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Global Liquidity: Availability of Funds for Safe and Risky Assets -IMF Working paper
June 10, 2011--What is global liquidity and how does it affect an economy? The paper addresses that question by looking at liquidity from two different perspectives: global liquidity as availability of funds in safe and risky asset markets. This distinction between safe and risky asset markets is important due to market segmentation, which called for unconventional monetary policy to restore a function of risky asset markets. To analyze the effect of global liquidity,
to restore a function of risky asset markets. To analyze the effect of global liquidity, I construct proxy variables and then asses how they affect an emerging economy whose interest rate is affected by a world risk-free rate and a risk premium. Using the data from four major Latin American countries, I find that these two aspects of global liquidity have similar effects on economic performance in emerging market economies except for their effect on inflation.
view IMF Working paper-Global Liquidity: Availability of Funds for Safe and Risky Assets
S&P raises gold and base metals price assumptions for 2011
Standard & Poor's has raised its metals price assumptions for 2011 and beyond, citing the increased volatility of the markets but worries about sharp risk of fall in investor demand for gold.
June 10, 2011--Standard & Poor's Thursday raised its gold price assumption from $1,100 per ounce to $1,200 per ounce for the remainder of this year.
The price assumption for 2012 was raised from $1,000 to $1,100 per ounce, while the price assumption for 2013 and beyond is now $900 per ounce, versus $900 for 2012, $700 for 2014, and $600 for 2015 previously.
In their analysis, S&P Credit Analysts Andrey Nikolaev and Mark Puccia expressed concern that currently "about half of the demand for gold comes from financial investors. The key risk remains a sharp decrease in investor demand as the uncertainty in the global economy declines."
Commodities' inflation hedge potential waning, says Amundi
June 9, 2011--Commodities remain one of the few assets effective as an inflation hedge, but this correlation is diminishing, Amundi Asset Management has said.
The French asset manager pointed out that commodities are necessary to diversify portfolios and to protect against rising inflation.
Portfolio Investment: CPIS Data - Database Contents
June 9, 2011--Under the auspices of the IMF, a Coordinated Portfolio Investment Survey (CPIS) is conducted on an annual basis.
The purpose of the CPIS is to collect information on the stock of cross-border holdings of securities-equity securities and long- and short-term debt securities-valued at market prices prevailing at end-December of the reference year,
and broken down by the economy of residence of the issuer of the securities (see Notes and Definitions).
In addition to this core (i.e., required) set of data, the CPIS also encourages the reporting of supplementary information that is considered to be useful, as indicated below.
The 2011 Global Retail Development Index™
June 9, 2011--This year’s GRDI reflects the dramatic changes in the global economy and their very different impact on different developing markets—some developing giants kept roaring ahead, some small jewels dodged the bullet, some succumbed to the political upheaval that economic distress brings, others “muscled through” the recession. Today, as leading international retailers are rewarded for their flexibility and long-term outlook in the face of short-term uncertainty, it is time to focus on a portfolio of countries—with different levels of risk, at different stages of maturity and with distince consumer profiles—to balance short- and long-term opportunities.
South America has jumped to the head of our index this year, based largely on countries’ continued growth through the global meltdown and lack of investment fatigue that has impacted some of the historical chart-toppers
Asia has dropped in the rankings to make room for South America, even though India and China continue to lead the way out of the global recession to global recovery
The Middle East and North Africa—although dominating headlines in 2011 with political unrest and demonstrations—still eight of the top 20 countries in the GRDI
view report-GRDI: A 10-Year Retrospective
Markit Launches Markit iBoxx European ABS Index
June 8, 2011-- Markit, a leading, global financial information services company, today announced the launch of the Markit iBoxx European ABS index, a cash bond index designed to track the performance of the European floating-rate asset backed securities (ABS) market.
The Markit iBoxx European ABS index provides investors with a benchmark to assess returns available on European ABS assets denominated in EUR, GBP, USD, and measure the relative performance of their portfolios.
Rob Ford, ABS portfolio manager at TwentyFour Asset Management, said: “This index is good news for overall transparency in the European ABS market. It’s a great addition to Markit’s index offering, and I’m sure it will be widely used by the market.”
Stephan Flagel, managing director and head of indices at Markit, said: “We are delighted to expand the coverage of the Markit iBoxx indices to the ABS asset class. The Markit iBoxx European ABS index’s strictly defined rules and pricing model make it ideal for performance attribution and structuring of financial products.”
The Markit iBoxx European ABS index is independent, transparent and rules-based. Independent buy-side and sell-side committees provide guidance on issues such as index functions and advancements. Index levels and rules are available on www.markit.com.
OPEC divided as Saudi pushes for oil increase
June 8, 2011--OPEC oil producers on Wednesday were split down the middle on whether or not to back a Saudi-led plan to increase supplies and try to cap inflated world crude prices.
Under pressure from consumer countries to contain fuel inflation, Riyadh hopes to convince the Organization of Petroleum Exporting Countries to lift production by as much as 1.5 million barrels a day, Gulf delegates said. As ministers went into closed session, Riyadh had support from its Gulf Arab allies Kuwait and the United Arab Emirates to meet rising demand in the second half of the year. But five countries -- long-time price hawks Iran and Venezuela plus Ecuador, Iraq and Angola -- say they see no need to increase output. All want to keep oil prices above $100 a barrel. Brent crude traded near $116 a barrel.
Mining sector feels heat as Peru turns left
June 8, 2011--Shares in mining companies operating in Peru fell sharply on Monday after a leftwing former coup leader won a narrow victory in the country’s presidential election.
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Grupo Mexico, a metals mining company with operations in Peru, fell 8 per cent in New York trading. Hochschild, a silver miner, and Southern Copper Corp, tumbled 5 per cent and 11.3 per cent respectively. Shares in Xstrata, which is building one of Peru’s biggest mines, were off 0.86 per cent, while Volcan Compañía Minera, in which Glencore has a stake, fell 8 per cent.
BlackRock * New Report * ETF Landscape: Industry Review - April 2011
June 7, 2011--At the end of April 2011, the global ETF industry had 2,670 ETFs with 6,021 listings and assets of US$1,469.8 Bn, from 140 providers on 48 exchanges around the world. This compares to 2,189 ETFs with 4,354 listings and assets of US$1,113.1 Bn from 122 providers on 42 exchanges at the end of April 2010.
Additionally, there were 1,149 other ETPs with 1,872 listings and assets of US$201.1 Bn from 57 providers on 23 exchanges. This compares to 778 ETPs with 1,099 listings and assets of US$182.0 Bn from 45 providers on 18 exchanges, at the end of April 2010.
Combined, there were 3,819 products with 7,893 listings, assets of US$1,670.9 Bn from 176 providers on 52 exchanges around the world. This compares to 2,967 products with 5,453 listings, assets of US$1,295.1 Bn from 150 providers on 44 exchanges, at the end of April 2010.
Open Protocol Enabling Risk Aggregation: Publication of The Overture and the start of the consultative phase
June 7, 2011-On December 1st 2010, a Working Group comprised of leading investors, hedge funds, administrators and prime brokers was formed to develop an Open Protocol Enabling Risk Aggregation: an attempt to standardise how hedge funds collect, collate and convey market risk information. Today, co-chairs Albourne Partners and Thomson Reuters are pleased to publish a preliminary version of the Protocol, so as to be able to solicit feedback and suggestions from all, and any, interested parties.
It is envisaged that this period of public consultation will last until July 15th. There will then follow a period of re-writing and revision, as required, with a formal launch targeted for August 9th in London and August 11th in New York.
“We are very pleased to have been able to contribute our thoughts and time”, explained Bruce Cundick of Utah Retirement Systems, “as we think this initiative has the potential to substantially increase the utility of the risk information that we already receive, as well as prove to be a step towards greater industry-wide transparency”. While there is no formal obligation for the hedge funds on the Working Group to agree to submit information based on the final protocol, the D. E. Shaw group added, “We have been pleased to be involved in this process because as active practitioners, we have to grapple with this kind of technical detail and how best to present complex information every day.”