Global ETF News Older than One Year
DB- Equity Research - Q1-11 ETP Market Review & Outlook : ETF market advances despite an unsettled start to the year
March 12, 2011--ETP asset growth meets expectations despite a bumpy market over Q1-11
Political unrest in a number of Middle Eastern oil producing countries, as well as the earthquake and its aftermath in Japan, managed to raise question marks over the very strong asset market growth rates observed in the first month of the year. While the impact of these events on the pace of global economic recovery remains uncertain, they have managed to raise questions about its strength.
Strong performance of the equity ETF market, especially in the first two months of the year, contributed to delivering 6.9% asset growth in the global ETP market over Q1-11. The growth picture was by no means consistent among global regions. The US market, which accounts for 69% of the global ETP market, registered a growth rate close to 7%, supported by strong domestic equity asset prices as well as very favorable inflows ($26.2 billion). In Europe, while cash flows came in at satisfactory levels (€8.2 billion), asset prices lagged resulting in a growth rate under half that of the US market (2.9%). The Asian market was adversely impacted by events in Japan, and while growth remained positive at 1.7%, cash flows were very weak registering at just $700 million for the entire region.
The US market accommodated 65.5% of all new flows, while Europe saw 20.2% and Asia gathered just 1.5%. With the exception of Asia, cash flow strength reflects the market share of the US and European regions.
The global equity ETF market started the quarter very strongly, ramping up to $20 billion by the beginning of February. Events in the Middle East and Japan clearly slowed down the largest asset class’ ascent, however, no significant overall outflows were observed. Once clearer information regarding the Japan events transpired, in the second and third week of March, equity cash flows begun to climb once more finishing the quarter at close to $27 billion.
Strong Q1-11 flows were led by equity ETF investors
Overall global ETP market cash flows over Q1-11 point to a good start to the year. The global ETP market saw flows of $40.2 billion, with healthy flows across all regions except Asia. Global ETP market cash flow levels in Q1-11 were almost double those of Q1-10.
The global ETP cash flows were driven by equity ETFs, which gathered $27.1 billion of inflows, more than three times those observed in Q1-10. Both the US as well as the European ETF markets registered the majority of their flows – 60% and 70% respectively - in the equity part of the market. The US equity ETF market raised $16.6 billion while the European equity ETF market gathered €5.8 billion.
Global fixed income ETF flows were satisfactory ($8.8 billion), however they were driven primarily by the US market ($7.8 billion). Europe’s fixed income cash flow performance was particularly weak, managing to accumulate just €400 million. The biggest component of the European fixed income ETF market remains sovereign debt (56%), and the return of investors to the equity market – largely by liquidating defensive sovereign positions, hurt the European fixed income market’s growth potential.
Equity was the asset class that defined investment patterns over Q1-11, indicating that investors have continued their return to riskier assets. Commodity flows were at the same level as those in Q1-10, and at levels much lower than the preceding four quarters.
High yield continued to be the fixed income market’s driver
Inflows in the global fixed income market were primarily driven by the US market. The global corporate sector, including high yield in the US, registered $5.2 billion of inflows while money market ETFs, primarily in Europe, added $1.2 billion.
The US fixed income high yield ETF sector registered consistent inflows throughout the quarter, while investment grade benchmarked ETFs had a good run starting at the end of February 2011. Overall, global high yield benchmarked ETFs registered inflows of $2.3 billion, while investment grade benchmarked ETFs gathered new money totaling $2.1 billion.
The vast majority of fixed income outflows occurred in Europe and they represented money leaving sovereign benchmarked ETFs. These outflows totaled $1.2 billion over Q1-11. The US comparable part of the market registered net inflows of $0.3 billion, somewhat off-setting the march out of European sovereign benchmarked ETFs.
Change of temperature in the non-precious metals commodity ETP market
There was a distinct change in commodity ETP investing temperature in Q1-11. Over the past few quarters, the space has been dominated by precious metals, especially gold, inflows. Diversified commodity indices as well as energy benchmarked ETPs registered combined flows of $2.8 billion, while precious metals registered outflows of $1.7 billion.
Non precious metals inflows were consistent throughout the quarter, picking up at the beginning of February, a point at which gold outflows peaked at $3.8 billion. Gold had the greatest impact in shaping precious metals outflows in the first quarter of 2011, with its outflows reaching $2.5 billion, while silver and platinum experienced inflows of $700 million and $238 million respectively.
Medium sized providers gain ground
Provider competitive dynamics on a global level remained fairly stable among the top 5 global providers. Blackrock (nu.1, 39.7%) and StateStreet (nu.2, 17.3%) lost 0.5% and 0.6% of market share respectively over Q1-11, while the world’s number 3, Vanguard gained 0.4% reaching 11.1%.
US market dynamics have slightly changed in the last two quarters with the Tier 1 providers yielding 1.3% of market share to Tier 2 and 3 providers. In addition, Van Eck Funds has been added to our Tier 1 US providers as their AUM surpassed the $20 billion milestone. The top 6 providers managed over 90% of the AUM of the region.
In Europe, three medium sized ETF providers experienced particularly strong inflows. UBS, Amundi and Source, all of which are not in the region’s top five, registered flows of €2.3, €1.1 and €1.0 billion each. This largely contributed to the top 5 European ETP providers loosing 1.5% of combined market share, all of which went to these three rising stars.
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Source: Deutsche Bank Global Equity Index & ETF Research
IEA releases first Clean Energy Progress Report
April 11, 2011-On April 6, 2011 the IEA released thr first Clean Energy Progress Report. Notable successes in deployment of clean-energy technologies are being overshadowed by continued hunger for fossil fuels, report says
The International Energy Agency on Wednesday released its first Clean Energy Progress Report, which assesses global deployment of clean energy technologies and provides recommendations to countries on future action and spending.
The report was presented on 6 April in Abu Dhabi at the second Clean Energy Ministerial meeting. The report finds that while impressive progress has been made in developing clean energy technologies in recent years, the success stories are being overshadowed by surging demand for fossil fuels, which are outstripping deployment of clean energy technologies. Coal has met 47% of the global new electricity demand over the past decade, eclipsing clean energy efforts made over the same period of time, which include improved implementation of energy efficiency measures and rapid growth in the use of renewable energy sources.
In order to change this status quo, the IEA argues that more aggressive clean energy policies are required, including the removal of fossil fuel subsidies and the implementation of transparent, predictable and adaptive incentives for cleaner energy options.
view the Clean Energy Progress Report
Source: IEA
The OECD composite leading indicators signal continued expansion
April 11, 2011--Composite leading indicators (CLIs) for February 2011, designed to anticipate turning points in economic activity relative to trend, continue pointing to expansion in most OECD countries.
CLIs continue pointing to robust expansion relative to trend in Germany and the United States and a possible regained momentum in France and Canada. The CLI for the United Kingdom points to a slow but stable pace of expansion. The CLI for Italy points to a loss of momentum in economic activity.
Because of the exceptional circumstances the country is facing, it is not possible to provide reliable estimates of the CLI for Japan at this stage.
The CLI for China points to a possible moderation in economic activity. For Brazil the CLI indicates that economic activity should remain near its long-term potential. The CLI for India continues pointing to a slowdown and the CLI for Russia continues pointing to expansion.
Source: OECD
Oil falls from 32-month high on demand concerns
April 11, 2011--Oil dropped nearly 3 percent on Monday, falling from 32-month highs as concerns that rising fuel costs will erode demand and threaten the economic recovery spurred profit-taking.
In early activity, Brent crude extended its rally to top $127 a barrel and U.S. crude reached $113 due to ongoing concerns about unrest in Libya.
When crude turned negative, analysts and brokers cited technicals indicating it had become overbought in recent sessions, as well as a client recommendation from Goldman Sachs warning it saw a strong chance commodity prices may reverse and saying they should take profits.
Goldman noted "nascent signs of oil demand destruction in the United States" that could drag prices down, as well as the possibility of a Libya ceasefire. The bank also said Nigeria's elections, which had added further risk to oil markets, had thus far not caused supply disruptions.
Source: Reuters
Junk bond funds back in demand
April 11, 2011--Funds investing in junk bonds had record inflows last week as individual investor demand for higher-yielding corporate debt roared back after a brief pause last month.
On a global basis, $1.47bn was invested in junk bond or “high-yield†funds last week, the biggest weekly inflow ever seen, according to EPFR, which tracks funds flows. In the US, inflows totalled $933m, also one of the biggest ever weeks. “All major high-yield markets have seen fund inflows in the search for yield,†said analysts at Barclays Capital.
Source: FT.com
The Oil Trading Markets, 2003 – 2010:Analysis of market behaviour and possible policy responses Paper
April 11, 2011--In this working paper Adair Turner et al. consider price movements in the oil trading markets between 2003 and 2010 and provide an analysis of factors which potentially explain the significant trends in this period.
The authors also discuss the impact of different forms of oil price volatility and propose the type that matters most from an economic standpoint is medium-term price trends. The authors then discuss possible public policy actions that could be employed to prevent or mitigate such trends with the paper concluding that proposals solely related to the operation of the financial markets will not address the fundamental drivers of instability.
Source:Oxford Institute for Energy Studies
Deep Probe Expected for Deutsche Borse-NYSE Euronext Merger
Derivatives competition a concern for regulators
Talks with authorities globally 'going well' -NYSE CFO
OSC clarifies focus on London-Toronto bourse tie-up
April 11, 2011--Regulators are likely to take a long, hard look at Deutsche Borse's planned takeover of NYSE Euronext, the EU's antitrust chief said, while a top NYSE executive said talks with authorities globally are so far "going well."
EU's Almunia says deal is a 'complex' case
EU Competition Commissioner Joaquin Almunia's comments on Thursday underscored the hurdles the deal faces in Europe compared with the United States, where regulators are expected to clear the $10.2 billion takeover.
The tie-up, announced last month, would give the merged company a stranglehold on European exchange-traded derivatives, and immediately raised questions over whether competition authorities would block it.
Source: Wall Street & Technology
World Economic Outlook (WEO) Tensions from the Two-Speed Recovery: Unemployment, Commodities, and Capital Flows
April 11, 2011--The World Economic Outlook (WEO) presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries.
It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.
view the WORLD ECONOMIC OUTLOOK April 2011
Source: IMF
NASDAQ OMX Group and IntercontinentalExchange Respond to NYSE Euronext Board's Summary Rejection of Superior Proposal
Board of NYSE Euronext Wants to Deny Stockholders Benefit of Superior Proposal
Significant Execution Risks with Deutsche Boerse Proposal
Reaffirms Proposal that Delivers Significantly More Value to NYSE Stockholders
April 10, 2011--NASDAQ OMX (NDAQ) and IntercontinentalExchange (ICE) today issued the following statement in response to the summary rejection by NYSE Euronext (NYX) of their joint proposal to acquire NYSE Euronext, valued at $43.13 per share in cash and stock, as of the close of trading on Friday, April 8, 2011.
NYSE Euronext's Board of Directors, without engaging in any dialogue or discussion, has summarily elected to deny its stockholders the opportunity to benefit from a clearly superior proposal to the announced transaction with Deutsche Boerse, a proposed transaction that is indisputably financially inferior.
This NASDAQ OMX/ICE transaction would create two global leading exchanges, one primarily focused on cash equities and the other on derivatives. This reduces execution risk and allows investors to make their own allocation decisions.
The superior cash and stock proposal from NASDAQ OMX and ICE provides NYSE Euronext's stockholders with immediate value and a higher premium to the proposal from Deutsche Boerse.
There is greater potential for long-term value creation under the NASDAQ OMX/ICE proposal by placing NYSE Euronext's businesses under management teams with proven track records of unlocking value through successful merger integrations.
Source: NASDAQ OMX
Deutsche Börse NYSE Euronext Board of Directors rejects NASDAQ/ICE proposal
April 10, 2011-- Deutsche Börse AG has been informed by NYSE Euronext that the NYSE Euronext Board of Directors has unanimously decided to reject the unsolicited proposal by NASDAQ OMX and IntercontinentalExchange.
Deutsche Börse shares the view of NYSE Euronext that the agreed merger of two of the strongest exchange organizations in our industry, NYSE Euronext and Deutsche Börse, will create compelling value for shareholders of both companies. The value creation unlocked by this combination is driven by significant growth opportunities across different asset classes and geographies, identified cost synergies based on conservative joint estimates and highly attractive distributions for shareholders in the combined group based on superior cash flow generation paired with a strong balance sheet.
Since Deutsche Börse and NYSE Euronext entered into a definitive Business Combination Agreement on 15 February 2011, Deutsche Börse and NYSE Euronext have commenced regulatory proceedings and made significant progress on integration planning. With the proxy statement already on file with the US Securities and Exchange Commission, Deutsche Börse and NYSE Euronext continue to be fully on track to close the transaction at the end of 2011.
Source: Deutsche Börse
