance of the gold price
so far this year. Real (inflation-adjusted) yields have fallen even more, with US CPI rising from 1.5% at the end of 2013, to 2.0% in April.
This has led to around a 1% decline in the US 10yr real yield in just five months. If inflation continues to creep up, while bond yields remain subdued, the gold price may continue to rally.
Platinum and palladium prices continue to rise as strikes in South Africa turn violent. Last week, platinum led the precious metals higher with a 2.4% gain as South Africa strikes turned violent, adding to concerns about possible supply shortages. The palladium price reached its highest closing level since August 2011, with price support also boosted by Russian sanction fears as Russia remains the world’s largest palladium producer.
Meanwhile, reports on Friday that Russia’s state may be considering buying palladium, if true, would also likely be price supportive. Labour strikes at the mines in South Africa have resulted in over 13% of platinum and 9% of palladium global mine supply lost to the strikes so far. Amplats, Implats and Lonmin have declared force majeure on some of their contracts, highlighting the difficulty in getting supplies of metal to buyers. Even if the strikes are resolved soon and prices dip, we would view the declines as a potential longer-term buying opportunity as supply demand deficits and production costs continue to rise.
Source: ETF Securities
For investors, diamonds might be the new gold
May 19, 2014--Gold has lost its luster--at least as an investment. Since hitting $1,900 an ounce in the summer of 2011,the price of the shiny metal has plunged some 30%.
That fall has prompted an exodus from gold-backed ETFs. But now investors are setting their sights on another precious material: diamonds.
Excitement has been building in recent months around the potential of diamonds to become a veritable asset class for the first time.
Source: CNN Money
Gold Demand Trends First Quarter 2014
May 19, 2014--Gold jewellery demand totals 571t in Q1, biggest start to year since 2005
Jewellery demand grew 3% year-on-year to reach 571t, the largest Q1 volume since 2005, as consumers responded positively to lower average gold prices. Geographically, demand was wide-spread; however it was China that posted the largest volume increase, rising by 18 tonnes from Q1 2013.
Shifts in the components of investment cancel out: net investment demand little changed, down 2%
First quarter investment demand of 282t was just 6 tonnes below Q1 2013. Bar and coin demand was down 39% from last year's elevated levels, while outflows from ETFs slowed to a virtual halt compared with outflows of 177t in Q1 last year.
view the World Gold Council Gold Demand Trends Q1 2014 report
Source: World Gold Council
The New Frontier: Economies on the Rise
May 19, 2014--There is a group of fast-growing low-income countries that are attracting international investor interest-frontier economies. Understanding who they are, how they are different, and how they have moved themselves to the frontier matters for the global economy because they combine huge potential with big risks.
Get to know them
The first thing to note is that some of these countries already have moved to the lower-middle income group. While a working definition of frontier economies is subject to further discussion, broadly speaking, these countries have been deepening their financial markets, such as Bangladesh, Kenya, Nigeria, Mozambique, and Vietnam.
Some also have been able to tap the international capital markets, such as Bolivia, Ghana, Honduras, Mongolia, Nigeria, Senegal, Tanzania, Vietnam, and Zambia. Their markets are, however, not as deep and liquid as those of the emerging markets, but compared to the latter, they offer higher returns and the benefits of a diversified portfolio.
Source: IMF Direct
ESMA publishes the second 2014 Risk Dashboard
April 16, 2014--The reporting period of this Report is 01 January 2014 to 31 March 2014, unless indicated otherwise.
view EMSA Risk Dashboard No. 2, 2014
Source: ESMA
Death of silver fix heralds overhaul for precious metal benchmarks
May 16, 2014--London's precious-metal price benchmarks' including silver' the century-old gold "fix" and platinum group metals are on the verge of major transformation, industry sources say, as regulatory scrutiny and lawsuits hasten action.
Customers of the daily London silver fix, used as a global benchmark, were shocked this week when its operator said it would stop administering the 117-year-old process on Aug. 14.
Source: Reuters
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
