Global ETF News Older than One Year
DECPG Weekly Brief -February 14, 2014
February 14, 2014--Several developing country currencies have depreciated since the start of the year, but a majority remained stable under
renewed market pressures. Despite the market turbulence, gross capital flows to developing countries picked-up in
January, driven by record volumes of sovereign and corporate bond issuances.
In a further positive development, recent business sentiment indicators generally point to strengthening activity in developing countries.
Developing-country currencies came under downward pressure in January amid a generalized correction in global equity markets. Changing market sentiment towards the end of January led to a sizeable retrenchment of global equity markets, with both high-income and developing country markets seeing losses of around 6 percent between January 21 and February 5. The sell-off was provoked by a 16 percent devaluation of the Argentine peso, and resulted in rising exchange-rate pressures on a number of emerging economies. While 45 percent of developing country currencies lost more than 1 percent against the US dollar, a majority of them were stable or even appreciated. More recently, Kazakhstan devaluated its exchange rate by around 20 percent against the dollar after seeing a rapid contraction in foreign reserves and under the influence of a weak Russian ruble. Currencies in Ukraine and Ghana also lost significant ground, despite the introduction of currency controls to limit capital outflows. The Turkish lira was initially hard hit, but an aggressive tightening of monetary policy later stabilized it. Market pressures seem to have abated in recent days.
Source: World Bank
SPDR Gold Fund holdings rise to a more than 7-week high
February 14, 2014--The world's largest gold-backed exchange-traded fund saw a spike in holdings of the metal this week, on the heels of a more than 4% weekly climb in prices for the precious metal.
The SPDR Gold Trust GLD +0.18% shows an increase to 25.925 million ounces as of Thursday, up 0.9% from Wednesday and at its highest total level since Dec. 20.
Source: MarketWatch
Diverging Markets: European stocks have led other global equity markets and emerging markets have significantly underperformed since the U.S. Fed began taper talk in June 2013, according to Russell Indexes.
February 14, 2014--As new U.S. Federal Reserve chair Janet Yellen testifies on the current state of the U.S. economy and U.S. Fed policy this week in Washington, Russell Indexes reflect a divergence in global equity markets since former Fed chair Ben Bernanke first announced the Fed tapering policy in June of last year.
From June 19, 2013, Bernanke's initial tapering announcement, through February 12, 2014, the Russell Eurozone Index returned 18.2%, followed closely by the more broadly represented Russell Developed Europe Index at 15.2%. The Russell 3000(R) Index, which represents the entire universe of U.S. stocks, returned 11.1% for this same time period, with U.S. small-cap stocks, as represented by the Russell 2000(R)Index (12.6%), outperforming U.S. large-cap stocks, as reflected by the Russell 1000(R) Index (11.0%).
Source: Russell Investments
Are Commodities Safe Yet?
Prices have taken a beating, but some advisers see opportunities
February 14, 2014--After watching commodities take a beating over the past three years, investors may want to consider carefully treading back into the sector, financial advisers say.
The average U.S. commodity-focused mutual fund and exchange-traded fund has gained 2.2% in 2014 through Thursday, according to Chicago-based investment-research firm Morningstar. Meanwhile, blue-chip stocks, as represented by shares of the SPDR S&P 500 ETF Trust, are down 0.91% over that period.
Source: Wall Street Journal
: FSB to review foreign exchange benchmarks
February 14, 2014--The Financial Stability Board was tasked by the G20 in 2013 to co-ordinate and guide work on the necessary reforms to short-term interest rate benchmarks, to ensure that widely-used benchmarks are held to appropriate standards of governance, transparency and reliability.
Within its broader mandate, the FSB will promote adoption and implementation of principles and good practices that emerge regarding the benchmark setting process. A high-level Official Sector Steering Group (OSSG) of regulators and central banks is taking this work forward[1].
Source: FSB (Financial Stability Board)
Morgan Stanley Sees Bond Evolution in Trade Jump: Credit Markets
February 14, 2014--Corporate-bond trading volumes are surging to the highest ever to start the year as investors adapt to a new reality of reduced dealer balance sheets by turning to electronically exchanged debt and smaller transactions.
Even as issuance of the securities slowed, the amount of investment-grade and junk bonds changing hands increased to $20.3 billion on average each day this year, 3 percent more than during the same period in 2013, Financial Industry Regulatory Authority data show.
Source: Bloomberg
EPFR Global News Release-Europe and Japan Equity Funds extend record start to year while EM outflows moderate
February 14, 2014--Year-to-date inflows for EPFR Global-tracked Japan and Europe Equity Funds pushed past the $9 billion and $17 billion marks respectively during the second week of February as both fund groups maintained their record setting start to 2014.
With equity markets in both developed and some emerging markets rebounding, flows into US Equity Funds bounced back and redemptions from Emerging Markets Equity Funds ran at half the levels seen during the previous two weeks.
Overall, Equity Funds posted collective net inflows of $11.5 billion for the week ending Feb. 12 while Bond Funds took in $4.72 billion and Money Market Funds $16.7 billion. Dividend Equity Funds posted back-to-back weekly outflows for the first time since early September as their attraction continues to wane despite further performance gains.
Visit www.epfr.com for more info
Source: EPFR
IMF Working paper-Debt and Growth: Is There a Magic Threshold?
February 13, 2014--Summary: Using a novel empirical approach and an extensive dataset developed by the Fiscal Affairs Department of the IMF, we find no evidence of any particular debt threshold above which medium-term growth prospects are dramatically compromised.
Furthermore, we find the debt trajectory can be as important as the debt level in understanding future growth prospects, since countries with high but declining debt appear to grow equally as fast as countries with lower debt. Notwithstanding this, we find some evidence that higher debt is associated with a higher degree of output volatility.
view the IMF Working paper-Debt and Growth: Is There a Magic Threshold?
Source: IMF
IMF Working paper-Commodity Price Shocks and Imperfectly Credible Macroeconomic Policies in Commodity-Exporting Small Open Economies
February 13, 2014-- Summary: In this paper, we analyze how lack of credibility and transparency of monetary and fiscal policies undermines the effectiveness of macroeconomic policies to isolate the economy from commodity price fluctuations. We develop a general equilibrium model for a commodity-exporting economy where macro policies are conducted through rules. We show that the responses of output, aggregate demand, and inflation to an increase in commodity price are magnified when these rules are imperfectly credible and lack transparency.
If policies are imperfectly credible, then transparency helps private agents to learn the systematic behavior of the autorities, reducing the effects of commodity prices shocks. Coherent with the model, we show cross-country evidence that monetary policy transparency and fiscal credibility reduce the incidence of export price volatility on output volatility. Also, our results indicate that having an explicit fiscal rule and an inflation targeting regime contribute to isolate the economy from terms of trade fluctuations.
Source: IMF
Active fund managers welcome return of volatility
February 13, 2014--It is the year of the stock picker, or at least that is what stock pickers are saying.
These active fund managers tend to make bold promises every year that they can beat the market and the passive funds that follow the indices. This year, though, they might be on to something.
Source: FT.com
