Global ETF News Older than One Year
Economic Outlook June 2012 - Uncertainty weighing heavily on the economy
June 15, 2012--ECONOMIC SITUATION
The increase in political and financial uncertainty associated with the euro and, in particular,
the banking system has damaged business confidence. BUSINESSEUROPE expects GDP
growth to be 0.1% this year and 1.4% in 2013 in the EU 27.
Net exports will be the only main demand component contributing positively to GDP growth this year as businesses take advantage of growth in the global economy.
Unemployment is expected to reach its highest level in almost 20 years. While both labour market and overall economic performance differ widely among Member States, average EU unemployment levels will reach 10.5% this year, and 10.8% in 2013.
Investment is being constrained by both weak demand and access to finance. BUSINESSEUROPE expect the cost and difficulty of access to finance to increase even more over the next 6 months, placing further pressure on business survival and expansion.
Source: European Business
IMF Working paper-Government Bonds and Their Investors: What Are the Facts and Do They Matter?
June 15, 2012--Summary: This paper introduces a new dataset on the composition of the investor base for government securities in the G20 advanced economies and the euro area. During the last decades, investors from abroad have increased their presence in government bond markets.
The financial crisis broke this trend. Domestic financial institutions allocated a larger share of government securities in their portfolios, as Japan has done since its crisis in the 1990s. Increases in the share held by institutional investors or non-residents by 10 percentage points are associated with a reduction in yields by about 25 or 40 basis points, respectively. The data show a varied lead-lag relationship between bond yields and investor holdings. Portfolio balance estimates suggest that a change in statutory or regulatory holdings of government securities to the tune of 10 percent of the outstanding stock causes expected returns to decline by 7 to 25 basis points.
Source: IMF
EPFR Global Fund Data-Investor flows adopt "anywhere but Europe" strategy, however Global Equity managers increase allocation to Europe
June 15, 2012--With Spain's sovereign ratings dragged closer to junk territory by the admission its banks need to be recapitalized to the tune of $120 billion and Greece about to head to the polls for the second time in as many months,funds with European mandates found themselves shunned during the second week of June.
EPFR Global-tracked Europe Bond Funds experienced their biggest weekly redemptions since early December and Europe Equity Funds posted outflows for the tenth time in the past 12 weeks as investors again looked to the US and tangible assets such as gold.
Developed Market Equity Fund Flows
Flows into EPFR Global-tracked Developed Markets Equity Funds during the second week of June were, at first glance, surprisingly robust. But short-term trading of US ETFs and commitments to Japanese ETFs tied to the Bank of Japan’s asset purchase program again underpinned the week’s flows.
Predictably, Europe Equity Funds posted outflows for the fourth straight week as Spain joined the Eurozone’s bailout club and Greeks prepared to vote in an election many believe is their last chance to avoid leaving -- or being pushed out of -- the currency union. Less predictably, German Equity Funds also posted outflows for the fourth week running. "In addition to the problems in its backyard, Germany’s export story is coming under scrutiny as key emerging markets such as China continue to slow," said Cameron Brandt, EPFR Global’s Director of Research.
Visit http://www.epfr.com for more info
Source: EPFR
Liquidity remains a priority for investors
June 15, 2012--Private clients are still seeking reassurance from wealth managers that their portfolios are flexible enough to negotiate stock market volatility.
During the financial crisis of 2008, clients of several wealth management firms discovered that their portfolio managers were unable to sell holdings and cut losses – because they had committed so much money to illiquid assets that had no functioning secondary market.
Source: FT.com
OPEC Maintains Oil Quota as Price Decline Brings Compromise
June 14, 2012--The Organization of Petroleum Exporting Countries kept its production ceiling unchanged, as concern that global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices.
The 12-member group agreed to leave the limit at 30 million barrels a day, Youcef Yousfi, Algeria’s Minister of Energy and Mines, said today in Vienna at the end of the producer group’s first meeting of the year. Venezuela, Angola and Ecuador were among nations that backed keeping the quota unchanged prior to the decision. Saudi Arabia, whose minister, Ali al-Naimi, had said this week he might favor a production increase, said he was “happy” with today’s outcome.
Source: Bloomberg
IOSCO Publishes a Report on Institutional Investors in Emerging Markets
June 14, 2012--The International Organization of Securities Commissions has published today a report on Development and Regulation of Institutional Investors in Emerging Markets, which focuses on a wide range of developmental
issues and challenges faced by emerging markets seeking to develop their institutional investor base.
Some of these challenges include limited capital market size and liquidity, competition to capital market investment from substitute services, regulatory restrictions, overly dominant distribution channels and constraints on cross-border activities. Additional discussions on related macro-economic and capital market conditions in the emerging markets and analysis of cross-border activities of institutional investors are also included in the report.
view the IOSCO report-Development and Regulation of Institutional Investors in Emerging Markets
Source: IOSCO
Fine wine fund
June 13, 2012--French asset management company Uzes Gestion recently toasted the launch of its Uzes Grands Crus wine fund created to lure investors with a thirst for fine wines and profits.
Similar funds exist outside France, but theirs is the first regulated by French authorities and likely will appeal to French and other investors. It also couldn't come at a better time.
Source: FIN24
Mirae Asset-BRICs weekly-Global Focus on the Spanish Banking Sector
June 13, 2012--China-Central bank cuts interest rates for the first time in 3 years.
Hong Kong and China stock markets ended last week unchanged as investors waited for May economic data to see if stronger easing measures will be introduced.
The People’s Bank of China (PBoC) cut the benchmark one-year deposit and lending rates by 25bp to 3.25% and 6.31% respectively.
India-More than USD 6 billion set for 2012-13 to revive economy.
With the outlook for the Euro region getting worse, Asian countries such as India and China have launched new measures to support growth. In light of the expectations that policy makers are going to do more to stimulate growth, the Indian market went up last week.
Indian stocks reached the highest level in a month, after Prime Minister Manmohan Singh announced a $6.3 billion stimulus package on June 6 to fund infrastructure projects in order to boost the economy. The package includes port, railway and road projects, as well as additional power-generation capacity.
Brazil-Markets subdued as it monitors news from Europe.
Brazilian equities traded sideways in the week ending June 7th, with the MSCI Brazil falling by 40bps in USD terms, and suffering a correction of 11.9% over the past month. In the absence of further material developments within the Eurozone financial sector, market flows remained light with Brazil seeing modest net outflows.
May’s Brazilian CPI (IPCA) posted an increase of 0.36% month-on-month, which was below market consensus. The year-on-year IPCA inflation rate fell to 4.99%, again below the ceiling of the inflation target. This downward trend will continue in the coming months due to subdued local and external economic activity.
Russia-Europe in the spotlight as Russian investors adopt wait-and-see approach.
The Russian market finished higher on June 4 for the first time in four sessions.
Another violent session, with the Bank of England and the Federal Reserve not helping, but People’s Bank of China rate cut welcomed by all. Real money is still not chasing the rally.
Source: Mirae Asset
MSCI to Announce Classification Review Results on June 20
June 13, 2012--MSCI Inc. (MSCI) (MSCI), whose stock indexes are tracked by investors with about $7 trillion in assets, will release the results of its 2012 annual market classification review on June 20.
The decision will be announced shortly after 11 p.m. Central European Summer Time, MSCI said in a statement on its website. MSCI is reviewing South Korea and Taiwan for a potential reclassification to developed markets, and Qatar and the United Arab Emirates to emerging markets.
Source: Bloomberg BusinessWeek
IMF Working Paper-Fiscal Transparency, Fiscal Performance and Credit Ratings
June 13, 2012--Summary: This paper investigates the effect of fiscal transparency on market assessments of sovereign risk, as measured by credit ratings. It measures this effect through a direct channel (uncertainty reduction) and an indirect channel (better fiscal policies and outcomes), and it differentiates between advanced and developing economies.
Fiscal transparency is measured by an index based on the IMF’s Reports on the Observance of Standards and Codes (ROSCs). We find that fiscal transparency has a positive and significant effect on ratings, but it works through different channels in advanced and developing economies. In advanced economies the indirect effect of transparency through better fiscal outcomes is more significant whereas for developing economies the direct uncertainty-reducing effect is more relevant. Our results suggest that a one standard deviation improvement in fiscal transparency index is associated with a significant increase in credit ratings: by 0.7 and 1 notches in advanced and developing economies respectively
view the IMF Working Paper-Fiscal Transparency, Fiscal Performance and Credit Ratings
Source: IMF
