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BlackRock New Report * ETF Landscape Emerging Markets Industry Review: November 2010
December 2, 2010--This publication provides analysis of the growth in assets, net asset flows and trading volumes of all emerging and frontier market ETFs and ETPs.
The use of ETFs and ETPs for emerging markets exposure have always been very useful and popular for many investors since it is often difficult to achieve exposure directly in many emerging and frontier markets such as Korea and Taiwan, without foreign investor status due to a limited selection of available futures contracts offering emerging and frontier market exposure.
At the end of August 2010, there were 450 ETFs/ETPs providing exposure to various emerging markets indices with 869 listings, assets of US$193.5 Bn from
94 providers on 38 exchanges in 32 countries.
YTD, ETFs/ETPs providing exposure to emerging and frontier market indices have seen net inflows of US$30.5 Bn, with US$27.9 Bn of net new assets going into emerging and frontier market equity ETFs/ETPs, of which US$18.7 Bn went into broad emerging market equity ETFs/ETPs and US$5.7 Bn into ETFs/ETPs tracking Chinese equity indices.
In comparison, for the full year 2009, ETFs/ETPs providing exposure to emerging and frontier markets had net inflows of US$24.8 Bn, with US$23.2 Bn going into ETFs/ETPs tracking emerging and frontier equity indices, of which US$9.6 Bn went into ETFs/ETPs tracking broad emerging/frontier market equity indices and US$6.5 Bn into ETFs/ETPs tracking Chinese equity indices.
The array of ETFs/ETPs now available to track emerging markets benchmarks has grown significantly, such that an investor can now access every MSCI emerging market country except the Czech Republic and Morocco.
Emerging markets has been one of the markets where we've seen innovation in ETF/ETP structures such as allowing for exposure to India and China A share indices. We expect to see continued growth in the use of these products, as well as emerging market and frontier market exposures availability.
Note: Flow data for many emerging market ETFs is only available 6 weeks after month end via the Simfund global mutual fund database, end of August 2010 data was the latest available when the analysis was produced.
Global Metro Monitor report-The Path to Economic Recovery
A preliminary overview of 150 Global Metropolitan Economies in the Wake of the Great Recession
December 2, 2010--The global financial crisis of the late 2000s precipitated an economic
downturn of such magnitude and reach that many now refer to the
period as the “Great Recession.” According to the International Monetary
Fund, global economic output, which had grown at an annual rate of 3.2
percent from 1993 to 2007, actually shrank by 2 percent from 2008 to
2009. A precarious economic recovery is now underway.
Aggregate views of the global economy, however, mask the distinct
experiences of its real hubs—major metropolitan areas. Metro areas,
which are economically integrated collections of cities, suburbs, and
often surrounding rural areas, are centers of high-value economic
activity in their respective nations and worldwide. And because metros
form the fundamental bases for national and international economies,
understanding their relative positioning before, during, and after the Great Recession provides important evidence on emerging shifts in the
location of global economic resilience and future growth. The Global
MetroMonitor examines data on economic output and employment in 150
of the world’s largest metropolitan economies, located in 53 countries,
from 1993 to 2010 and makes the following findings:
Environment: Cities central to climate change response
December 1, 2010-- Cities and metropolitan regional governments should play a more prominent role in defining the wider response to climate change, according to a new report from the OECD.
Cities and Climate Change confirms that urban areas use most of the world’s energy and are responsible for most of the world’s greenhouse gas emissions. Cities are at the same time highly vulnerable to the rising sea levels, warmer temperatures and destructive storms expected to result from climate change: by 2070, 150 million city-dwellers, producing 9% of global GDP in coastal cities, will be exposed to the full brunt of climate change, according to the report.
“Cities are at the center of the problem, and given their role as the predominant consumers of energy, they are also a necessary part of the climate change solution,” OECD Secretary-General Angel Gurria said. “Urban policymakers should immediately start reshaping their cities’ futures, using better urban planning and policies to reduce energy use, cut greenhouse gas emissions and make their infrastructure more resilient.”
view Competitive Cities and Climate Change
Average Daily Volume of 10.2 Million Contracts at Eurex and ISE in November
Eurex’s monthly volume grew by 20 percent y-o-y/ ISE with stable monthly figures y-o-y
December 1, 2010--At the international derivatives markets of Eurex, an average daily volume of 10.2 million contracts was traded in November (November 2009: 9.4 million). Thereof, 7.2 million contracts were traded at Eurex (November 2009: 6.3 million) and 3.0 million contracts were traded at the International Securities Exchange (November 2009: 3.1 million). In total, 221.7 million contracts were traded on both exchanges (November 2009: 193.0 million); thereof, 159.0 million contracts at Eurex and 62.7 million contracts at ISE.
At Eurex, the equity index derivatives segment was the most active segment, totaling 71.2 million contracts (November 2009: 64.0 million). Futures on the EURO STOXX 50 reached 30.7 million contracts and options on this index recorded another 27.7 million contracts. The futures on the DAX index reached a turnover of 3.4 million contracts, the DAX option recorded another 6.7 million contracts.
The Eurex segment of equity-based derivatives (equity options and single stock futures) recorded 33.9 million contracts (November 2009: 29.1 million). Thereof, equity options totaled 27.5 million contracts, single stock futures 6.4 million contracts.
Due to the higher volatility of European bond markets, Eurex’s interest rate derivatives segment grew by 38 percent y-o-y and reached 53.2 million contracts, compared with 38.5 million in November 2009. Approximately 21.9 million contracts were traded in the Euro-Bund-Future, 12.1 million contracts in the Euro-Bobl-Future and 11.2 million contracts in the Euro-Schatz Future. The Euro-BTP-Future set a new monthly record with more than 160,000 contracts, the recently launched Short Term Euro-BTP-Future recorded almost 61,000 contracts.
Dividend derivatives traded roughly 482,000 contracts, an increase of 26 percent y-o-y. Commodities derivatives totaled at 83,000 contracts, an increase of almost 22 percent y-o-y. Volatility derivatives totaled at 165,000 contracts.
Eurex Repo, which operates CHF repo, EUR repo and GC Pooling markets, grew by 26 percent y-o-y and all markets combined reached an outstanding volume of 259.7 billion euros (November 2009: 205.5 billion euros). The secured money market GC Pooling grew by 25 percent and achieved a new monthly record, totaling an average outstanding volume of 100.1 billion euros (November 2009: 80.4 billion euros).
The electronic trading platform Eurex Bonds, which rounds out Eurex’s fixed-income product range, saw volume of 10.3 billion euros (single counting) in November, an increase of 12 percent compared with 9.2 billion euros in November 2009.
Liability Driven Investing for Pension Schemes
December 1, 2010--The online report where leading pension scheme managers, risk managers and economist assess the outlook for liability driven investment strategies and analyse how best to protect pension risk in a low interest rate environment.
As financial markets continue their run of volatility and the economic environment continues to provide uncertain signals, pension schemes look inward at their schemes investments and consider, 'how can we manage our scheme liabilities regardless of the future?'.
Liability driven investing (LDI), the concept of matching a pension schemes assets and investments to their liabilities, has bounced back onto the agenda of pension trustee boards as sponsors realise the risks they may be exposed to by not focussing on liability values at the centre of their investment plan.
'Liability Driven Investing for Pension Schemes' is the first report of its kind focussed from a pension scheme perspective on how LDI works and the key features of the strategy, the rational for engaging in LDI now as well as the key issues around the interest rate environment, longevity risk and gaining growth from an LDI plan.
Key issues include:
Liability driven investing explained - unravelling the complexity and confusion of a rejuvenated market-place
Asset, manager, instrument matching: what are the right instruments for liability driven investing and best practise criteria for picking an appropriate manager?
Interest rate environment: is now the time to be in LDI?
CPI in October 2010 OECD annual inflation rate up to 1.9% in October 2010
November 30, 2010--Consumer prices in the OECD area1 rose by 1.9% in the year to October 2010, up from 1.7% in September. The uptick was partly driven by strong rises in Japan, where annual inflation was positive for the first time in twenty months, and Canada, where consumer prices rose at their fastest rate since October 2008.
Energy and food price growth also drove the pick-up in inflation. Energy prices rose by 6.6% in October compared with 5.2% growth seen in September, while food prices were up 2.6%, versus 2.3% the previous month.
Excluding food and energy, consumer prices rose by 1.1% in the year to October 2010, slightly down from 1.2% in September.
Green and growth go together: the business case for a low-carbon economy
November 30, 2010-- Companies are designing new ‘green’ business models which will complement the outcome of international climate change negotiations.
A new OECD report, Transition to a low carbon economy: Public Goals and Corporate Practices, highlights decisions companies are taking to fight climate change and recommends government actions to encourage them.
“A number of front-running companies have grasped the challenges and opportunities of moving towards a low-carbon economy”, says OECD Secretary General Angel Gurria. “Our report shows that “green” and “growth” go together: Substantial green investment makes economic sense and can support effective climate policies.”
The report, which covers OECD countries as well as China, India and South Africa, draws on national experiences and a survey of companies worldwide to assess business strategy on climate change.
Today 400 of the Global 500 companies measure and report their GHG emissions. Though this is an important step towards managing emissions, there are no internationally-agreed standards for corporate GHG emission reporting so results are neither comparable nor credible. Governments could solve this problem by agreeing international corporate GHG accounting methodologies.
BlackRock New Report ETF Landscape Industry Review, End of October 2010
November 30, 2010--At the end of October 2010 the global ETF industry had 2,409 ETFs with 5,335 listings, assets of US$1,239.4 Bn from 130 providers on 46 exchanges around
the world.
Additionally, there were 995 other Exchange Traded Products (ETPs) with 1,572 listings and assets of US$153.6 Bn from 50 providers on 21 exchanges.
Combined, there were 3,404 products with 6,907 listings, assets of US$1,392.9 Bn from 160 providers on 50 exchanges around the world at the end of October 2010.
YTD assets have increased by 19.6% from US$1,036.0 Bn to US$1,239.4 Bn. This is greater than the 4.6% increase in the MSCI World Index in US dollar terms.
The top 100 ETFs out of 2,409, account for 63.3% of global ETF Assets Under Management (AUM). 1,217 ETFs have less than US$50.0 Mn in assets and 426 ETFs have less than US$10.0 Mn in assets.
YTD, the number of ETFs has increased by 23.9% with 514 new ETFs launched while 50 ETFs were delisted. ETFs listed in Europe surpassed the United States in April 2009. As at the end of October 2010, Europe has 1,048 ETFs listed, whilst the United States has 887 ETFs listed. There are currently plans to launch 1,036 new ETFs.
YTD, the number of exchanges with official listings has increased from 41 to 46 and the ETF average daily trading volume
Africa, EU on summit collision course over economic deals
November 29, 2010--Africa squared up to fight for a better economic deal with the European Union on Monday as Libyan leader Moamer Kadhafi opened a key summit warning the continent was ready to do business elsewhere.
"We have failed in our economic partnership with Europe," Kadhafi told leaders of 80 nations gathered in the high-rise seaside Libyan capital for the two-day talks.
Opening the first summit in three years between the two continents, Kadhafi reopened old wounds between former colonial powers and nations marking half a century of independence at a time when the onus is on efforts to seal a "new, equal" partnership.
IOSCO Publishes Final Report on Guidelines for the Regulation of Conflicts of Interest Facing Market Intermediaries
November 25, 2010--Executive Summary
The last few years have seen a significant growth in the involvement of market intermediaries in the financial market, which has led to increased complexity in the range of business services provided as well as the usage of financial products and instruments. The recent financial crisis and several corporate scandals have given rise to concern over the conduct of market intermediaries due to their inherent agency structure that gives rise to conflict of interests. Many cases have arisen where intermediaries are not acting in the best interests of their clients. Further, due to providing a wide range of services, market intermediaries are prone to conflicts of interest, which can lead them to diverge from adopting strategies and behavior to benefit their clients.
The evolving market scenario combined with an enhanced role of globalization in financial markets has prompted regulators to find improved regulations to address conflicts of interests faced by market intermediaries which pose a risk to the health of any financial system. There are apprehensions over the methods and strategies adopted for the regulation of market intermediaries to manage conflict of interests. Regulators have been criticised by various sections for using soft regulation in relation to market intermediaries1. The increased role of globalization in the financial markets has also led to circumstances which have called for greater alignment in the regulatory scope of different jurisdictions. Therefore, regulation of financial markets needs to be developed with a focus on commonly accepted rules for the regulation of conflicts of interest. Consequently, an increasing number of the members of the International Organization of Securities Commissions (IOSCO) are in the process of adopting new regulations, to target conflicts of interest.