Global ETF News Older than One Year
Economic Freedom of the World: 2011 Annual Report
September 23, 2011--This year's report notes that economic freedom fell for the second consecutive year. The average economic freedom score rose from 5.53 (out of 10) in 1980 to 6.74 in 2007, but fell back to 6.64 in 2009, the most recent year for which data are available. In this year's index, Hong Kong retains the highest rating for economic freedom, 9.01 out of 10, followed by Singapore, New Zealand, Switzerland, Australia, Canada, Chile, the United Kingdom, and Mauritius. The world's largest economy, the United States, has suffered one of the largest declines in economic freedom over the last 10 years, pushing it into tenth place. Much of this decline is a result of higher government spending and borrowing and lower scores for the legal structure and property rights components.
This year's report also contains new research comparing policies that promote "freedom" compared to "entitlement" in relation to economic development. The findings suggest that fundamental freedoms are paramount in explaining long-term economic growth. Countries that favor free choice — economic freedom and civil and political liberties — over entitlement rights are likely to achieve higher sustainable economic growth and to achieve many of the distinctive proximate characteristics of success identified by the Commission on Growth and Development (World Bank, 2008). In contrast, pursuing entitlement rights through greater coercion by the state is likely to be self-defeating in the long run. The report also includes findings on the positive relationship between increases in economic freedom and improvements in women's well-being.
The first Economic Freedom of the World Report, published in 1996, was the result of a decade of research by a team which included several Nobel Laureates and over 60 other leading scholars in a broad range of fields, from economics to political science, and from law to philosophy. This is the 15th edition of Economic Freedom of the World and this year's publication ranks 141 nations for 2009, the most recent year for which data are available.
view the Economic Freedom of the World: 2011 Annual Report
Source: Cato Institute
Innovation: Hive of creativity cools a little
September 23, 2011--Actively managed funds, which employ a manager to actively select securities, account for only 1 per cent of assets invested in ETFs. But with the market increasingly saturated by passive ETFs that track all manner of indices, active funds are considered central to future rapid growth in the industry.
Regardless of the apparently small demand for active funds, ETF issuers are scrambling to create offerings. In the US, the Securities and Exchange Commission is currently reviewing more than 800 applications, many sponsored by new entrants, who would be offering their first ETF
Source: FT.com
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.
Source: FT.com
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.
Source: FT.com
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.
Source: Bloomberg
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.”
Source: World Bank
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
Source: IMF
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.
Source: IMF
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.”
Source: World Bank
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.
Source: Bloomberg
