Global ETF News Older than One Year
Infrastructure investments lag significantly behind population growth trend
Febryary 15, 2011--According to Eurosif’s Infrastructure Report, the major issues affecting the infrastructure sector include a growing population, under financing, security and climate change. Demand for infrastructure and public utilities is increasing, putting pressure on governments, infrastructure assets and resources. The OECD predicts that about €1.5 trillion will be required annually to finance world infrastructure by 2030.
As governments struggle to make ends meet, private investors are filling in the gaps for these projects, and the implications for environmental, social and governance (ESG) factors on the sector are intensifying.
This sector report is the 12th in a series. Dexia Asset Management provided the research and a steering committee composed of representatives from CDC Climat, CM-CIC Asset Management and Threadneedle oversaw the project.
view the Infrastructure Sector Report
Source: Eurosif
Fitch Ratings Scenario: Euro Dollar Parity
Picking Winners (and Losers) in EMEA
February 15, 2011--Summary: Positive for Minority of European Issuers
The effect of a hypothetical 30% depreciation of the euro, bringing it broadly to parity with the USD, would on average be positive for the profitability of European
corporate issuers. However, the global nature of most of these companies implies a considerable variety of outcomes, with only a minority likely to benefit materially.
Cost Mismatches Common
Euro/dollar parity brings into focus often significant currency mismatches in
European issuers’ cost and revenue bases. While they are used to dealing with exchange rate fluctuations — through hedging, pricing and sourcing — currency has a greater positive or negative impact on some sectors and issuers than others.
Impact Greatest on Manufacturers But Effects Vary
A weakening euro is generally positive for manufacturers (including some
technology companies), as expected. Fitch Ratings estimates that most European manufacturers have a larger proportion of EUR?denominated costs than revenue, which makes a falling euro profit?enhancing.
Source: Fitch Ratings
Chief Financial Officer and Executive Vice President, Corporate Strategy to Depart NASDAQ OMX
February 14, 2011--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) announces that Adena Friedman, Chief Financial Officer and Executive Vice President, Corporate Strategy will be leaving the company, effective March 4, 2011. Ms. Friedman will be joining The Carlyle Group as Managing Director, Chief Financial Officer and Member of the Operating Committee, based in Washington, D.C. Former NASDAQ OMX CFO David Warren has been appointed special advisor to the CEO and Ronald Hassen, Senior Vice President, Controller and Principal Accounting Officer will become interim CFO, while a permanent replacement is sought.
Adena has been a valued and trusted partner of mine since I joined as CEO," said Bob Greifeld, Chief Executive Officer of NASDAQ OMX. "She has played a tremendous role in the growth and success of NASDAQ OMX over her 18 years with the company. Her leadership skills, outstanding business acumen and entrepreneurial spirit have driven a number of game changing transactions for NASDAQ OMX. I have great respect for Adena personally and professionally and wish her much success at Carlyle."
Ms. Friedman assumed the role of CFO in 2009 in addition to overseeing corporate strategy. She directed NASDAQ's acquisition of OMX AB, through which NASDAQ OMX acquired the Nordic and Baltic markets and a global exchange technology business. She also managed NASDAQ OMX's acquisition of the Philadelphia Stock Exchange, now one of the largest options exchanges in the U.S. In 2005, Friedman directed NASDAQ in its acquisition of the INET ECN, which enhanced NASDAQ's technology infrastructure and further improved its trading capabilities. Before assuming her role as CFO, Ms. Friedman served as head of Global Data Products, a $250M business unit within The NASDAQ OMX Group. She joined NASDAQ in 1993.
Source: NASDAQ OMX
Statistics : Composite leading indicators point to continued expansion
February 14, 2011-- Composite leading indicators (CLIs) for December 2010, designed to anticipate turning points in economic activity relative to trend, continue to point to expansion in most major OECD countries.
The CLIs for Germany, Japan and the United States point to relatively robust expansion relative to trend, while in Canada, France and the United Kingdom the CLIs point to continued moderate expansion. There are nevertheless signs of a downturn emerging in Italy.
Source: OECD
BlackRock * New Report * ETF Landscape: Industry Highlights - January 2011
February 11, 2011--This report highlights the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry as of the end of January 2011.
We expect global AUM in ETFs and ETPs to increase by 20–30% annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion in Europe in 2013.
The ETF Landscape industry highlights, as of the end of January 2011, are as follows:
United States ETF industry:
The United States ETF industry had 913 ETFs and assets of US$907.3 Bn, from 28 providers on two exchanges. This compares to 791 ETFs and assets of US$665.4 Bn, from 28 providers on two exchanges at the end of January 2010.
US$10.3 Bn of net new assets went into United States listed ETFs/ETPs in January 2011. US$8.6 Bn net inflows went into equity ETFs/ETPs, of which US$10.6 Bn went into ETFs/ETPs tracking North American indices, while ETFs/ETPs tracking emerging market indices saw net outflows of US$3.8 Bn. Fixed income ETFs/ETPs saw net inflows of US$2.8 Bn, of which US$1.1 Bn went into high yield bond ETFs/ETPs and US$0.8 Bn into government bond ETFs/ETPs. Commodity ETFs/ETPs experienced US$1.7 Bn net outflows, of which precious metals ETFs/ETPs saw net outflows of US$3.5 Bn, while US$1.1 Bn net inflows went into agricultural commodity ETFs/ETPs in January 2011.
Of the US$12.1 Bn of net new assets in United States listed ETFs in January 2011, State Street Global Advisors gathered the largest net inflows with US$5.1 Bn, followed by Vanguard with US$4.2 Bn net inflows, while iShares saw US$2.3 Bn net outflows.
Global ETF and ETP industry:
The global ETF industry had 2,501 ETFs with 5,701 listings and assets of US$1,334.6 Bn, from 138 providers on 47 exchanges around the world. This compares to 2,055 ETFs with 3,941 listings and assets of US$984.0 Bn from 114 providers on 40 exchanges at the end of January 2010.
The global ETF and ETP industry combined had 3,574 products with 7,487 listings, assets of US$1,498.9 Bn from 172 providers on 51 exchanges around the world. This compares to 2,675 products with 4,852 listings, assets of US$1,132.8 Bn from 137 providers on 43 exchanges at the end of January 2010.
European ETF industry:
The European ETF industry had 1,085 ETFs with 3,808 listings and assets of US$291.9 Bn, from 40 providers on 23 exchanges. This compares to 896 ETFs with 2,468 listings and assets of US$217.9 Bn from 34 providers on 18 exchanges at the end of January 2010.
US$3.8 Bn of net new assets went into European listed ETFs/ETPs in January 2011. US$4.7 Bn net inflows went into equity ETFs/ETPs, of which US$1.8 Bn went into ETFs/ETPs tracking European indices and US$0.7 Bn into ETFs/ETPs tracking emerging market indices. Fixed income ETFs/ETPs saw net outflows of US$0.4 Bn, of which government bond ETFs/ETPs saw net outflows of US$0.8 Bn while US$0.3 Bn went into money market ETFs/ETPs. Commodity ETFs/ETPs saw net outflows of US$0.3 Bn, of which ETFs/ETPs providing precious metals exposure saw US$0.6 net outflows while US$0.3 Bn went into broad commodity exposure.
Of the US$4.4 Bn of net new assets in European listed ETFs in January 2011, iShares gathered the largest net inflows with US$1.9 Bn, followed by Source Markets with US$0.9 Bn net inflows, while Lyxor Asset Management had the largest net outflows with US$0.2 Bn.
Asia Pacific (ex-Japan) ETF industry:
The Asia Pacific (ex-Japan) ETF industry had 211 ETFs with 318 listings and assets of US$54.5 Bn, from 60 providers on 13 exchanges. This compares to 134 ETFs with 218 listings and assets of US$36.9 Bn, from 47 providers on 13 exchanges at the end of January 2010.
Japan ETF industry:
The Japanese ETF Industry had 80 ETFs with 83 listings and assets of US$31.2 Bn, from seven providers on two exchanges. This compares to 69 ETFs with 72 listings and assets of US$24.2 Bn from six providers on two exchanges at the end of January 2010. There are 178 ETFs which have filed notifications in Japan.
Latin America ETF industry:
The Latin American ETF industry had 26 ETFs, with 365 listings and assets of US$9.7 Bn, from four providers on three exchanges. This compares to 17 ETFs, with 220 listings and assets of US$9.5 Bn from three providers on three exchanges at the end of January 2010.
Canada ETF industry:
The Canadian ETF industry had 157 ETFs and assets of US$38.0 Bn, from four providers on one exchange. This compares to 125 ETFs and assets of US$28.4 Bn from four providers on one exchange at the end of January 2010.
Source: Deutsche Bank Global Equity Index & ETF Research
DB Global Markets Research-Fundamental Index Views-Equities: S&P500 (Buy) "Go with the flow"
February 2011--S&P 500’s +ive momentum backed by strong fundamentals
Our US economists have raised their 2011 GDP forecast from 3.3% to 4.3% on
the back of an improved outlook on the unemployment rate (2011 YE forecast
lowered to 7.8% from 8.8% previously) and rising output due to the combination
of strengthening demand and negligible inventory (should result in inventory
accumulation which is likely to propel output up to +4.5%).
Further, bottom-up aggregated fundamentals of S&P 500 companies (ex Financials) look strong where EBIT margins have recovered above pre-crisis levels, reasonable deleveraging is accompanied by a comfortable cash position and high net interest cover ratios. Also, strong positive momentum in earnings revisions is building up. We estimate 96$ in 2011E and a fair value multiple of 16.4x which brings us to our YE target of 1,550. We estimate 2011E sales growth of 8.8% and EPS growth of 12.4%.
…and a strong Q4’10 reporting so far (see pages 6, 7)
Out of 245 S&P 500 companies, 71% have reported sales above expectations
(strongly ahead of Q3 2010) and 71% above earnings expectations (as of 4 Feb
2011). In contrast, out of 68 Stoxx 600 companies in Europe, only 56% have
reported earnings above expectations and 61% came in with sales surprises. On
the sector level, Technology (largest sector weighting in the S&P 500 of ~19%,
see middle chart on the right) stands out positively with 81% out of 37 companies having positively surprised on the earnings level and even 84% on the sales level.
In a nutshell, 16 out of 19 sectors have beaten on an earnings level and only Construction & Materials as well as Utilities disappointed so far.
Fund flows supportive for DM and our case for US Equities (see page 5) A key theme since Nov 2010 has been investors’ move from ‘nominal’ to ‘real’ assets with major flows out of US Bonds into Equities (with Japan, EMEA and the US as key beneficiaries) and Corporate High Yield Bonds. Moreover, inflows into Emerging market (EM) equities have continuously faded since Nov 2010 and have finally turned into record outflows of 1.0% of total assets over the last week (a 3-year record) while Developed market (DM) equity funds and particularly the US continued to see inflows with an improving trend. US equities have seen inflows of 0.2% of total assets last week (inflows in 8 out of the last 9 weeks). The stronger than expected US January ISM may also have been supportive.
To request a copy of the report
Source: Deutsche Bank Global Markets Research
BlackRock * New Report * ETF Landscape: Industry Review - Year End 2010
February 11, 2011--The industry grew in all major dimensions during 2010 and we expect this to continue in 2011. With products and assets both growing by 26.6%, the global ETF industry had 2,459 ETFs with 5,554 listings and assets of US$1,311.3 Bn, from 136 providers on 46 exchanges around the world, at year end 2010. This is up significantly on 2009's year end of 1,943 ETFs with 3,827 listings and assets of US$1,036.1 Bn, from 108 providers on 41 exchanges.
Demand for ETFs globally has surged as professional and retail investors alike have discovered their unique combination of benefits, such as versatility, transparency and significant cost advantages. The availability of cost effective, flexible, liquid, and diversified investment products that enable rapid implementation of a comprehensive range of investment strategies has struck a chord with investors – during both bull and bear markets.
Factors driving expanding use of the vehicle include the number and types of equity, fixed income, commodity and other indices covered, more fund platforms embracing ETFs, more active marketing of ETFs by online brokers, greater involvement by fee based advisors, the growing number of exchanges planning to launch new ETF trading segments, and regulatory changes in the United States, Europe and many emerging markets that allow funds to make larger allocations to ETFs.
We expect global AUM in ETFs and ETPs to increase by 20-30% annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion in Europe in 2013.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Conformism and Public News -IMF Working Paper
February 9, 2011--Summary: We study a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment. The information of investors consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment.
We assume that the return of the investment is correlated with the aggregate investment. This results into a beauty contest among analysts (or a "conformism" effect). In equilibrium, analysts sell all the information they have to all the investors. A striking result is that there are sometimes multiple equilibria. There are equilibria where the beauty contest is exacerbated. Because of the correlation across analysts' information sources, not all the information available in the economy is transmitted to investors.
view IMF Working paper-Conformism and Public News
Source: IMF
IEA-Highlights of the latest Oil Market Report
February 10, 2011--HIGHLIGHTS
Crude prices were propelled higher at end?January by political
unrest in Egypt, with Brent crude reaching $100/bbl on fears that
the turmoil might disrupt Suez canal and SUMED pipeline flows or
spread in the region. Although prices have since eased, Brent futures
remain around $100.50/bbl and WTI at $87.20/bbl at writing.
Global oil product demand for 2010 and 2011 is revised up by 120 kb/d on average on higher?than?expected submissions in non?OECD Asia and improved economic prospects for OECD North America. At 87.8 mb/d in 2010, global oil demand rose by 2.8 mb/d year?on?year, and should reach 89.3 mb/d in 2011 (+1.5 mb/d year?on?year).
World oil supply rose 0.5 mb/d in January, to 88.5 mb/d, on higher OPEC crude and NGL output. Non?OPEC supply was unchanged from December at 53 mb/d, as outages continued to constrain production. 2010 estimates remain at 52.8 mb/d, while the 2011 outlook is nudged up 0.1 mb/d to 53.5 mb/d on higher North American output.
OPEC crude supply scaled two?year highs in January at 29.85 mb/d, with Iraq underpinning the 280 kb/d monthly increase. OPEC NGLs in 1Q11 rise by 200 kb/d to 5.7 mb/d on gains from Qatar and UAE. The 2011 ‘call on OPEC crude and stock change’ now averages 29.9 mb/d after upward revisions to demand, close to observed January OPEC output levels. OPEC effective spare capacity stands at 4.7 mb/d.
Source: International Energy Agency (IEA)
IEO Releases Evaluation of IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07
February 9, 2011--The Independent Evaluation Office (IEO) of the International Monetary Fund (IMF) released today its evaluation of the IMF Performance in the Run-Up to the Financial and Economic Crisis. This evaluation was discussed by the IMF’s Executive Board on January 26, 2011. In releasing the report, IEO Director Moises Schwartz explained that the evaluation’s main aim is to improve the effectiveness of IMF surveillance in
warning the membership on emerging risks and vulnerabilities to the global economy.
The evaluation focused on the performance of IMF surveillance during the 2004-2007 period. The report found that the IMF provided few clear warnings about the risks and vulnerabilities associated with the impending crisis before its outbreak. During the run-up to the crisis, the banner message of IMF surveillance was characterized by overconfidence in the soundness and resiliency of large financial institutions, and endorsement of the financial practices in the main financial centers. The risks associated with housing booms and financial innovations were downplayed, as was the need for stronger regulation to address these risks.
The IEO found that the IMF’s ability to identify the mounting risks was hindered by a number of factors, including a high degree of groupthink; intellectual capture; and a general mindset that a major financial crisis in large advanced economies was unlikely. Weak internal governance and an institutional culture that discourages contrarian views also played an important role.
Source: Independent Evaluation Office (IEO)
