Global ETF News Older than One Year
DECPG Weekly Global Economic Brief -Economics and Financial Market Commentary
October 11, 2013--The stalemate in US budget negotiations and rising concerns about a potential technical default on US debt has
gradually affected market confidence. Contagion to developing countries has been limited but is likely to increase in the absence of a lasting resolution. Investment spending showed signs of improving further in the third quarter in high income economies, supported by strong consumer spending and still easy financial conditions.
The outlook, however, remains vulnerable to downside risks from fiscal policy uncertainty in the US. Officially recorded remittance flows to developing countries are projected to increase by 6.3 percent to reach $414 billion in 2013.
As the 17 October deadline for raising the US debt ceiling approaches, markets are re-pricing risk on key US assets. Since September 19, the US S&P 500 is down 3.3 percent, the VIX risk index up 14 percent and yields on 1-month US T-bills have increased sharply. Spillovers to developing countries have been muted thus far, with stock markets correcting 0.8 percent over the same period and bond spreads only up 9 basis points. However, contagion is likely to increase in the absence of a lasting resolution. A similar stand-off during the August 2011 US debt ceiling debate left significant financial turbulence in its wake despite a final hour deal. In the months that followed, developing countries' spreads rose 75bp, while stock markets and bond and equity issuances fell by 15 and 50 percent respectively. Past the October 17 deadline, the impact of an actual technical default are difficult to predict and will heavily depend on containment strategies. But a crisis scenario with consequences comparable to those of the 2008 financial crisis is possible.
Source: World Bank
China is the biggest danger to emerging market rally
October 10, 2013--Will emerging markets make a comeback in 2014? Although it may seem unlikely given the losses seen during the summer, some strategists and fund managers think so.
Investor nervousness sparked by the US government shutdown and looming debt ceiling have capped the gains of stocks, bonds and currencies in the developing world, but September was nonetheless a positive month for most markets.
Source: FT.com
IMF-Commodity Market Monthly
October 10, 2013--Commodity prices fell by 0.3 percent in September,with declines in agriculture prices on
improving supply prospects,and in metals prices where many markets are in surplus amid demand concerns. Energy prices edged higher due to supply constraints but these have eased recently. For the first nine months commodity prices rose 1.4 percent, led by a 7.5 gain in crude oil prices,
partly offset by declines in metals and agriculture prices of 7.7 and 4.4 percent, respectively.
Crude oil prices rose 0.7 percent in September-up for a fourth straight month-and averaged$108.8/bbl following strong summer demand, supply outages and rising geopolitical tensions. However, prices peaked in early September at $112/bbl and fell below $106/bbl in early October on slowing demand, recovering output in Libya, and reduced market concerns with regard to Syria and Iran. Crude oil demand is weakening seasonally as refiners enter maintenance that typically peaks in October. Libya's oil production has rebounded from less than 0.2 mb/d in early September to around 0.7 mb/d following negotiations with protesters in the western part of the country. Meanwhile ports and terminals in eastern Libya remain closed (with the exception of Brega) and are unlikely to reopen soon as strikers seek greater autonomy. Outages in a number of other countries persist, helping support prices. Iraq's production fell 0.4 mb/d mainly due to development work at the offshore Basrah oil terminal, but pipeline leaks also affected output. Saudi Arabia reportedly raised output above 10 mb/d to meet market demand.
Source: IMF
Emerging Markets Need 'Second Generation' of Reforms
Emerging markets more resilient compared to earlier crises
But changing global conditions are exposing problems in emerging markets
Next generation of reforms vital for lasting growth
October 10, 2013--After years of strong performance, emerging economies are experiencing a slowdown, and a new round of reforms will be necessary if growth is to be sustained in the face of a more challenging external environment, panelists told a seminar at the IMF-World Bank Annual Meetings.
At "Emerging Markets: Restoring the Momentum," a group of experts observed that most emerging economies have reaped substantial benefits over the past decade from cheap capital, high commodity prices, and strong growth in China.
But a tightening in global financial conditions in recent months is exposing a divergence in these economies-some have strengthened economic fundamentals, while others simply rode the wave of good fortune.
Thanks to reforms pursued after the financial crises of the 1990s, many emerging economies are now more resilient and better able to avert any problems that arise as a result of a reversal of the positive external conditions. In order to boost their growth potential, however, these countries may now need to pursue a second generation of reforms, the panelists said.
Source: IMF
IntercontinentalExchange Update on NYSE Euronext Acquisition
October 10, 2013--IntercontinentalExchange, a leading operator of global markets and clearing houses, today provided the following statement and timeline for completing its acquisition of NYSE Euronext.
ICE and NYSE Euronext have established a closing date of November 4, 2013 for their previously announced transaction.
The November 4, 2013 closing date is predicated upon the receipt by IntercontinentalExchange and NYSE Euronext of remaining European regulatory approvals prior to such date, and may be extended to a later date by further public announcement should any necessary approvals remain outstanding at such date.
Source: IntercontinentalExchange
Better Quality Investments needed in the Middle East and North Africa Region to Boost Shared Growth
Long period of political instability has affected both the quality and quantity of investments, skewing them towards activities that create the least jobs
October 10, 2013--Ongoing political turmoil in 2013 has weighed down economic activity in the Middle East and North Africa (MENA) region. The World Bank Group's latest Economic Developments and Prospects report projects MENA's economic growth in 2013 to average 2.8 percent, half the estimated 5.6 percent in 2012.
In oil-importing countries, growth is expected to remain weak and fiscal and external deficits to persist. In developing oil-exporting countries, the pace of economic expansion is slowing considerably due to unfavorable developments. The economic expansion in the Gulf Cooperation Council economies will slow down relative to 2012, but their growth will be the region's strongest. If the political situation evolves toward greater stability and clarity, growth will pick up and average 4 percent in 2014, but a variety of risks, mostly domestic in nature and linked to political instability, threaten this outlook.
Source: World Bank
Countries should make carbon pricing the cornerstone of climate policy, says OECD
October 9, 2013--Credible and consistent carbon pricing must be the cornerstone of government actions to tackle climate change, according to a new OECD report.
Releasing the report Climate and carbon: Aligning prices and policies during a Lecture organised jointly with the London School of Economics, OECD Secretary-General Angel Gurría said that a transformation of the global energy system is needed if countries hope to limit climate change to a 2ºC temperature increase from pre-industrial levels, as agreed by the global community. He called for a coherent approach to carbon pricing, to ensure that price signals sent to consumers, producers and investors alike are consistent and facilitate the gradual phase-out of fossil fuel emissions. He also questioned how much impact existing climate policies can have when countries around the world continue to subsidise the exploration, production and use of fossil fuels. Read Mr. Gurría's speech on The climate challenge: achieving zero emissions.
view the OECD report-Climate and carbon: Aligning prices and policies
Source: OECD
Chinese, European central banks strike currency swap deal
October 9, 2013--The Chinese and European central banks said Thursday they reached agreement to set up a "currency swap" mechanism for the purchase and repurchase of their respective currencies, the yuan and euro.
The "bilateral currency swap arrangement" will be valid for three years, the European Central Bank said in a statement on its website.
Source: EUbusiness
JPMorgan launches $3.3 billion physical commodity business sale
October 9, 2013--JPMorgan Chase & Co (JPM.N) has launched the sale of its physical commodities business, circulating offering documents to potential buyers and valuing the assets at $3.3 billion, according to a person familiar with the matter.
JPMorgan's sales pitch comes after the bank announced it was exiting physical commodity trading in July, as Wall Street faces heightened scrutiny from regulators and politicians on their role in the natural resources supply chain.
Source: Reuters
NYSE Euronext Announces Trading Volumes for September 2013
Global Derivatives ADV Down Year-over-Year but Up Sequentially
European and U.S. Cash Equities ADV Down Year-over-Year but Up Sequentially
October 9, 2013--NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for September 20131.
Global derivatives average daily volume ("ADV") of 6.5 million contracts, excluding Bclear in September 2013 decreased 7.5% compared to September 2012, but increased 12.7% from August 2013. U.S. equity options volumes in September 2013 decreased 11.7% compared to September 2012, but increased 8.8% sequentially. ADV in U.S. cash equities declined 9.3% year-over-year, but increased 13.1% month-over-month. European cash equities ADV in September 2013 decreased 5.8% compared to September 2012, but increased 4.8% from August 2013 levels.
Source: NYSE Euronext
