Global ETF News Older than One Year
IMF 2012 Spillover Report-Background Papers
November 21, 2012--Summary:This note conducts a business cycle accounting analysis for systemic economies, with an emphasis on spillover effects from macroeconomic versus financial shocks.
The systemic economies under consideration are China, the Euro Area, Japan, the United Kingdom, and the United States. This analysis is based on historical decompositions of output growth derived from the estimated structural macroeconometric model of the world economy, disaggregated into thirty five national economies, documented in Vitek (2012). Within this framework, each economy is represented by interconnected real, external, monetary, fiscal, and financial sectors. Spillovers are transmitted across economies via trade, financial, and commodity price linkages.
view the IMF 2012 Spillover Report-Background Papers
Source: IMF
Credit Suisse splits off investment bank
Swiss bank announces plans to carve out investment banking from newly merged private banking and wealth management
November 20, 2012--Credit Suisse cited "the new regulatory reality" as it announced plans to carve out its investment banking from its newly merged private banking and wealth management business.
The move comes amid turmoil in Swiss banking with UBS axing 10,000 roles as it pulls out of areas of investment banking, such as bond trading, that are not profitable enough.
Sandy Chen, analyst at Cenkos Securities said the Credit Suisse restructuring put pressure on the new management of Barclays to cut costs at its investment bank. "There is now scope for disappointment if Barclays doesn't announce a similarly bold restructuring."
Source: The Guardian
IOSCO Emerging Markets Prepare for Bigger Role in the Global Economy
November 20, 2012--The emerging market members of the International Organization of Securities Commissions (IOSCO) met in Santiago de Chile this week to continue work aimed at preparing emerging securities markets to play a bigger role in driving growth in the global economy.
Fernando Coloma, Chair of the Superintendencia de Valores y Seguros, Chile, chaired the meeting. Masamichi Kono, Chairman of the IOSCO Board attended the meeting. During its Annual Conference on 19 – 21 November, members of IOSCO’s Emerging Market Committee (EMC) debated its future within IOSCO, while stressing the importance of building regulatory capacity and developing safe and robust securities markets in emerging economies.
The EMC comprises eighty-six members that account for more than 80% of IOSCO’s ordinary membership. The EMC members also represent the world’s fastest growing economies and include 10 of the G-20 members. Emerging economies are expected to represent a growing portion of IOSCO membership as new members continue to join.
Source: IOSCO
Credit Suisse Shakes Up Management in Restructuring
November 20, 2012--Credit Suisse shook up its management team on Tuesday, appointing a co-head of investment banking and merging its asset management division into its wealth management and private banking unit.
The announcement comes less than a month after Credit Suisse said it would find additional cost savings totaling 1 billion Swiss francs by 2015. The bank now expects to save a combined 4 billion francs ($4.25 billion), partly from the previously announced layoffs of 3,500 workers.
Source: NY Times
Macro Matters- Global Markets Retreated on Persistent Uncertainties
November 20, 2012--China-New leadership announced.
Both Hong Kong and China market dropped as investors reduced risk exposure given uncertainties over the policies of the new leaders.
Early this week, encouraging export data and a pledge by the country’s securities regulator to support the domestic market triggered bargain hunting in big-name property counters and banks.
However, markets, in particular property developers, dropped after Xinhua reported the country’s housing minster saying that Beijing is "actively studying" expanding property tax beyond Chongqing and Shanghai, Chinese.
The China’s ruling communist Party unveiled the new leadership on Thursday. Xi Jin Ping, the new leader of China's ruling Communist Party, emphasized the need for continued economic reforms and ousting corruption from the Party without using most of slogans that his predecessor did, which some viewed positively.
India-Weak economic data dragged down market.
Indian market retreated in the week of Dawali festival on continued concerns over the U.S. budget talks and EU debt issues and disappointing industrial production data.
Amid continued weak cues from global markets including the U.S. and Europe, disappointing industrial production dragged down the market. Industrial production unexpectedly contracted by 0.4%.
Manufacturing output, which accounts for three-quarters of the Index of Industrial Production, contracted by 1.5 percent while capital goods — such as factory plant equipment — plunged by 12.2 percent.
Brazil-Lack of momentum across the board.
Markets retreated in the week ending November 15th. The combination of a weak Q3 earnings season in Brazil and renewed concerns over the growth outlook in the developed world have resulted in deterioration in market sentiment and flows.
The Brazilian market lacks momentum across the board, with domestically focused YTD outperformers seeing profit taking, and large cap exporters / commodity plays / banks yet to attract significant interest despite underperformance and depressed headline valuation.
The Economic Activity Index (IBC-Br) posted a negative print of 0.52% in September month-on-month, following the +0.95% MoM gain reported in August.
Russia-Global uncertainties continued to persist.
Euro zone finance ministers are to reconvene to decide on the disbursement of the next installment of financial aid to Greece, following the adoption of deeper austerity measures passed by the Greek parliament last week.
In the US, talks begin in Congress over a deal to avert / moderate $607bn in automatic spending cuts and tax hikes in January. The ability of policymakers on both sides of the Atlantic to successfully negotiate both the Euro zone sovereign debt crisis and US Fiscal Cliff will have a material impact on near-term market direction.
Source: Mirae Asset Financial Group
Yet Another Blow to Modern Portfolio Theory
November 19, 2012--Modern Portfolio Theory is predicated on the ability to construct an efficient frontier based on returns, correlations, and volatility.
Each of these parameters needs to be accurate for the efficient frontier to be accurate. Since forecasting is tough, often historical averages are used. Since the next five or ten years is never exactly like the last 50 years, that method has significant problems. Apologists for modern portfolio theory claim that better efficient frontiers can be generated by estimating the inputs. Let’s imagine, for a moment, that this can actually be done with some accuracy.
There’s still a big problem. Volatility bumps up during adverse market conditions, as reported by Research Affiliates. And correlations change during declines—and not in a good way.
From the abstract of a recent paper, Quantifying the Behavior of Stock Correlations Under Market Stress:
view the Quantifying the Behavior of Stock Correlations Under Market Stress
Source: systematicrelativestrength.com/
Regulation by proxy for index providers-Deborah Fuhr
November 19, 2012--For index providers, the devil is in the detail following the unveiling of regulations designed for exchange trade funds and European Ucits funds.
At the start of the process, regulators set out to concentrate their attention on investment and systemic issues relating to ETFs.
Later they realised they needed to look at issues which affected Ucits funds in general, not solely ETFs. In July, the European Securities and Markets Authority published its guidelines. Its decision to broaden the debate further brought into focus a series of concerns about retail investment funds and the type of investments they could hold.
Source: Financial News
ETFs Precious Metals Weekly: Gold ETP Holdings Hit All-Time High on Fiscal Cliff and Greece Debt Fears
November 19, 2012--Global gold ETP holdings hit an all-time high last week.
Concerns the US may not be able to avoid going off the "fiscal cliff" at the end of the year and Greece may have trouble having its next bailout disbursement approved, caused investors to continue to build their gold ETP holdings as a hedge against worst case scenarios. Official data last week confirmed that the Eurozone is back in recession for the first time in three years. Despite the two-year extension given to Greece to meet its fiscal targets, uncertainty remains over how the funding gap resulting from this extension will actually be financed. The Eurogroup meeting this week will be closely watched to gauge the likelihood that Greece has its next disbursement agreed upon by the Troika and necessary national parliaments by the end of the month. Until Greece's disbursement clears these approvals and there are clear signs the US Congress can find a fiscal compromise, markets are likely to remain on edge and demand for perceived safe havens such as gold are likely to remain high.
Fed hints at further quantitative easing. The FOMC minutes from the October meeting revealed that the US Federal Reserve is considering adding to QE3 in the new year and is open to experimenting with new tools. The Fed chairman also cautioned in a speech that the nascent housing market recovery is fragile, with the implication that the market continues to need the Fed's support buying mortgage-backed securities. The Fed's commitment to further easing should help support precious metals as a hedge against potential debasement of the US dollar.
Johnson Matthey expect platinum and palladium to be in deficit this year. Johnson Matthey's much-anticipated interim review estimates the platinum market will move from surplus in 2011 to a deficit in 2012. The on-going disruption to mines in South Africa and low levels of metal recycling are holding back supply, while demand remains firm. The report also highlighted that rising vehicle production growth in Japan and the US and continuing substitution of platinum in both light and heavy duty diesel catalysts are also likely to drive the palladium market into a substantial deficit this year. The palladium price reacted strongly to the news, rising 4% after the release.
Visit www.etfsecurities.com for more info.
Source: ETF Securities
BlackRock shifts iShares' chief strategist to broader company role
November 19, 2012--Russ Koesterich was named chief investment strategist at BlackRock (BLK).
The position is new. Mr. Koesterich "will focus on communicating the firm's investment strategy and perspective on the markets and economy to investors," according to a news release.
Mr. Koesterich will report to Ken Kroner, senior managing director and global head of multiasset strategies, and will continue in his current role as global investment strategist for BlackRock's iShares business.
Source: Pensions & Investments
Index Industry Association appoints executive director
November 19, 2012--The Index Industry Association (IIA) has appointed Rick H. Redding as its first executive director.
The IIA also announced that Russell Index Group, Russell Investments has joined the association, following in the footsteps of Barclays and Nasdaq OMX Global index Group who both joined in June.
Rick Redding has spent most of his career in senior leadership roles with The CME Group, a leading provider of benchmark futures and options products and an innovator in futures trading. Rick held the post of managing director, products and services at CME. In this role he led global sales, product development, and strategic global growth initiatives. He played an integral part in the transition of CME’s ownership stake in Dow Jones Indexes to the S&P Dow Jones Indices joint venture. He also held senior positions in CME’s index products division.
Source: FTSE Global Markets
