Global ETF News Older than One Year
Global finance 'dangerously close' to Ponzi scheme status, say selectors
Fund selectors believe the world of global finance is becoming an increasingly high risk enterprise according to a poll at Citywire's Germany event in Cologne.
When questioned over whether global finance has become a ponzi scheme an overwhelming majority (66%) said it is getting dangerously close to turning into this type of fraudulent operation.
Just under a third (23%) had a more positive view of markets' efficiency believing it is currently alive and well. Only 6% had the bleak outlook that we are tittering on the edge of failure and that one more wrong move could mean disaster.
Source: CityWire
Brics eye joint anti-crisis fund
June 21, 2012--Major emerging economies may set up a joint anti-crisis fund if they do not receive enough say in decision making at the International Monetary Fund (IMF) under proposed voting reforms, a senior Russian official said.
The leaders of Brics nations - Brazil, Russia, India, China and South Africa - pledged at the Group of 20 summit in Mexico to chip in $75bn to boost the IMF’s lending power but had sought to tie the loans to voting reforms.
Source: FIN24
Moody's downgrades 15 major banks
Bank stocks were hit hard in anticipation of the move.
June 21, 2012--Thursday's downgrade of 15 big global banks is just the latest stop on Moody's Investor Service's world tour of the financial sector.
Back in February, Moody's announced that it would review the credit ratings of 17 global investment banks. On May 14, it downgraded the credit ratings of Italian banks that included UniCredit and Intesa Sanpaolo (ISNPY -2.52%). On May 18 it downgraded 16 Spanish banks including Banco Santander (SAN -2.72%). June 6 brought downgrades to seven German and three Austrian banks.
Source: MSN Money
DCGX Academy-FED SPEAKS:Operation Twist: Sell 267$B short term, buy long term
June 21, 2012--HIGHLIGHTS
FED ACTIONS
Operation Twist : Sell 267$ Billion of short term debt (Less than 3 Years) and Buy debt (6-30) long term
It will help to put downward pressure on longer term interest rates make financial condition more accommodative
Fed Cut its growth projection 1.9 % from 2.9%
Joblessness predicted at 8.2%
Rupee
Declines for the 4th Day @ 56.40
INR declined by 25 paise to 56.40 at opening on stronger dollar against euro and Asian currencies overseas. Iincreased demand from importers and a weak opening in the local equity market also put pressure on the rupee, traders said. Dollar gained against euro in overseas markets on concerns that Spain's banks may need a bigger fund infusion than stated , INR had ended lower by 19 paise at 56.15 against the dollar yesterday as importers bought dollars in late trade. BSE Sensex fell by 43.04 points, or 0.25 per cent, Other reasons atributed is tjhe limited scope of the Fed Easing and HSBC PMI showed contraction in China . RBI intervention is expected
GOLD
Gold declines for the 3rd day
Gold declined for a third day in the longest losing run in a month after the Fedl Reserve extended its Operation Twist program while refraining from additional debt purchases. Spot gold declined to 0.6 % to $1,597.50 and was trading at $1,600.63 in Asian hours . Bullion dropped to a one-week low . Fed extended its program of replacing short-term bonds with longer-term debt by $267 billion through the end of 2012. Gold prices, up for a 12th year as investors sought protection from weakening currencies and financial turmoil, almost doubled in that time. Fed officials reduced their estimate for growth in 2012 to between 1.9 % and 2.4 % from 2.4 % to 2.9 % projected in April. The jobless rate will end the year at 8 % to 8.2 %. August futures fell for a fourth day on falling 1.1 % to $1,598.10 . Fed Chairman Bernanke said " If we don't see continued improvement in the labor market, we'll be prepared to take additional steps if appropriate, and added Additional asset purchases would be among the things that we would certainly consider."
Source: DGCX Academy
IMF Working paper-Too Much Finance?
June 20, 2012--Summary: This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth.
We use different empirical approaches to show that there can indeed be "too much" finance. In particular, our results suggest that finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. We show that our results are consistent with the "vanishing effect" of financial development and that they are not driven by output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.
view the IMF Working paper-Too Much Finance?
Source: IMF
Deutsche Bank, Guggenheim end talks for RREEF
Deutsche, Guggenheim unable to agree on sale terms
Failure to sell RREEF follows failed asset management sale
Deutsche to give Bank-wide strategy update in September
June 20, 2012--
Deutsche Bank AG and Guggenheim Partners have ended negotiations on the potential sale of RREEF, the German bank's global alternative asset management business, after failing to agree on terms, Deutsche Bank said on Wednesday.
The RREEF business, which has around 47 billion euros ($59.70 billion) in assets under management, was the last one of a range of businesses Deutsche Bank tried but failed to sell to U.S.-based institutional asset manager Guggenheim.
Source: Reuters
Mirae Asset-BRICs weekly-Global Markets Welcome the Greek Election Result
June 20, 2012--China
More policy easing expected.
Hong Kong and China stock markets rose on improving economic data despite persisting volatility. Exports surprised the market with a 15.3% year-on-year growth. Imports rose 12.7%YoY, taking the trade surplus to US$18.7 billion.
On the liquidity front, M2 money supply in May rose 13.2%YoY while new yuan loans added 793.2 billion. The growth in new loans suggests that banks are acting to support the government’s targets on strengthening and improving macroeconomic policy.
India
Worsening economy calls for further measures.
The Indian market rose on speculation that central banks in India, Europe and US may help to stimulate growth giving the current gloomy market outlook. In India, the market is calling for a rate cut as recent data releases disappointed the market.
May inflation came in at 7.6% which was higher than what the market expected. Exports in May were down 4.2% to US$25.7bn. April industrial production of 0.1% growth was below analysts’ expectations.
Brazil
Markets see improving economic data.
Following May’s sharp deterioration in sentiment in response to a deterioration in the global growth outlook, June has thus far seen markets deliver stable performance.
Though the trend of Brazilian economic activity remains weak, it is important to see the 2nd quarter beginning with a positive print of an increase in the Economic Activity Index. The Brazilian government has provided several stimulus measures (tax rebates, lowering labor costs, interest rate cuts) and has room for more.
Russia
Drop in oil prices hinders economic recovery.
Sunday’s Greek elections are to have a globally material impact on near-term market direction. A victory for the New Democracy party and the formation of a pro-bailout coalition government would be well received by markets.
Eurozone finance ministers confirmed that the Spanish banking system is to receive a rescue package worth up to EUR100bn, with no further austerity measures required in exchange. The liability for the loan will ultimately rest with the Spanish Government, causing the country’s sovereign yields to rise further during the week.
Source: Mirae Asset
MSCI: UAE and Qatar remain Frontier Markets, to be reviewed in June 2013
June 20, 2012--The MSCI UAE Index and MSCI Qatar Index will remain under review for potential reclassification to Emerging Markets, at the next Annual Market Classification Review in June 2013,
MSCI said in an e-mailed statement released at 1am local UAE time. Both countries have been under review for an upgrade for the past four years. However, the long expected verdict acknowledged a number of positive developmens in both markets, but hurdles remain. On the UAE, MSCI said that "The MSCI UAE Index meets all requirements besides specific market accessibility issues related to custody and clearing and settlement. Based on current information, the Emirati regulator (Emirates Security and Commodities Authority –“ESCA”), the Dubai Financial Market (“DFM”) and the Abu Dhabi Securities Exchange (“ADX”) have taken the decision to delay the implementation of a proper false trade mechanism that is expected to remove the requirements for international institutional investors to operate with a dual account structure (...) This dual account structure results in significant operational burdens associated with the need to transfer shares from one account to the other prior to trading." On Qatar, the Geneva-based index developer said "The issue around the very low Foreign Ownership Limit (“FOL”) levels imposed on Qatari companies is expected to be the only remaining impediment to the reclassification of the MSCI Qatar Index to Emerging Markets." The MSCI Emerging Market Index tracks stock markets with a total market capitalisation of $3.2 trillion. An upgrade of the UAE and Qatar to emerging markets would trigger capital inflows from passively and actively managed investment funds covering the emerging markets which under the MSCI scheme include the BRIC (Brazil, Russia, India, China).
Source: AME Info
IMF Working paper-Monetization in Low-and Middle-Income Countries
June 19, 2012--Summary: The degree of an economy's monetization, which has an important implication on economic growth, can be affected by the conduct of monetary policy, financial sector reform, and episodes of financial crises.
The paper finds that monetization--measured by the ratio of broad money to nominal GDP-- in low- to middle-income countries is significantly correlated with per-capita GDP, real interest rates, and financial sector reform. It suggests that maintaining an upward momentum in monetization can be an important policy objective, particularly for low-income countries, and that monetary and financial sector policies need to be conducive to enhancing monetization.
view the IMF Working paper-Monetization in Low-and Middle-Income Countries
Source: IMF
FSB publishes study on the effects of regulatory reforms on Emerging Market and Developing Economies
June 19, 2012--The Financial Stability Board (FSB), in collaboration with the International Monetary Fund and the World Bank, published today a study identifying potential unintended consequences of regulatory reforms on emerging market and developing economies (EMDEs).
The study, which was prepared in response to a February 2012 request by G20 Finance Ministers and Central Bank Governors, focuses primarily on internationally agreed regulatory reforms whose implementation may affect EMDEs.
The intent of the study is not to re-open those reforms but to better understand their possible effects on EMDEs in the context of broader post-crisis developments and to facilitate their timely, full and consistent implementation.
Input for this study was received from national authorities in 35 EMDEs that are members of the FSB or an FSB Regional Consultative Group, as well as from the private sector. There is widespread support among surveyed EMDEs for the objectives of the agreed reforms. At the same time, there is a range of views about the extent to which these reforms are having, or expected to have, an impact on their financial systems. This heterogeneity in perspectives reflects the early stage of implementation of these reforms and the diversity of EMDE financial systems, which give rise to different considerations and concerns. Most of the responses reflect expectations regarding potential future effects, rather than observed impacts.
Source: FSB
