Global ETF News Older than One Year
ETFs not ideal for all allocation aspects, says S&P
December 9, 2010--Although exchange-traded funds (ETFs) have been gaining significant traction ever since the global financial crisis, investors should be fully aware of their capabilities as an investment.
That is the view supported by the research house Standard & Poor’s Fund Services (S&P) in its latest report entitled ‘Exchange-Traded Funds Increasingly Popular in the Australian Market’.
The report claimed the current array of ETFs available on the Australian Securities Exchange was cost effective, transparent and efficient to transact, but warned investors should be aware that ETFs “do not necessarily provide investment solutions for all allocation aspects of portfolio construction, [such as] currency hedging or foreign equity exposures”.
Source: Money Management
Regular Review Results for Dow Jones Islamic Market Indexes
Fourth Quarter 2010
December 9, 2010-Dow Jones Indexes, a leading global index provider, today announced the results of the regular quarterly review of the Dow Jones Islamic Market Indexes. All changes will be effective after the close of trading on Friday, December 17, 2010-
In the Dow Jones Islamic Market World Index, 165 components will be added while 50 components will be deleted. That increases the number of components in the index to 2,479 from 2,364. The top five components by free-float market capitalization that will be added to the index are Rio Tinto PLC (United Kingdom, Basic Materials, RIO.LN), Bayer AG (Germany, Basic Materials, BAYN.XE), Norilsk Nickel Mining & Metallurgical Co. ADS (Russia, Basic Materials, MNOD.LN), Life Technologies Corp. (United States, Health Care, LIFE) and Coca-Cola Enterprises Inc. (United States, Consumer Goods, CCE).
The free-float market capitalization of the reconstituted Dow Jones Islamic Market World Index increased to US$13.374 trillion from US$13.141 trillion.
In the Dow Jones Islamic Market Asia/Pacific Index, with 114 additions and 24 deletions, the number of components in the index will increase to 1,168 from 1,078. The top five components by free-float market capitalization that will be added to the index are ASUSTeK Computer Inc. (Taiwan, Technology, 2357.TW), Petronas Chemicals Group Bhd (Malaysia, Chemicals, 5183.KU), BYD Co. Ltd. (China, Industrials, 1211.HK), Yangzijiang Shipbuilding Holdings Ltd. (Singapore, Industrials, BS6.SG), and Celltrion Inc. (South Korea, Health Care, 068270.KQ).
Source: Dow Jones Indexes
Thomson Reuters Monthly Market Share Reports For November 2010
November 9, 2010--Trading is fragmenting between exchanges and competing venues. But by how much and which venues? Find out in the Thomson Reuters summarised monthly reports.
Source: Thomson Reuters
IMF Working paper-Bank Capital: Lessons from the Financial Crisis
December 9, 2010--Using a multi-country panel of banks, we study whether better capitalized banks experienced higher stock returns during the financial crisis. We differentiate among various types of capital ratios: the Basel risk-adjusted ratio; the leverage ratio; the Tier I and Tier II ratios; and the tangible equity ratio.
We find several results: (i) before the crisis, differences in capital did not have much impact on stock returns; (ii) during the crisis, a stronger capital position was associated with better stock market performance, most markedly for larger banks; (iii) the relationship between stock returns and capital is stronger when capital is measured by the leverage ratio rather than the risk-adjusted capital ratio; (iv) higher quality forms of capital, such as Tier 1 capital and tangible common equity, were more relevant.
view the Bank Capital: Lessons from the Financial Crisis-IMF Working paper
Source: IMF
Emerging Markets Come of Age
November 9, 2010--These vibrant middle-income countries survived the global recession, but face bumps as they seek to solidify their place in the world economy.
The superlative performance of emerging market economies, a group of middle-income countries that have become rapidly integrated into global markets since the mid-1980s, has been the growth story of the past decade.
After being beset by various crises during the 1980s and 1990s, emerging markets came into their own during the 2000s, recording remarkable growth rates while keeping inflation and other potential problems largely under control.
Before the global financial crisis of 2008–09, there was a growing sense among investors and policymakers that emerging economies, with their new economic might, had become more resilient to shocks originating in advanced economies. Indeed, empirical evidence indicates that over the past two decades there has been a convergence of business cycles among emerging markets and a convergence among advanced economies, but a gradual divergence of cycles between the two groups—referred to as decoupling. Fluctuations in financial markets have become more correlated across these two sets of countries, but that has not translated into greater spillovers into the real economy, which produces goods and services.
Source: IMF
Hedge Funds Took in $16 Billion in October, Most in a Year
December 8, 2010--Hedge funds received net deposits in October of $16 billion, the largest since November 2009, as investors were willing to take more risk, according to TrimTabs Investment Research and BarclayHedge Ltd.
Distressed securities funds took in the most cash, receiving $3.8 billion in October, the research firms said today in a report. Fixed-income funds received the least of any strategy, taking in $506 million, the smallest amount since April.
Source: Bloomberg
NYSE Euronext Announces Major Enhancements to NYSE BondsSM Platform
DRetail Investor-focused Platform Creates New Liquidity Program Expected to Launch in Q1 2011
- Greater Visibility on Markets and Liquidity -
Limit-Order Functionality Allows Retail Investor Interaction
December 8, 2010 ? NYSE Euronext today announced major enhancements to its fixed income trading platform, NYSE BondsSM. They include the new Bond Liquidity Provider (BLP) program that will improve liquidity and provide price transparency to retail investors.
The proposed enhancements remain subject to approval by the U.S. Securities and Exchange Commission, following the usual public comment and review period.
The program, which the company expects to launch in first-quarter 2011, will include multiple bond dealers. Each dealer will cover specific NYSE listed companies, and will be responsible for posting live bids and offers of a minimum size on the outstanding corporate bonds of those companies.
Source: NYSE Euronext
Tax reforms to improve economic performance
December 8, 2010--Many governments are facing historic high levels of deficit and debt. Public spending has risen and they are taking in less money as tax revenues fall - more than 10% in some countries.
Governments are attempting to consolidate their budgets, looking for the appropriate balance between expenditure cuts and revenue increases. OECD’s “Tax Policy Reform and Fiscal Consolidation” says that for tax regimes to support sustainable economic growth governments must decide the right way to raise additional tax revenues.
Taxes can be a disincentive to work, invest and innovate, with adverse effects on economic growth and welfare.
Source: OECD
Implementation of New ISE Options Trading System Scheduled for April 2011
Deutsche Börse Introduces Optimise™, its new global trading architecture
December 8, 2010-The International Securities Exchange today announced an updated schedule for the launch of its new options trading system, based on Deutsche Börse Group’s Optimise™ trading architecture. The roll-out of Optimise at ISE will begin in April 2011 and continue into July as both ISE’s primary and second markets migrate to the new platform. Based on input from ISE member firms,
ISE completely revised the Optimise implementation timetable and will now provide greater system
functionality from day one of the Optimise launch.
Daniel Friel, ISE’s Chief Information Officer, said, “In developing our new trading system built on the Optimise platform, we have drawn upon the vast experience and expertise in electronic trading that span our cross-Atlantic technology teams. The result is an innovative new trading system that will be an industry leader with regard to latency and performance, and will position ISE for another decade at the forefront of the highly competitive U.S. options industry.”
With Optimise, Deutsche Börse Group also today introduced its new global trading architecture. Developed using the expertise of Deutsche Börse Systems and ISE, Optimise will serve as the common technology backbone that is going to be used across all Deutsche Börse Group exchanges. Optimise is a cornerstone of Deutsche Börse Group’s IT strategy and will enable faster technology upgrades, lower maintenance costs, and enhanced expansion opportunities.
Source: International Securities Exchange (ISE)
FTSE Launches New Emerging Markets Flows Index with EPFR Global
December 7, 2010-– FTSE Group (“FTSE”), the award winning global index provider, and Emerging Portfolio Funds Research (“EPFR Global “), the industry standard for global fund flows data, have today launched a new emerging market focused index - the FTSE EPFR EM Fund Flows Index.
The FTSE-EPFR index, a factor-adjusted version of the FTSE Emerging Index, is the first to overlay 'country flows' data on top of a market cap weighted index. Country flows data tracks investment allocation and flows in funds covering stock markets in developed and emerging countries. The new index gives investors a clearer picture of how these factors are driving emerging markets and can help improve portfolio performance by influencing an investor’s country weight adjustments.
Emerging markets constitute a growing fraction of investor portfolios and the new FTSE-EPFR index is aimed at improving country allocations within emerging market equity portfolios. Asset owners and institutional investors globally can use the FTSE EPFR Index to enhance their emerging markets portfolio, based on recommended country weights linked to countries’ investment flows Country investment flows combine fund flow and country weight data to track the flow of money into world stock markets. The fund flow data tracks the amount of cash flowing in and out of thousands of ETFs and mutual funds monitored by EPFR world-wide, while the country weights data tracks fund managers’ portfolio allocations at month-end across various emerging markets. Combining these two data sets gives a timely measure of portfolio flows in and out of individual emerging markets. The index country weightings will be revised quarterly based on the country flows data.
EPFR tracks global flows into and out of emerging markets from the US, Europe, and other regions, providing a more complete view of foreign investor demand.
“The new index will enable investors to further develop their interest in emerging markets”, said Mark Makepeace, CEO, FTSE Group. “FTSE is pleased to work with EPFR Global in creating this timely and valuable addition to our range of investment strategy indices.”
EPFR’s Managing Director, Simon Ringrose commented, “Fund flows are an important element in the investment process. Partnering with FTSE, EPFR Global is delighted to offer emerging market equity investors a tool to help improve country selection.”
The index was developed using FTSE’s internationally recognised robust index rules and methodology.
Source: FTSE
