Global ETF News Older than One Year
IMF queries derivatives reform effectiveness
March 29, 2011--New regulations aiming to reform the vast derivatives markets may fail to remove systemic risks or prevent the need for another taxpayer bail-out of the financial system, according to a research paper published by the International Monetary Fund.
The reforms, which shift derivatives to clearing houses in an effort to dilute the impact of a default of a large dealer, could result in more risks for the financial system and alternative policies such as a tax on banks’ derivatives liabilities should be considered, the IMF paper said.
Source: FT.com
March 2011 Commentary And Report - Dow Jones-UBS Commodity Indexes: Up Slightly As Focus Centers On Geopolitical Issues, Technical Factors
March 28, 2011--The Dow Jones-UBS Commodity Index was up 1.56% for the month of March. The Dow Jones-UBS Single Commodity Indexes for Silver, Natural Gas and Cotton had the strongest gains with month-to-date returns of 9.55%, 9.25%, and 6.93%, respectively.
The three most significant downside performing single commodity indexes were Cocoa, Wheat and Orange Juice, which were down 12.26%, 10.25%, and 6.99% respectively, in March.
Source: Mondovisione
BlackRock * New Report * ETF Landscape: Global Handbook - Q1 2011
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Fitch Ratings Sovereign 2010 Transition and Default Study
Meanwhile, a significant share of emerging economies experienced strong growth, resulting in
emerging market sovereign downgrades tumbling to 4.3% from 15.9% in 2009 and
emerging market upgrades climbing to 15.7% from a modest 2.9% in 2009. In contrast, developed market sovereign downgrades increased year over year to 16.1%, up from 9.7%, and only one upgrade was recorded, a slight rise from zero in the prior year. The epicentre of the global financial crisis was the U.S. and the U.K., and public finances in both continued to deteriorate in 2010, but it was sovereign creditworthiness
of Euro Area member states that was subject to the greatest market scrutiny and financing pressures. The ‘peripheral countries’ ? Greece, Ireland, Portugal and Spain
? all suffered sovereign rating downgrades, with some sovereigns sustaining multiple
downgrades while remaining on Negative Outlook. Conversely, robust economic growth and improving fiscal and external balance sheets underpinned positive rating actions for
emerging market sovereigns. Latin America and emerging Europe exhibited the strongest positive rating momentum in 2010, with upward pressure on sovereign ratings
also apparent in emerging Asia.
Source: Fitch Ratings
Recovery marches on, prices soar in Europe
The euro zone’s dominant service sector accelerated and while its factories saw solid but slower growth, their Chinese counterparts stepped up a gear, Purchasing Managers’ Indexes compiled by Markit found. News from the United States was somewhat disappointing, with orders for long-lasting manufactured goods unexpectedly fell in February and business spending plans declined for a second straight month. However, economists cautioned against reading too much into the report, which tends to be very volatile and was in stark contrast with surveys showing strong factory activity. The euro zone’s composite PMI, a broad survey of the private sector conducted largely before a massive earthquake and tsunami devastated Japan, dipped only slightly from February’s near five-year high to 57.5.
Source: Todays Zaman
Making OTC Derivatives Safe - A Fresh Look
The present regulatory and reform efforts may not remove the systemic risk from OTC derivatives but rather shift them from banks to CCPs. Under the present regulatory overhaul, the OTC derivative market could become more fragmented. Furthermore, another taxpayer bailout cannot be ruled out. A reexamination of the two key issues of (i) the interoperability of CCPs, and (ii) the cost of moving to CCPs with access to central bank funding, indicates that the proposed changes may not provide the best solution. The paper suggests that a tax on derivative liabilities could make the OTC derivatives market safer, particularly in the transition to a stable clearing infrastructure. It also suggests reconsideration of a "public utility" model for the OTC market infrastructure. view IMF Working Paper-Making OTC Derivatives Safe?A Fresh Look
Source: IMF
Managing Volatility - A Vulnerability Exercise for Low-Income Countries-IMF Working Paper
The objective is to strengthen the staff’s capacity to spot vulnerabilities and flag potential pressure points in LICs arising from external triggers before they materialize. view the IMF Working paper-Managing Volatility: A Vulnerability Exercise for Low-Income Countries
Source: IMF
Fitch Ratings Global Structured Finance 2010 Transition and Default Study
The investment-grade impairment (default and near-default) rate, in particular, contracted to 2.1% from 12.5% in 2009 and the ‘AAA’ impairment rate fell to 0.24% from 3.38% in 2009. While downgrades still affected a significant 33% of structured finance ratings, the share of investment-grade ratings downgraded was 22% in 2010. This study analyzes the rating migration and default experience of global SF securities rated by Fitch Ratings in 2010, along with longer-term performance spanning the past twenty years. Rating transitions are examined across the major SF sectors, covering ABS, CMBS, RMBS and structured credit.
Highlights Global RMBS downgrades still accounted for almost half of all SF downgrades in 2010. The sluggish U.S. housing recovery contributed to mixed results for the sector. While subprime delinquencies associated with deals originated from 2005?2007 began to improve, delinquencies on prime mortgages rose in 2010. The RMBS impairment rate was 16% in 2010, down from 38% in 2009.
Source: Fitch Ratings
Regulation Win for Hedge Funds over Banks
Total hedge fund assets are expected to soar to $2.5 trillion (£1.5 trillion) by the end of 2012, from about $1.9 trillion at the end of last year, handing even more power to their secretive multi-millionaire managers. Morgan Stanley warns that regulators "underestimate" how much business will move from banks to hedge funds and other non-banks as regulation makes many previously lucrative products uneconomic for investment banks.
Source: The Telegraph
Barclays Capital Recommends More Cautious Stance on Risk
“We are recommending that investors shift to a more cautious approach to markets than the risk-embracing positions we have recommended since the recovery got underway two years ago,” said Larry Kantor, Head of Research at Barclays Capital. “We generally favor developed country over emerging equity markets, particularly the US, where policy is still easing, immediate growth prospects are best and risks are relatively low.” Additional themes of Barclays Capital’s Global Outlook include:
The events of recent weeks, in Japan as well as the Middle East and North Africa, should not derail the expansionary trend
Monetary authorities around the world are shifting their focus from growth to inflation
Emerging markets exposure should be focused on currencies and local markets that have not appreciated dramatically, such as Korea Avoid government bonds; credit is now basically a range trade Inflation breakevens have risen, but remain an effective way to hedge inflation risk.
Source: Barclays Capital
March 28, 2011--ETF Landscape: Global handbook - Q1 2011 is a comprehensive directory of all 3,649 Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) with 7,610 listings, assets of US$1,542.7 Bn from 174 providers on 52 exchanges around the world.
March 28, 2011--Summary
The narrative surrounding sovereign credit trends in 2010 was mixed. Developed market economies continued to struggle with a slow-moving recovery, financial sector concerns,
and mounting debt. In the Euro Area, these pressures drove several countries to appeal to other, more fiscally sound member states for financial support.
March 26, 2011--The global economic recovery marched on this month, shrugging off a devastating earthquake and tsunami in Japan, but Middle East turmoil is pushing prices higher, business surveys showed on Thursday.
March 25, 2011--Summary:
Recent regulatory efforts, especially in the U.S. and Europe, are aimed at reducing moral hazard so that the next financial crisis is not bailed out by tax payers. This paper looks at the possibility that central counterparties (CCPs) may be too-big-to-fail entities in the making.
March 25, 2011--Summary:
This paper, introduces the analytical framework for a Vulnerability Exercise for Low-Income Countries (VE-LIC). The envisaged exercise will strive to identify vulnerabilities and emerging risks that arise from changes in the external environment in a consistent manner across countries and across time.
March 25, 2011--Summary
The global recession’s impact on structured finance (SF) securities lingered in 2010, but signs of stability also surfaced, as both the number and severity of downgrades declined significantly year over year.
Against the backdrop of emerging from the severe economic and financial crisis of 2008 and 2009, negative SF rating activity finally began to subside in 2010. Downgrades fell 57% year over year and affected 33% of ratings, compared with 55% in 2009. The biggest contributor to this was RMBS, which saw the share of ratings downgraded contract to 33% from 64% in 2009. SF upgrades remained scarce overall, affecting just 1% of ratings in 2010.
March 25, 2011-"Non banks", which include hedge funds, private equity firms and pension funds, are likely to pick up an increasing share of financing services once provided exclusively by the big banks. The forecast comes in a report by US investment bank Morgan Stanley and consultancy Oliver Wyman, which predicts tough times ahead for the City.
"Global Outlook" research forecast recommends a more cautious position on risk, as inflation pressures trigger policy normalization
NEW YORK/LONDON (March 24, 2011) – The global expansion continues, but policy normalization will be a constraint on market performance, Barclays Capital today said in its latest flagship quarterly research publication, Global Outlook: Winding Down the Recovery Trade.
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