Global ETF News Older than One Year
What Caused the Global Financial Crisis - Evidence on the Drivers of Financial Imbalances 1999 - 2007-IMF Working Paper
December 20, 2010--Summary: This paper investigates empirically the drivers of financial imbalances ahead of the global financial crisis. Three factors may have contributed to the build-up of financial imbalances: (i) rising global imbalances (capital flows), (ii) monetary policy that might have been too loose, (iii) inadequate supervision and regulation. Panel data regressions are performed for OECD countries from 1999 to 2007, so as to shed light on the relative importance of these factors, as well as the extent to which these factors might have interacted in fuelling the build-up.
We find that the build-up of financial imbalances was driven by capital inflows and an associated compression of the spread between long and short rates. The effect of capital inflows on the build-up is amplified where the supervisory and regulatory environment was relatively weak. We find that, by contrast, differences in monetary policy cannot account for differences across countries in the build-up of financial imbalances ahead of the crisis.
Source: IMF
U.S. Leveraged Finance Multiple EV-aluator
December 20, 2010--Summary
In this introductory installment of its recurring valuation-focused special report series, Fitch Ratings provides a summary of how market multiples (enterprise value [EV]/EBITDA) for more than 400 high-yield issuers in the U.S. have tracked over time on an aggregated sector basis. The report highlights how these market multiples have compared with transaction multiples of publicly traded U.S. companies and with the
distressed valuation multiples employed by Fitch for purposes of its recovery analysis.
This report also provides a snapshot of how leveraged certain sectors are relative to their enterprise valuations assigned by the market, and in doing so offers an insight into how implied equity cushions have fluctuated through the credit cycle. Fitch’s key observations include the following:
Current market valuation multiples for most sectors have rebounded from their downturn lows with the revival in the equity markets. As expected, the highest swings in market valuation (as measured in terms of standard deviation) over the past decade have been witnessed in cyclical sectors such as homebuilding, technology, followed by media and entertainment. Curiously, though, the retail sector - also arguably subject to similar cyclicality forces ? emerged as the most stable in terms of market valuations across time.
This report also provides empirical evidence that supports a moderate deleveraging trend (relative to leverage levels in 2006) among speculative-grade companies in seven out of the 18 sectors. The chemicals sector, followed by energy and natural resources, delevered at a faster rate than their valuation multiples had compressed since 2006, contributing to enhanced equity cushions.
The recent resurgence in M&A activity has been spurred by an enabling environment of low bond yields, robust primary markets, reasonable corporate valuations, strong corporate cash balances (expected to be over $2 trillion), and limited organic growth prospects. As evident from the sector charts on pages 3-24, current transaction multiples for an overwhelming majority of sectors are still nowhere near their 2006-2007 peaks.
Source: Fitch Ratings
December 2010 Monthly Preliminary Performance Report Dow Jones-UBS Commodity Indexes
December 20, 2010--The Dow Jones-UBS Commodity Index was up 5.76% for the month of December. The Dow Jones-UBS Single Commodity Indexes for Cotton, Sugar and Coffee had the strongest gains with month-to-date returns of 27.94%, 17.97%, and 11.98%, respectively. The three most significant downside performing single commodity indexes were Live Cattle, Natural Gas and Gold, which were down 1.76%, 1.53%, and 0.50% respectively, in December.
Year to date, the Dow Jones-UBS Commodity Index is up 11.49% with the Dow Jones-UBS Cotton Sub-Index posting the highest gain of 105.14% so far in 2010. Dow Jones-UBS Natural Gas Sub-Index has the most significant downside YTD performance, down 45.00%.
Source: Mondovisione
Exchanges also face financial reform
December 20, 2010--Exchanges like to boast that, while they are an unusually visible part of the financial markets, they had nothing to do with the financial crisis of 2008. Trading of stocks, options and futures carried on throughout the worst moments of the crisis, with prices being quoted continuously and deals done.
However, exchanges are not unaffected by the sweeping changes to the financial landscape as a result of the regulatory overhaul of financial services – the biggest since since the US stock market crash of 1929.
Source: FT.com
Investors buy into haven of the dollar
December 20, 2010--The dollar was in demand as investors sought havens from the eurozone debt crisis while rising geopolitical tensions in the Korean peninsula weighed on Asian currencies.
Sentiment for the euro remained fragile after Moody’s downgrade for Ireland and its warning on Spain last week. “The lack of any substantive plan to bulk up the European financial stability facility or provide an alternative crisis management system has kept the market negative on the euro as the downgrades keep rolling in from Moody’s,” said Adrian Schmidt, of Lloyds Bank Corporate Markets.
Source: FT.com
Sugar and coffee hit multi-year highs
December 20, 2010--Sugar and coffee prices hit multi-year highs on Monday, further boosting food inflation concerns as supply problems mounted after a string of lower-than-expected harvests due to unfavourable weather, analysts said.
The surge in sugar and coffee prices comes as other agricultural commodities – from corn and wheat to soyabean and barley – trade near a two-year high.
Source: FT.com
Weathering the Global Storm: The Benefits of Monetary Policy Reform in the LA5 Countries-IMF Working paper
December 17, 2010--This paper highlights that central banks from Brazil, Chile, Colombia, Mexico, and Peru (the LA5 countries) reaped the benefits of what they sowed in successfully weathering the global crisis. The adoption of far-reaching institutional, policy, and operational reforms during the last two decades enabled central banks to build credibility about their commitment with the objective of price stability.
Thus, when the 2007 - 08 supply shock and the financial crisis hit the world, the LA5 central banks reacted swiftly and effectively based on a flexible policy framework and with the support of strong macroeconomic and financial foundations. Building on the experience of the LA5 central banks and complementing with recommendations from the IMF’s technical advice, the paper provides several suggestions for countries seeking to strengthen the effectiveness of monetary policy.
Source: IMF
NASDAQ OMX Prices $370 Million Senior Notes Offering
December 17, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced that it priced an underwritten public offering of $370 million aggregate principal amount of 5.250% Senior Notes due 2018. The offering is expected to close on December 21, 2010, subject to customary closing conditions.
NASDAQ OMX expects to use the net proceeds from the notes offering to repay senior unsecured indebtedness that it expects to incur to finance the purchase of approximately 22.8 million shares of NASDAQ OMX's common stock, $0.01 par value per share, from Borse Dubai Limited.
J.P. Morgan Securities LLC is the sole bookrunner of the notes offering.
The offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. A prospectus supplement and accompanying prospectus describing the terms of this offering will be filed with the SEC. Copies of the prospectus supplement and the accompanying base prospectus may be obtained at no cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, J.P. Morgan Securities LLC can arrange to send you the prospectus if you request it by calling J.P. Morgan Securities LLC at the following collect number: 1-212-834-4533.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Source : NASDAQ OMX
Hedge Funds Raise Bets on Commodity Rally to Highest Level in Four Years
December 16, 2010--Hedge funds and large speculators increased their bets on a commodity rally to the highest level since at least 2006 as copper and gold gained to records.
An index tracking speculative positions in 20 commodity futures in the U.S. advanced 8.4 percent from the week before to 1.54 million contracts as of Dec. 7, the highest level since at least February 2006, Commodity Futures Trading Commission data show. The gauge, compiled by Bloomberg, is derived by taking short positions, or bets on lower prices, from long positions.
Source: Bloomberg
Asset Recovery Handbook 2010
Creative International Cooperation Can Help Developing Countries Recover Stolen Assets
November 16, 2010--Developing countries lose between $20 billion and $40 billion each year to bribery, embezzlement, and other corrupt practices. Over the past 15 years only $5 billion has been recovered and returned. A new handbook seeks to help close this gap.
The Asset Recovery Handbook, released today by the Stolen Asset Recovery (StAR) Initiative of the World Bank Group and the United Nations Office on Drugs and Crime, provides practitioners with a how-to guide for recovering stolen assets. The process is complex, requiring coordination between many public agencies in multiple jurisdictions. Practitioners must exchange sensitive information with partners in other countries to trace stolen funds and gather evidence. They must be familiar with a wide range of legal tools and procedures for freezing, seizing, and repatriating stolen funds. And they must be able to navigate the legal systems of their own country and of partner countries.
“The process can be overwhelming for even the most experienced practitioners. It is exceptionally difficult for those working in the context of failed states, widespread corruption, or limited resources,” said Jean Pierre Brun, World Bank Senior Financial Sector Specialist and lead author of the handbook. “A practical guide can help these states navigate the process, anticipate challenges, and determine and implement effective strategies.”
The handbook, prepared by an international team of experts, draws on the experience of a wide range of countries and legal traditions. Designed as a quick reference, it describes approaches to recovering proceeds of corruption located in foreign jurisdictions, identifies the difficulties that practitioners are likely to encounter, suggests strategic and tactical options to address the challenges, and introduces good practices. It also provides reference tools, case studies, and practical resources such as sample intelligence reports, applications for court orders, and mutual legal assistance requests.
“In these tough economic times, and with corruption such a drain on development, it is vital for countries to have the resources they need to battle this scourge. The handbook could also be helpful to those making policy decisions about legislation and management of resources devoted to fighting corruption,” said Ngozi Okonjo-Iweala, Managing Director of the World Bank. “The World Bank Group and UNODC will use it to provide technical assistance and promote capacity building in countries interested in the StAR Initiative,” she added.
view the Asset Recovery Handbook 2010
Source: World Bank
