Global ETF News Older than One Year
ETFS Precious Metals Weekly-Gold Revisits US$1,200/oz Support as Strong Data Raises Early Tapering Risks
December 9, 2013--Market expectations rise on the FOMC signalling a reduction in bond buying this month. Better-than-expected economic data from the US reignited fears of early tapering by the Fed,keeping commodity price gains in check,particularly precious metals. Despite the US government shutdown,US economic data has been consistently positive. Economic indicators continue to point to a pick-up in US economy,with the November manufacturing and jobs data both surprising on the upside.
We expect the US Federal Reserve to begin to taper bond purchases in Q1 2014 as the employment picture continues to strengthen. Fed tapering is likely to provide support for the US dollar in the near-term - historically a headwind for gold price performance. The gold price has been under strong downward pressure in 2013,but last week the market appeared to draw a line-in-the-sand at the US$1,200/oz. level. There now appears to be an almost unanimous consensus belief that US economic growth,interest rates and the dollar will rise next year. This scenario is also now reflected in gold futures and ETF positioning. If there is any disappointment in US growth numbers or reduced confidence stemming from the brewing government budget fight,the tail risk event in 2014 could be a surprise counter-consensus rally of the gold price.
Source: ETF Securities
New research finds HFT improves market fairness-CMCRC
December 9, 2013-- New research from the Capital Markets Cooperative Research Centre (CMCRC) has found that the presence of high frequency traders improves market fairness by reducing end of day price dislocation. Professor Michael Aitken, CMCRC CEO, said that End of Day (EOD) price dislocations whether they occurred by fair means or foul were troublesome for markets and that any market structure change which mitigates the incidence of such changes should be seen as a positive outcomes for the marketplace.
“EOD prices are often used to determine the expiration value of directors' options, the price of seasoned equity issues, evaluate broker performance, calculate net asset values of mutual funds, and compute stock indices," he said. "So on the one hand there's clear incentive to manipulate the closing price by ramping end of day trading to push the closing price to an artificial level. However, EOD dislocation could also simply reflect price pressure brought on by the fact that the market is about to close for 18 hours. Either way, EOD dislocation of prices is not a good look for markets."
view the High Frequency Trading and end-of-day price Dislocation
Source: Capital Markets Cooperative Research Centre (CMCRC)
BIS-December 2013 Quarterly Review: Low rates boost credit markets
December 8, 2013--Easy money continued to drive financial markets. Searching for yield,c investors extended credit to riskier firms at progressively lower rates and on looser terms. But banks, especially in the euro area, struggled further to regain the market's confidence.
The Fed's hint that it might "taper" its asset purchases was followed by a sharp fall in cross-border credit to some large emerging market economies.
Daily turnover in the global FX market reached an all-time high of $5.3 trillion in April 2013. Non-dealer financial institutions are playing a more active role, as Dagfinn Rime (Central Bank of Norway) and Andreas Schrimpf (BIS) show.
Monthly FX market turnover has fallen since the Triennial Central Bank Survey in April 2013, report Morten Bech and Jhuvesh Sobrun (BIS).
view the BIS Quarterly Review December 2013- International banking and financial market developments
Source: BIS
BlackRock Is The Biggest Investor In The World - Is Its Dominance A Problem?
December 7, 2013--ASK conspiracy theorists who they think really runs the world, and they will probably point to global banks, such as Citigroup, Bank of America and JPMorgan Chase. Oil giants such as Exxon Mobil and Shell may also earn a mention. Or perhaps they would focus on the consumer-goods firms that hold billions in their thrall: Apple, McDonald's or Nestle.
One firm unlikely to feature on their list is BlackRock, an investment manager whose name rings few bells outside financial circles. Yet it is the single biggest shareholder in all the companies listed above. It owns a stake in almost every listed company not just in America but globally. (Indeed, it is the biggest shareholder in Pearson, in turn the biggest shareholder in The Economist.)
Source: Business Insider
The monolith and the markets
Getting $15 trillion in assets on to a single risk-management system is a huge achievement. Is it also a worrying one?
December 7, 2013--EAST WENATCHEE, in Washington state, is known for its apples, not for its financial services. But in a data centre nestled between the orchards and hills, a cluster of 6,000 computers oversees the assets of over 170 pension funds, banks, endowments, insurance companies and others.
Whirring around the clock, the machines look at what interest-rate changes, or bank collapses, or natural disasters could mean for trillions of dollars of assets. Around the world, 17,000 traders have the computers’ assessments of these risks at their fingertips when they buy or sell assets.
Source: The Economist
BlackRock Research-ETP Landscape-US and European Equities lead flows
December 6, 2013--Highlights:
Global ETP flows were $15.8bn during November, more moderate relative to the past two months as expectations resurfaced that Fed tapering may come sooner rather than later.
November Equity flows revealed a tale of two halves with Developed Markets taking in $21.5bn while Emerging Markets experienced outflows of ($4.7bn).
Pan European flows maintained momentum gathering $3.5bn although the pace slowed from the record setting totals witnessed in the prior three months. Year-to-date the category has gathered $24.0bn in contrast to outflows of ($6.5bn) from German ETPs.
US Equities gathered $9.9bn, with investors cautious and looking to protect gains amid concerns that valuations may be stretched. Large Cap and Sector funds fared the best but were offset by Small Cap redemptions.
Source: BlackRock ETP Landscape Research
DECPG Weekly Global Economic Brief
December 6, 2013--Business confidence surveys are indicating a further improvement in global activity, supported by strengthening demand
in high income economies and China. This has translated into a rebound in exports of developing countries, and
contributed to narrowing of their trade deficits.
After a rebound in September, capital flows to developing countries weakened for a second consecutive month, reflecting concerns that the US Federal Reserve may begin to taper its quantitiative easing as the US economy strengthens.
Business surveys point to further firming in global activity.
Following earlier softness in Q3, November manufacturing Purchasing Manager’s Indices (PMIs) signal accelerating output growth. Business confidence rebounded to its highest level in 2013 in the US as drags from the October government shutdown faded, and rose to a 50-month high in Japan. Euro Area PMIs indicated a fifth consecutive month of expansion, signaling the durability of the ongoing recovery. Sentiment also remained firm in China, suggesting that the recent policy-induced rebound in growth remains intact. In turn, stronger demand in high income economies and China is bolstering sentiment and activity elsewhere. Barring Brazil and Indonesia (where domestic demand has weakened), November PMIs point to improving business conditions in Mexico, Turkey, Hungary, South Africa and India in part supported by rising external orders. Going forward, the sustained pickup in developing-country exports (14.9% 3m/3m annualized in October vs 1.7% in September) should help mitigate weaknesses in domestic demand.
Source: World Bank
Fund flows muted as investors look ahead to Fed's December meeting and the New Year
December 6, 2013-- With better than expected US data triggering visions of less quantitative easing by the New Year, there was an appreciable 'tapering' of flows into many EPFR Global-tracked Equity and Bond Fund groups during the week ending Dec. 4.
Among the fund groups taking in less money- or posting bigger outflows - than the previous week were US, Japan, Europe, and Emerging Markets Equity Funds and Europe, Global, US, High Yield and Asia-Pacific Bond Funds.
Overall, investors pulled a net $2.03 billion out of Equity Funds, which experienced their fifth straight week of retail redemptions, and $376 million from Bond Funds while Money Market Funds, a proxy for cash, saw over $31 billion flow in. Dividend Equity Funds posted inflows for the eighth time in the past 10 weeks, but the amounts committed maintained the broad downward trend since flows peaked in late 1Q13.
Visit www.epfr.com for more info
Source: EPFR
Euronext Monthly ETF Activity Report-November 2013
December 6, 2013-Highlights:
Listings
In November, we welcomed FinEx as a new issuer to our markets with 1 ETF listing. In addition, there were 6 new ETF listings from iShares.
At the end of November, Euronext's markets counted 650 listings of 560 ETFs from 17 issuers.
Trading activity
Average daily value traded on-book in November of €195.0 million, an increase of 1.4% vs October 2013, and down 7.3% vs November 2012.
Total value traded on-book amounted to €4.1 billion, a decrease of 7.5% vs October 2013, and down 11.6% vs November 2012.
Average of 6,226 on-book trades (single-counted) executed daily last month, an increase of 0.1% vs October 2013, and down 4.4% vs November 2012.
Total of €138.6 million exchanged in block trades in November, down 70.1% from the €464.1 million in October and down 79.1% vs November 2012.
Overall, block trade volume represented 3.4% of the total regulated market ETF trading activity on Euronext.
Assets Under Management (AUM)
At the end of November 2013, the combined AUM of all ETFs listed on Euronext's markets totalled €162.6 billion.
Market Quality
In November, 4 LPs took on liquidity responsibilities for 25 new LP contracts on 25 different ETFs:
Flow Traders expanded their current activity with a total of 12 new ETFs: 4 Amundi ETFs, 4 iShares ETFs, 2 Lyxor ETFs, 1 HSBC ETF and 1 Vanguard ETF.
Susquehanna took the lead on 5 of the new iShares ETFs, while also adding 2 Lyxor ETFs and 1 EasyETF to their list.
Goldenberg Hehmeyer took the lead on the new FinEx ETF and also commenced activity on 1 Lyxor ETF.
UBS took the lead on one of the new iShares ETFs.
Median spread for all listed ETFs of 24.1 bps, an enhancement of 5% vs October 2013 and down 32% vs November 2012.
23 Liquidity Providers currently active on ETFs.
ETP Service Update
ETF Liquidity Provider programme fee schedule modification: The review of the fee scheme has been carried out to further incentivise liquidity provision on ETFs and enhance market quality through tighter spreads and deeper liquidity. With this change, we aim to facilitate asset gathering on existing products and also further support the launch of new products, by encouraging more Liquidity Providers (LPs) on initial ETF product launches.
Launch of multicurrencies for Exchange Traded Products: The new facility will enable a single product to be listed and traded in different currencies on separate NYSE Euronext European venues through dedicated Euronext codes and trading symbols, but with a single ISIN code. The multi-currency listing and trading will facilitate investor access by removing currency barriers, and will offer broader investment opportunities. For more information visit http://etp.nyx.com
view US ETP Monthly Flash report
Source: NYSE Euronext
ETF and ETP Assets Have Surpassed or Are Posed to Surpass Assets Invested in Hedge Funds
December 6, 2013--A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade futures and options, and invest in almost any asset class or market where it sees opportunities with a goal of delivering absolute returns while minimizing risk and volatility and preserving capital.
Since the end of September 2013 hedge funds in the US have been allowed to advertise that they are looking to raise assets.
Source: NASDAQ OMX
