Global ETF News Older than One Year
DB Global Equity Index & ETF Research : Q3'10 ETP Market Update: 'Emerging' Forward
October 25, 2010--Improving market conditions in September, together with continued positive flows across all ETP asset classes, greatly contributed to strong ETP market performance in the third quarter of 2010. The industry grew by 14% Q3’10 YTD (sharply up from the flat Q2’10 0.1% growth). Strong ETP market cash flow patterns, together with mildly rising equity markets lead us to reiterate our 2010 ETP market growth projection of expecting growth upwards of 20% for 2010. This implies additional growth of at least 7% in Q4’10, which we believe will be comfortable to achieve.
While the months of July and August were definitely characterized by a numbness that resulted from last May’s market downturn, September came back with a vengeance and delivered a very strong finish to the quarter. The global ETP industry amassed $43 billion of new money in Q3’10.
ETP Investment trends in each of the three major global regions had common themes:
While interest in broad equity market benchmarked ETFs remained subdued throughout the quarter, very strong continuing interest in emerging markets left the most profound footprint on investors’ choices. An astounding $25.7 billion (US: $18.4 billion, EU: €5.4 billion) of Q3’10 equity emerging market inflows accounted for 60% of the industry’s quarterly flows. The money was channeled to both broad emerging market indices, as well as ETFs that track single country indices.
Fixed income investing remained extremely popular in the US, with $10.5 billion of inflows, while Europeans continued to support the asset class with $1.6 billion of inflows. The majority of the industry’s fixed income ETF inflows went into US high yield and corporate issuer benchmarked ETFs in both the US and Europe. With equity market volatility decreasing, investors retracted from sovereign benchmarked ETFs, however, they showed preference to domestic fixed income solutions rather than broad domestic equity market indices, putting fixed income products at work in order to generate value.
Commodity investing, through the ascent of gold, defined ETP investment patterns in the second quarter of this year. However, its fortunes have been sharply reversed in the present quarter. Consistent with the uptick in equity investing, gold flows grinded to a halt in the US ($734 million in Q3’10 vs $8.4 billion in Q2’10) while Europe continued to see inflows (€987 million in Q3’10 vs €2.8 billion in Q2’10) albeit at a much slower pace. As the quarter drew to an end the price of gold kept rising, however, gold ETP inflows did not follow. While they stayed in positive territory, their growth pattern became distinctly slower.
The 2010 ETP product launch calendar is set to become the strongest to date. So far the year saw 463 new product launches. This compares very favorably with 2007, which has thus far held the record with 482 new product launches. On average, each quarter in 2010 has seen 155 new products, which make it almost certain that it will register a new high by year end.
Source: DB Global Equity Index & ETF Research
More Companies Meeting With Hedge Funds and Sovereign Wealth Funds, According to BNY Mellon Investor Relations Survey
93% of surveyed firms meet with hedge funds, 47% meet with SWFs
Nearly a quarter considering secondary stock listing in emerging markets
October 25, 2010-- Companies worldwide are adapting their investor relations strategies to enhance their outreach to hedge funds and sovereign wealth funds, according to an annual survey conducted by BNY Mellon, the global leader in asset management and securities servicing. In another key finding, the study reports that 22% of respondents are contemplating a secondary stock listing to attract investors in high growth markets, most notably China and Hong Kong.
Developed as a benchmarking tool for BNY Mellon's depositary receipt clients, the survey, Global Trends in Investor Relations, looks at how publicly traded companies are managing their IR practices – from guidance and disclosure policies to sell-side approaches and growing interest in social media tools. The survey was conducted during July and August 2010 and features input from nearly 400 companies across 47 countries. Respondents run the gamut of market cap, region and industry, including financials, technology, industrials, consumer staples and energy.
"We're seeing companies truly act more globally to raise their IR profile, from the time spent with hedge funds and sovereign wealth funds to the burgeoning use of secondary listings that target regional high growth markets," said Michael Cole-Fontayn, chief executive officer of BNY Mellon's Depositary Receipts business. "IR officers are making a commitment to give fair and equal access to all investors, no matter who or where they are, to make sure they have the best information about their company."
Key findings of the survey include:
•93% of all companies meet with hedge funds, versus 89% in 2009; 24% of a firm's investor meetings are with hedge funds, up from 16% in 2009. The reasons why some firms do not meet with hedge funds include lack of information on a fund's strategy and shorting risk
47% of all companies meet with sovereign wealth funds and an additional 23% are considering meeting with them. Western European companies are the most likely to meet (56%) or consider meeting (44%) with SWFs. North American firms are least likely to engage sovereign wealth funds, in fact more than half have no plans to meet with them
Nearly a quarter (22%) of companies are considering a secondary listing in an emerging market, outside their home market. Among these firms, the large majority (70%) identified a listing in China or Hong Kong of strategic interest
Social responsibility reporting is most common in Western Europe (77% of companies issue SRI/CSR reports) and Latin America (72%), in contrast to firms in Asia-Pacific (36%) and North America (29%)
Only 9% of companies use social media to communicate with investors, but 35% are looking for more information on its potential uses. Of those that do use social media, Twitter is the preferred medium, followed by corporate blogs
82% of companies provide financial guidance, especially those in Western Europe (89%) and North America (86%). 70% of firms in the BRIC countries offer such guidance, compared to 82% of companies in non-BRIC emerging markets
Over the next three years, North America (77%) and Europe (70%) will continue to be the major regions of focus for growth of investor opportunities, followed by Asia (48%).
"With the continued globalization of the equity markets, it is of growing strategic importance for companies to benchmark their investor relations activities against their global peers," said Guy Gresham, New York head of the Global IR Advisory team in BNY Mellon's Depositary Receipts group. "Our investor relations specialists work with clients to apply appropriate survey findings to support their efforts in targeting new pools of investment."
This is the sixth annual investor relations survey conducted by BNY Mellon's DR team. Download the report
BNY Mellon acts as depositary for more than 2,100 American and global depositary receipt programs, acting in partnership with leading companies from 67 countries. With an unrivaled commitment to helping securities issuers succeed in the world's rapidly evolving financial markets, the company delivers the industry's most comprehensive suite of integrated depositary receipt, corporate trust and stock transfer services. Learn more at www.bnymellon.com/dr.
Source: BNY Mellon
Currency rows as US pushes plan at G20
The US has urged G20 nations to reform their currency regimes to shore up the fragile world economy.
October 22, 2010--The US urged G20 nations to reform their currency regimes to shore up the fragile world economy after a devastating crisis, but faced resistance to its ideas today.
G20 finance ministers and central bankers opened a two-day meeting in South Korea, stalked by warnings of an all-out 'currency war' between debtor nations such as the US and export powerhouses such as China.
The G20 meeting, and parallel talks among the G7 grouping of North America, Western Europe and Japan, faced warnings that the world was at risk of relapsing into 1930s-style trade protectionism.
Source: RTE.ie
Deconstructing The International Business Cycle: Why Does A U.S. Sneeze Give The Rest Of The World A Cold?-IMF Working paper
October 22, 2010--Summary: The 2008 crisis underscored the interconnectedness of the international business cycle, with U.S. shocks leading to the largest global slowdown since the 1930s. We estimate spillover effects across major advanced country regions in a structural VAR (SVAR) using pre-crisis data. Our new method freely estimates the contemporaneous correlation matrix for underlying shocks in the VAR and (uniquely, to our knowledge) the associated uncertainty.
Our results suggest that the international business cycle is largely driven by U.S. financial shocks with a significant impact from global shocks, mainly reflecting commodity prices. Other advanced economic regions play a much smaller and regional role in growth spillovers. Our findings are consistent with the emerging evidence on the current crisis
Source: IMF
UNFPA State of world population 2010
From conflict and crisis to renewal: generations of change
October 21, 2010--Around the world, in countries and regions that have emerged from conflict, survivors restarting their lives are also facing fundamental changes in the societies around
them. People who have staggered out of the shadows of brutal wars, endured the destruction of homes and families and languished in camps for the displaced or fled as refugees are also learning to deal with new realities: new power relationships within families, changes in gender roles, upended village economies and traditional cultures in flux.
For survivors, peace is a welcome end to conflict, but it also presents new challenges. There to help are many budding non-governmental grass-roots organizations, some which are led by younger generations of local people who are close to their communities and are at home with contemporary communications and multimedia skills that link them globally to others far away. To back them up are an array of United Nations agencies and donors.
The release of The State of World Population 2010, published by UNFPA, the United Nations Population Fund, coincides with the 10th anniversary of resolution 1325, the Security Council’s groundbreaking move against the abuse of women in conflict and the marginalization of them in peacebuilding. For a decade, the Security Council followed up with a series of related resolutions, while at the same time, on the ground in diverse countries, women—and men—began transforming the goals of the resolutions into reality. Real-life experience was their guide in deciding what needed to be done
view the report-state of world population 2010
Source: UNFPA
The World's Women 2010: Trends and Statistics
October 21, 2010--Executive summary
In the Beijing Declaration adopted in 1995 by the Fourth World Conference on Women, participating Governments expressed their commitment “to advance the goals of equality, development and peace for all women everywhere in the interest of humanity”. To assess whether these goals are being achieved, The World’s Women is produced by the United Nations every five years, as called for in the Beijing Platform for Action.
The World’s Women 2010: Trends and Statistics presents statistics and analysis on the status of women and men in the world, highlighting the current situation and changes over time. Analyses are based mainly on statistics from international and national statistical agencies. The report covers several broad policy areas – population and families, health, education, work, power and decision-making, violence against women, environment and poverty. The main findings are summarized below.
General population patterns, families
In today’s world, there are 57 million more men than women. This surplus of men is concentrated in the youngest age groups and steadily diminishes until it disappears at about age 50, thereafter becoming a surplus of women owing to their longer life expectancy. A surplus of men characterizes the world’s most populous countries – China and India – hence the large surplus of men worldwide. In most other countries, there are more women than men. The surplus of women in older age groups is significant and is increasing, with obvious implications for health care and other social needs.
People are marrying at older ages than in the past – especially women. In Europe, the average age at which women first marry is 30 or older in many countries. In some less developed countries, however, such as Mali, Niger and several other countries in sub-Saharan Africa, the average age at which women first marry is still below 20. As family-building often starts with a marriage, the consequences for fertility is obvious. Globally, fertility declined to 2.5 births per woman, but women who bear more than five children are still common in countries where women marry early. Early marriage and high fertility limit such women’s opportunities for education and employment and can severely diminish their chances for advancement in life.
Source: UN
Emerging Markets Present Unique Opportunity For Carbon Conscious Portfolio Managers
Findings From A Study By Trucost Reveal That Emerging Markets Portfolios Are Up To 60% More Carbon Intensive Than Similar Portfolios In The US And Europe, Offering Unique Opportunities For Carbon Efficient Strategies
October 21, 2010--As growth opportunities in developed markets become limited, investors are increasing allocations to emerging market strategies covering growth economies such as China, India and Brazil in order to deliver their expected returns.
However, in comparison to developed countries, public equity markets in developing countries are still dominated by resource and carbon-intensive companies, presenting additional financial risks and unique opportunities to investors as many of these countries take action to limit rising greenhouse gas (GHG) emissions.
Emerging market countries including Brazil, South Africa, India and China, have set targets to reduce emissions by 2020 under the Copenhagen Accord, which could underpin a legally binding climate change agreement covering more than 80% of global greenhouse gas emissions at the UN climate change conference that starts in Cancun next month.
The study shows that almost 80% of greenhouse gases from companies on emerging market benchmark portfolios are emitted through their own operating activities, which is likely to be subject to policy measures such as performance standards and carbon taxes proposed to achieve national emission reduction targets. Abatement costs to reduce just 4% of projected emissions could equate to more than 5% of earnings for 24 emerging market companies in the Utilities, Resource, Oil & Gas, Construction and Travel sectors in 2013.
Source: Mondovisione
Singapore Exchange and NASDAQ OMX Extend Cooperation
ADR Trading on GlobalQuote Starts Today
New Collaboration Includes Dual Listings
October 21, 2010--Following the cooperation to bring American Depository Receipts (ADRs) on GlobalQuote, Singapore Exchange (SGX) and NASDAQ OMX (Nasdaq:NDAQ) today also announce plans to offer companies the opportunities for listing on both exchanges.
The listing co-operation includes offering a cross listing opportunity to currently listed companies on both the NASDAQ Stock Market and SGX as well as dual listing opportunities for new IPOs. This initiative potentially allows better price discovery and trading opportunities in the Asian and U.S. time zones. NASDAQ-listed companies with strong brand awareness and active business endeavors in Asia will benefit from a secondary listing on SGX. SGX-listed companies interested in reaching U.S. investors will be able to list their ADRs on the NASDAQ Stock Market.
At 9am today, 19 American Depositary Receipts of Asian companies will be quoted for trading on the GlobalQuote board on Singapore Exchange (SGX). SGX and NASDAQ OMX intend to add more ADRs from Asian-based companies onto GlobalQuote, providing investors with an array of trading opportunities, including some that were previously unavailable during the Asian trading day.
Magnus Bocker, CEO of SGX, said, "The partnership with NASDAQ OMX will bring a wider selection of investment choices to our investors and offer companies access to an enlarged pool of investors. This strengthens our Asian gateway strategy."
Bob Greifeld, CEO of NASDAQ OMX, said, "We have a strong working relationship with SGX that goes back to 2003, when we provided the technology platform for their trading system. The collaboration we are announcing today is a natural next step in our relationship and will give our customers the ability to increase their investor base and reach a more global investor community."
Source: NASDAQ OMX
Global Regulatory Overhaul is Pushing for Greater Transparency in OTC Instruments, Says TABB Group
New Research Report Examines the Changing OTC Valuations Industry; OTC Valuation Spending Projected to Grow at an 11% CAGR through 2013
October 20, 2010-- The recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act includes provisions addressing the lack of transparency in the OTC derivatives market that will provide a significant boost to the prospects of independent valuation service providers.
According to TABB Group in a just published research report, “OTC Valuation Services: How You Know if the Price is Right” regulators want more openness in the markets on many different levels. “Dodd-Frank speaks to central clearing, swap execution facilities (SEFs), a central trade repository and the Office of Financial Research to provide a framework for lowering systemic risk,” says Andy Nybo, a TABB principal, the advisory and research firm’s head of derivatives and co-author of the report with Finn Christensen, a senior contributing analyst. “As OTC instruments begin to trade on SEFs and are centrally cleared, they will provide a wealth of benchmark data that will feed more standardized OTC valuation models. This will force a change in business models current valuation service providers use to stay competitive.”
Nybo says OTC derivatives trading volume has returned to 2007 levels. “Although the challenges and opportunities faced by valuations services are varied, TABB believes better times are ahead for those firms able to successfully navigate changes brought about by regulatory reform. Spending on OTC valuations remains an increasingly important area of focus across the industry, with spending totaling an estimated $249 million in 2010.” He adds that by 2013, spending will increase by 18.1%, to $294 million. Over the 2002 to 2013 period, spending for OTC derivative valuation activities will grow at an estimated CAGR of 11%.
Source: TABB Group
The Impact of the Great Recession on Emerging Markets-IMF Working paper
October 20, 2010--This paper examines the impact of the recent global crisis on emerging market economies (EMs). Our cross-country analysis shows that the impact of the crisis was more pronounced in those EMs that had initial weaker fundamentals and greater financial and trade linkages. This effect is observed along a number of dimensions, such as growth, stock market performance, sovereign spreads, and credit growth.
This paper also shows that during this crisis, pre-crisis reserve holdings helped to mitigate the initial growth collapse. This finding contrasts with other studies that fail to find a significant relationship between reserves and the growth decline. This paper argues that our preferred measure of impact is a more accurate reflection of the true impact of the crisis on EMs.
Source: IMF
