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SPDR Gold Shares exceeds USD50bn in assets
June 30, 2010--Assets in the SPDR Gold Trust have surpassed USD50bn, according to State Street Global Advisors and World Gold Trust Services, a wholly-owned subsidiary of the World Gold Council.
"With assets having increased by approximately 32 per cent year-to-date (as of 25 June 2010), SPDR Gold Shares has radically transformed the way in which a wide range of investors access the gold market," says James Ross, senior managing director at State Street Global Advisors.
Jason Toussaint, managing director, investments, World Gold Trust Services, adds: "Strategic asset allocation will continue to play a central role in investors' portfolio performance moving forward, and portfolios that contain even a small allocation in gold have the potential to better cope with varying market scenarios. This milestone for GLD underscores that investors have embraced gold as a viable core holding over the long-term."
As of 25 June, assets under management in the trust totalled more than USD53bn, making it the second largest ETF by assets in the world.
GLD is also cross-listed on the Bolsa Mexicana de Valores, the Singapore Exchange the Tokyo Stock Exchange and the Stock Exchange of Hong Kong.
EDHEC-Risk Study Finds No Theoretical or Empirical Justification for Cap-Weighted Indices
June 29, 2010--After the financial crisis and the accompanying falls in the stock markets, many commentators have questioned the appropriateness of tracking cap-weighted indices. These indices are particularly inefficient and, through their momentum properties, favour the emergence of speculative bubbles.
New research from the EDHEC-Risk Institute shows that financial theory, despite widely-held views to the contrary, does not support investment in these types of indices. It is therefore urgent for investors to seek alternatives to these indices which are justified by neither fact nor theory.
The three main conclusions of the research are the following:
1.A cap-weighted stock market index is not the market portfolio of financial theory (the Capital Asset Pricing Model (CAPM) theory is often evoked to show that cap-weighted stock market indices are efficient portfolios and attractive investments). That it is not is clear from the choices made in empirical studies that attempt to come up with reasonable proxies for the market portfolio. These studies attach great importance to including many more stocks than indices do, and their proxies of the market portfolio include bonds, real estate, and non-tradable assets such as human capital.
2. Even if it were possible to construct and hold the market portfolio, the theory does not predict that the market portfolio is efficient unless we make highly unrealistic assumptions. In fact, the authors of the seminal academic research in the 1950s and 1960s, Harry Markowitz and William Sharpe, have themselves emphasised (Sharpe (1991) and Markowitz (2005)) that the market portfolio may not be efficient in a more realistic setting.
3. In view of these arguments, financial theory alone does not justify the current practice of cap-weighting. In fact, from a theoretical perspective, cap-weighted stock market indices seem to offer no particular advantage.
ETF Securities Gold Holdings Increase to a Record $10 Billion
June 28, 2010--Gold held in ETF Securities Ltd.’s European exchange-traded products rose to a record $10 billion, accounting for half of the provider’s total global assets under management.
Its ETFS Physical Gold product held $5.2 billion of metal as of June 11, and ETFS Gold Bullion Securities contained $4.8 billion, London-based ETF Securities said today in a report.
Total assets under management climbed to an all-time high $20 billion as of June 17 including commodity, currency and equity products, up 70 percent from last July, it said.
Gold ETP holdings advanced to an all-time high this year and coin sales from mints accelerated on buying by investors seeking to protect their wealth from Europe’s sovereign-debt crisis and on concern the global economic recovery may falter. Bullion climbed to a record $1,265.30 an ounce on June 21 and is up 15 percent this year.
Keeping Ahead of the Curve: Investment Management in the New Regulatory Landscape
June 25, 2010--Ensuring compliance with existing regulations and preparing for new regulatory developments is a normal part of doing business for financial services organizations. However, the breadth and volume of regulatory initiatives around the world has surged in response to the global financial crisis, putting increasing strain on businesses already under pressure. Proposed regulatory reforms to the investment management and financial services industries seek to lessen systemic risk and enhance investor protection.
This report by KPMG International highlights a survey of top executives in the investment management services industry on how they view new regulatory reform and the potential impact on their business.
The executives were polled on new regulations affecting strategic objectives, the markets in which they operate, financial targets for the future, and the impact of regulation on investment returns.
view Keeping Ahead of the Curve: Investment Management in the New Regulatory Landscape
BlackRock's O'Brien steps down, leaves investment management
June 25, 2010--Mike O’Brien, head of EMEA institutional business at BlackRock, is to leave the company.
He is to pursue business interests outside investment management.
O’Brien spent 10 years at Barclays Global Investors before it was acquired by BlackRock last year.
His successor is to be Charles Prideaux, currently chief executive of BlackRock's fundamental equities business.
Banks win battle for limits to Basel III
June 24, 2010--Plans by global regulators to compel banks to set aside billions of dollars in extra capital to cope with future crises are to be pared back after intense lobbying by the industry.
After wrangling over the details of a regulatory overhaul published six months ago, a consensus on the Basel committee is suggesting that its proposals be thinned down.
A draft of the latest thinking of the committee, set up to oversee global financial regulation, is to be presented at this weekend’s G20 summit in Toronto.
Corporate Clean Energy Investment Trends in Brazil, China, India and South Africa
June 23, 2010--Overall Findings
1. Companies in BASIC countries are making very sizeable investments in clean energy. The scale of corporate investments in the four countries studied, particularly in China which
is the world’s largest investor in this area, is very large. These investments are being driven
by regulation, but also by other purely business-led considerations such as cost reduction and energy security.
2. High-level policy signals are necessary and useful.
All four of the countries studied have framework legislation which sets out principles and aspirations for greater energy efficiency and use of renewable energy. These high-level
signals can influence investment; they also create societal expectations which help to shape internal company policies.
3. In addition to high-level signals, clear and specific regulation is also needed. Although high-level policy signals are useful, corporate investment decisions are most
strongly influenced by regulation that provides very specific requirements and mechanisms for action. Recent work by Chatham House describes this as “investment grade” policy.
4. CDM has made a contribution, and consideration should be given to its future role. The Clean Development Mechanism (CDM) has played an important role in incentivizing corporate investment, particularly for renewable energy. CDM’s uncertain future may affect levels of corporate investment in BASIC countries.
Summary of Findings by Country
Brazil
Energy Efficiency
Strong regulatory requirements for the energy sector are having an effect on corporate
investment;
In other industrial sectors policy and regulation exist, but are not currently playing a major role in corporate investment decisions;
June 2010 “Islamic Market’s Measure” Preliminary Report - Monthly Report On The Performance Of The Dow Jones Islamic Market Indexes
June 23, 2010--Based on the close of trading on June 22, the global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, gained 1.59% month-to-date, closing at 1939.90. In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a gain of 1.56%, closing at 156.04.
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 5.59%, closing at 1807.02. The Dow Jones Asian Titans 50 Index, in comparison, posted a gain of 3.86%, closing at 127.91.
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 1839.72, a gain of 1.90%, while the conventional Dow Jones Europe Index gained 4.94%, closing at 229.51.
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 1993.00. It represents a gain of 0.78%. The U.S. blue-chip Dow Jones Industrial Average increased 1.55%, closing at 10293.52.
World Wealth Report 2010
Wealth recovery nearly compensates for 2008 losses as HNWI population grows 17.1% and HNWI wealth reaches $39 trillion
June 23, 2010----Asia-Pacific Leads Emerging Wealth Recovery -- BRIC Countries Continue to Drive Regional Growth
The world's high net worth individuals (HNWIs)(1) regained ground despite weakness in the world economy, according to the 14th annual World Wealth Report, released today by Merrill Lynch Global Wealth Management and Capgemini. The world's population of HNWIs returned to 10 million in 2009 and HNWI financial wealth increased, posting a gain of 18.9 percent to $39 trillion. Ultra-HNWIs(2) increased their wealth by 21.5 percent in 2009.
These figures indicate that emerging wealth recovery has nearly recouped 2008 losses, returning to levels last seen in 2007.
"The last few years have been significant for wealthy investors. While in 2008 global HNWI wealth showed an unprecedented decline, a year later we are already seeing distinct signs of recovery, and in some areas a complete return to 2007 levels of wealth and growth," said Sallie Krawcheck, president, Global Wealth and Investment Management, Bank of America.
"The rebound has been, and will continue to be, driven by emerging markets -- especially India and China, as well as Brazil," said Bertrand Lavayssiere, managing director, Global Financial Services, Capgemini. "In fact, Asia-Pacific was the only region in which both macroeconomic and market drivers of wealth expanded significantly in 2009."
While the global HNWI recovery was generally stronger in developing nations, most of the world's HNWI population and wealth remained highly concentrated in the U.S., Japan and Germany, which together accounted for 53.5 percent of the world's HNWI population in 2009, down slightly from 54 percent in 2008. North America remains the single largest home to HNWIs, with its 3.1 million HNWIs accounting for 31 percent of the global HNWI population.
Asia-Pacific HNWIs, Hit Especially Hard in 2008, Led Recovery in 2009
After falling 14.2 percent in 2008 to 2.4 million, Asia-Pacific's HNWI population rebounded in 2009 to reach 3 million, matching that of Europe's HNWI population for the very first time. Asia-Pacific wealth also surged 30.9 percent to $9.7 trillion, more than erasing 2008 losses and surpassing the $9.5 trillion in wealth held by Europe's HNWIs. This shift in rankings occurred because HNWI gains in Europe, while sizeable, were far less than those in Asia-Pacific, which saw continued robust growth in both economic and market drivers of wealth. Hong Kong and India led growth in Asia-Pacific, after experiencing massive declines in their HNWI bases and wealth in 2008.
Moving Forward, Asia-Pacific and BRIC Will Likely Be the Powerhouses of HNWI Growth
BRIC nations (Brazil, Russia, India and China) are expected to again be the drivers of HNWI growth for their respective regions in the coming years. In Asia-Pacific, China and India will continue to lead the way, with economic expansion and HNWI growth likely to keep outpacing more developed economies. Asia-Pacific HNWI growth is likely to be the fastest in the world as a result. In Latin America, Brazil is similarly expected to remain an engine of growth. Russia is expected to display strength due to its commodity-rich resource base.
IEA says outlook for oil and natural gas markets still uncertain, but both share need for more investment, improved energy efficiency and better data
June 22, 2010--Oil and gas markets are starting to show signs of recovery, but the impact of the recession differs across regions,and the outlook remains very uncertain,” said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA). Launching the new combined IEA publication Medium-Term Oil and Gas Markets 2010 today in Paris, he said "In both oil and gas, we see a notable dichotomy between non-OECD and OECD markets, with strong growth in China, India and the Middle East compared to weaker or flat demand elsewhere, especially in the fragile European economy. These contrasting trends cloud efforts to foresee how oil and gas markets will develop into the medium term. But what is clear is that both will need more investment, a greater focus on energy efficiency and improved data."
Oil supplies could tighten without improved efficiency and diversified transport fuels
Taking into account this uncertainty, the IEA report presents two oil demand cases for the next five years: one based on relatively strong GDP growth of nearly 4.5% per year from 2010 onwards (in line with the most recent IMF projections) and a reduction in oil use intensity of 3% annually; the other one based on lower GDP growth at 3%, but with correspondingly slower reductions in oil intensity. Under higher growth, even with ongoing energy efficiency improvements, oil demand increases by an average of +1.2 mb/d annually (1.4%), reaching close to 92 mb/d by 2015. Oil demand recovers to pre-crisis 2007 levels again by 2010. Effective OPEC spare capacity in this scenario begins to decline again as soon as next year, reaching 3.6 mb/d by 2015. While new OPEC capacity should come on stream in 2014, we anticipate a tightening global balance, with surplus capacity falling below 5% of global demand. This could lead to more jittery markets ahead, after what has been a prolonged period of relative price stability over the past year.
But such demand growth is not inevitable. "The projected growth in demand is not set in stone," Mr. Tanaka said. "Greater attention to improved oil use efficiency and diversification of transport fuel supplies could maintain spare capacity at closer to the current 5-6 million barrels per day, while generating a slow but steady increase in demand for OPEC crude." In the lower GDP growth scenario, oil demand growth averages around 1% (840 kb/d), taking global demand to 90 mb/d by 2015 and also effectively prolonging the period of more comfortable markets. Particularly noteworthy is the role of non-OECD countries, where almost all growth in oil demand is to be found under either scenario, and the pivotal importance of the transport sector in driving demand.
