Global ETF News Older than One Year
BATS Europe Study: MTFs Offer Price Formation, Liquidity During Primary Market Outage
October 26, 2010--Executive Summary
At 15:42 BST on Wednesday 13th October 2010, the NYSE Euronext cash markets were halted due to human error. This paper builds upon previous analysis conducted by BATS Europe in relation to Listing Market outages. We have analysed market data and set out metrics by which to assess the impact of this outage on traded volumes on alternative trading venues (BATS Europe, Chi-X Europe and Turquoise), as well as the extent to which price formation took place on these venues during the outage.
The analysis demonstrates that, during the outage, traded volumes and execution rates on the alternative trading venues included in the study continued at a level comparable to normal, although we did not see a significant shift in liquidity from NYSE Euronext to these venues.
In addition, the analysis demonstrates that trading on the MTFs continued to show good price formation during the outage in the absence of a price from the Listing Market and that the prices on these venues were consistent with those of comparable European indices. This contrasts with the trading that took place at divergent – and effectively stale – prices on NYSE Euronext following the re-opening of its market prior to market close and during the Closing Auction.
We consider that the ability of the broad market to continue trading on alternative venues during a Listing Market (or alternative trading venue) outage has and will continue to strengthen the systemic stability of the overall market such that there is no single point of failure. As alternative trading venues continue to demonstrate resilience, consistent volume and reliable price formation during Listing Market outages, we expect more trading firms to be able and willing to continue trading.
Source: BATS Europe
October 2010 “Islamic Market’s Measure” - Preliminary Report - Monthly Report On The Performance Of The Dow Jones Islamic Market Indexes
October 26, 2010--Based on the close of trading on October 25, the global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, gained 4.85% month-to-date, closing at 2155.40. In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a gain of 3.77%, closing at 170.98.
The Dow Jones Islamic Market Asia/Pacific Titans 25 Index, which measures the performance of 25 of the leading Shari’ah compliant stocks in the Asia/Pacific region, increased 3.84%, closing at 2018.88. The Dow Jones Asian Titans 50 Index, in comparison, posted a gain of 4.12%, closing at 137.67.
Measuring Europe, the Dow Jones Islamic Market Europe Titans 25 Index, which measures the performance of the 25 of the leading Shari’ah compliant stocks in Europe, closed at 2154.44, a gain of 5.51%, while the conventional Dow Jones Europe Index gained 5.47%, closing at 272.30.
Measuring the performance of 50 of the largest Shari’ah compliant U.S. stocks, the Dow Jones Islamic Market U.S. Titans 50 Index increased, closing at 2166.81. It represents a gain of 4.77%. The U.S. blue-chip Dow Jones Industrial Average increased 3.49%, closing at 11164.05.
Source: Mondovisione
Time to look beyond Chinese rare earths, says EU trade boss
October 26, 2010--European Union trade commissioner Karel De Gucht on Tuesday urged global partners to diversify mining sources for prized rare earths as a battle with China deepened over scarce supplies.
De Gucht spoke out as a row that began between China and Japan over access to 17 essential minerals used in high-tech products ranging from flat-screen televisions to hybrid cars threatened to turn into a worldwide protectionist rallying cry.
"This is going to become a very, very difficult problem if we don't find a way out," De Gucht told an EU-China conference in Brussels.
He insisted that a string of mine closures elsewhere was "very closely linked to the price policy of rare earths by China" and stressed: "I think we should come to a global understanding."
The United States and Australia have 15 and five percent respectively of global reserves, but stopped mining them mainly because of cheaper Chinese competition.
Source: EUbusiness
Crisis and Recovery: Role of the Exchange Rate Regime in Emerging Market Countries-IMF Working paper
October 26, 2010--Summary: This paper examines the role of the exchange rate regime in explaining how emerging market economies fared in the recent global financial crisis, particularly in terms of output losses and growth resilience. After controlling for regime switches during the crisis, using alternative definitions for pegs, and taking account of other likely determinants, we find that the growth performance for pegs was not different from that of floats during the crisis.
For the recovery period 2010-11, pegs appear to be faring worse, with growth recovering more slowly than floats. These results suggest an asymmetric effect of the regime during and recovering from the crisis. We also find that proxies of the trade and financial channels are important determinants of growth performance during the crisis, while only the trade channel appears important for the recovery thus far.
view Crisis and Recovery: Role of the Exchange Rate Regime in Emerging Market Countries
Source: IMF
October 2010 Monthly Preliminary Performance Report Dow Jones-UBS Commodity Indexes
October 25, 2010--The Dow Jones-UBS Commodity Index was up 3.24% for the month of October. The Dow Jones-UBS Single Commodity Indexes for Sugar, Cotton and Zinc had the strongest gains with month-to-date returns of 20.19%, 17.45%, and 14.18%, respectively. The three most significant downside performing single commodity indexes were Natural Gas, Orange Juice and Lean Hogs, which were down 13.11%, 7.15%, and 5.64% respectively, in October.
Year to date, the Dow Jones-UBS Commodity Index is up 4.06% with the Dow Jones-UBS Cotton Sub-Index posting the highest gain of 58.07% so far in 2010. Dow Jones-UBS Natural Gas Sub-Index has the most significant downside YTD performance, down 47.24%.
Source: Mondovisione
FSB publishes report on improving OTC derivatives markets
October 25, 2010--The Financial Stability Board (FSB) published today a report on Implementing OTC Derivatives Market Reforms. The report responds to calls by G20 Leaders at the Pittsburgh and Toronto Summits to improve the functioning, transparency and regulatory oversight of over-the-counter (OTC) derivatives markets.
The report sets out recommendations to implement the G20 commitments concerning standardisation, central clearing, organised platform trading, and reporting to trade repositories. The report represents a first step toward consistent implementation of these commitments. Authorities will need to coordinate closely to minimise the potential for regulatory arbitrage.
The report was developed by a working group comprising international standard setters and authorities with the responsibility for translating the G20 commitments into standards implementing regulations.
view report-Implementing OTC Derivatives Market Reforms-Report of the OTC Derivatives Working Group
Source: Financial Stability Board
Red-hot copper rises above $8,500 a tonne
October 25, 2010--The price of copper rose on Monday above $8,500 a tonne for the first time since the fall of Lehman Brothers, as the sliding dollar coincided with buoyant investment demand.
The market for the red metal, a crucial cog in the global economy as it is widely used in manufacturing, has been in relentlessly bullish mode for several weeks as demand is expected to outstrip supply this year and next.
The atmosphere was further lifted on Monday by news that JPMorgan, one of the largest investment banks in commodities after its acquisition of RBS Sempra’s commodities business earlier this year, was planning to launch a physical copper exchange-traded fund in the US.
Source: FT.com
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
