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Market share: Battling for assets alongside the Big Three
September 23, 2011--To those standing on the sidelines of the exchange traded fund industry, attempts to make inroads into the market share of the world’s largest three players must seem like an insurmountable challenge.
iShares, State Street Global Advisors (SSgA) and Vanguard currently dwarf their closest competitors, commanding around 69 per cent of the global ETF business between them, leaving those further down the pecking order with the daunting task of playing catch-up.
Some challenges in using and creating ETFs
September 23, 2011--With developed world equity markets in the doldrums, investors are using ETFs to gain exposure to ever more diverse and potentially less liquid assets, such as emerging market equities and US municipal bonds.
A sell-off in illiquid underlying assets creates two problems for the market makers (often investment banks) that create and retire shares in the ETF as investors put money in or take it out.
Crude Oil May Fall Next Week on U.S., China Outlook, Survey Says
September 23, 2011--Oil may fall next week on concern that economic growth will slow in the U.S. and China, the fuel’s top two consumers, according to a Bloomberg News survey.
Twenty-two of 40 analysts, or 55 percent, forecast oil will decline through Sept. 30, while nine respondents, or 23 percent, predicted prices will increase. Nine estimated there will be little change. Last week, 45 percent of the surveyed analysts projected a drop.
World Bank: Eurozone Crisis Clouds Recovery In Emerging Europe And Central Asia
September 23, 2011--Economic recovery is underway in the Emerging Europe and Central Asia (ECA) region, but at a slow pace and is at risk from the troubled Eurozone, according to the World Bank at a press briefing during the World Bank/IMF Annual Meetings 2011.
“Most countries in Emerging Europe and Central Asia have recovered from the global economic crisis, but growth has returned at lower rates than pre-crisis trends in most of the region. The region is expected to record a real growth rate of 4.3 percent in 2011, which is one of the lowest of any developing region,” said Philippe Le Houérou, World Bank Vice President for the Europe and Central Asia Region. “The slow recovery in the region may be establishing a ‘new normal’ of lower economic growth rates in many of the region’s countries.”
Le Houérou cautioned, “The sovereign debt problems in Western Europe pose challenges to the sustainability of this relatively tepid recovery. The Eastern Europe and Central Asia region is especially dependent on Western Europe as an export market and a source of finance and migrant remittances, so slower growth in the West will hurt. The region’s strong financial linkages to Western Europe, which were a source of growth during the boom years in Central and Eastern Europe, are now a source of vulnerability for some countries.”
Spatial Spillovers in Emerging Market Spreads-IMF Working paper
September 23, 2011--Summary: We use novel spatial econometrics techniques to explore spillovers in the sovereign bond market for 24 emerging economies during 1995-2010. The paper extends the previous literature focusing on spillover effects from advanced to emerging economies by analyzing transmission of shocks across emerging markets.
After controlling for the impact of global factors, we find strong evidence of spillovers from both sovereign spreads and macroeconomic fundamentals in neighboring emerging economies. In addition to the geographical proximity, the channels of spatial transmission include trade and financial linkages. The results of the paper highlight the importance of accounting not only for spillovers from advanced economies to emerging markets, but also across emerging markets when analyzing sovereign spreads.
view IMF working paper-Spatial Spillovers in Emerging Market Spreads
Systemic Risks in Global Banking: What Available Data can tell us and What More Data are Needed? -IMF Working paper
September 23, 2011--Summary: The recent financial crisis has shown how interconnected the financial world has become. Shocks in one location or asset class can have a sizable impact on the stability of institutions and markets around the world. But systemic risk analysis is severely hampered by the lack of consistent data that capture the international dimensions of finance. While currently available data can be used more effectively, supervisors and other agencies need more and better data to construct even rudimentary measures of risks in the international financial system.
Similarly, market participants need better information on aggregate positions and linkages to appropriately monitor and price risks. Ongoing initiatives that will help in closing data gaps include the G20 Data Gaps Initiative, which recommends the collection of consistent bank-level data for joint analyses and enhancements to existing sets of aggregate statistics, and the enhancement to the BIS international banking statistics.
Eurozone Crisis Clouds Recovery In Emerging Europe and Central Asia
September 23, 2011--Economic recovery is underway in the Emerging Europe and Central Asia (ECA) region, but at a slow pace and is at risk from the troubled Eurozone, according to the World Bank at a press briefing during the World Bank/IMF Annual Meetings 2011.
“Most countries in Emerging Europe and Central Asia have recovered from the global economic crisis, but growth has returned at lower rates than pre-crisis trends in most of the region. The region is expected to record a real growth rate of 4.3 percent in 2011, which is one of the lowest of any developing region,” said Philippe Le Houérou, World Bank Vice President for the Europe and Central Asia Region. “The slow recovery in the region may be establishing a ‘new normal’ of lower economic growth rates in many of the region’s countries.”
World Corn Harvest Outlook Cut on U.S. Conditions, IGC Says
September 22, 2011--World corn production will be lower in the year through June 2012 than forecast a month ago after the outlook for the U.S. crop was cut, the International Grains Council said.
Global corn output in 2011-12 will be 845.2 million metric tons, down from 849.1 million tons forecast in August, the London-based IGC said in a monthly report published today, cutting its outlook for a second time in two months.
Corn futures have gained 5.5 percent in Chicago this year amid deteriorating crop conditions in the U.S., the largest grower and exporter. That contrasts with wheat, which slumped 19 percent as the outlook for harvests in the European Union and Russia improved.
BlackRock New ETF Landscape Report: Industry Highlights – August 2011
September 22, 2011--The ETF Landscape: Monthly Highlights provides a snapshot of ETF and ETP AUM and asset flows3 at a combined global level and various regional levels as of the most recent month-end period. All currency values are denominated in US dollars.
Key global ETF/ETP statistics at a glance:
Month-end AUM: US$1,575 Bn
Decrease from prior month AUM: -US$68 Bn
August 2011 NNA: US$1.6 Bn
YTD NNA: US$106 Bn
# of ETFs and ETPs: 4,036
August 2011 monthly flow highlights:
The “risk-off” market conditions of August 2011 were evident in ETF/ETP AUM flows.
Overall, fixed income and commodity products attracted US$5.6 Bn and US$0.8Bn NNA respectively, while equity products experienced net outflows of US$3.7 Bn for the month.
AUM of US$1,575 Bn decreased by US$68 Bn (-4%) in August 2011 as NNA of US$1.6 Bn were combined with US$70 Bn of negative market and exchange rate move, which represents a one month return of -4% compared to the MSCI All Countries World Index2 one month return of -7.3%.
This marks the third month in 2011 where global AUM has decreased from the prior month-end, which likewise occurred in May and June 2011 when AUM decreased 2% and 1%, respectively.
Despite challenging market conditions, AUM has grown by US$378 Bn or 32% versus August 2010 AUM of US$1,197 Bn
Global ETF/ETP YTD flows and market share
August 2011 YTD flow highlights:
AUM increased by US$93 Bn YTD through August 2011. Underlying this YTD change were NNA of US$106 Bn offset by US$13 Bn of negative market and exchange rate move, or -0.9% YTD return as compared to the MSCI All Countries World Index YTD return of -4.5%.
North America equity funds generated the largest 2011 YTD NNA with US$35 Bn, followed by fixed income with US$28 Bn, Europe equity with US$16 Bn, global/other with US$13 Bn, commodities with US$13 Bn, and Asia Pacific equity with US$3 Bn. Emerging markets equity funds generated NNA outflows of -US$2 Bn.
Regional highlights:
The global business remains concentrated in the United States with 68% of AUM market share.
Europe has market share of 22%, Asia Pacific (ex-Japan) has 6% and other regions have market share in the range of 1% to 3%.
United States AUM of US$1,066 Bn has grown 5% YTD through August 2011. Other regions have experienced higher growth rates including Europe which grew by US$339 Bn (8%), Asia Pacific (ex-Japan) grew by US$61 Bn (12%) and Latin America grew by US$11 Bn (10%).
Global Experts Poll: Confidence Severely Lacking in the State of the Global Economy
New quarterly Global Confidence Index polls 1,500 experts from business, government, international organizations and academia who are members of the Forum’s Network of Global Agenda Councils
Less than 10% express confidence in the state of the global economy over the next 12 months
Less than 10% express confidence in the state of global governance over the next 12 months
September 21, 2011--The World Economic Forum’s Global Confidence Index shows very little confidence worldwide in the state of the global economy and in global governance over the next 12 months.
Over 1,000 global experts from the public and private sectors were surveyed; one-half of the respondents are pessimistic about the global economic outlook and one-quarter anticipates there will be an economic disruption during the next year. One in four say there is a lack of global leadership to deal with problems during this time and a majority fear a geopolitical as well as societal upheaval, according to the quarterly Global Confidence Index.
Perspectives outside the private sector were the most bearish with almost 54% of the respondents indicating that they are not confident in the state of the global economy; just over 40% expressed little confidence in the economy in the next 12 months.