Global ETF News Older than One Year
Global Corporate Rating Activity
September 14, 2010--Summary
Global corporate (industrial and financial institution) downgrades trailed upgrades by a margin of 0.8 to 1 in the first half of 2010, a marked departure from the widespread
and severe credit erosion of early 2009. Credit gains among industrial firms accounted for the majority of positive rating movements in the first half of the year, with industrial upgrades outpacing downgrades across developed and emerging markets.
In contrast, downgrades continued to top upgrades among global financial institutions, although at a far slower pace than in 2009 and still mostly affecting developed market institutions. Weak financials contributed to a downgrade to upgrade ratio across developed markets of 1.1 to 1 in the first half, lagging the far improved 0.3 to 1 ratio recorded across emerging markets.
Fitch-rated global corporate issuer defaults totaled just five in the 2010 first half, resulting in a year-to-date corporate default rate of 0.2%. All five defaults were rated ‘CC’ or lower at the beginning of the year.
The share of global corporate issuers on Negative Outlook fell to 17% at midyear from 26% at year-end 2009. A decline was recorded by both major market sectors, with the share of industrial and financial institution issuers ending the first half with Negative Outlook assignments of 11% and 23%, respectively ? down considerably from 18% and 33% at year-end 2009.
Source: Fitch Ratings
Basel rewrites capital rules for banks
September 13, 2010--Global banking regulators on Sunday sealed a deal to effectively triple the size of the capital reserves that the world’s banks must hold against losses, in one of the most important reforms to emerge from the financial crisis.
The package, known as Basel III, sets a new key capital ratio of 4.5 per cent, more than double the current 2 per cent level, plus a new buffer of a further 2.5 per cent. Banks whose capital falls within the buffer zone will face restrictions on paying dividends and discretionary bonuses, so the rule sets an effective floor of 7 per cent.
Source: FT.com
Group of Governors and Heads of Supervision announces higher global minimum capital standards
September 12, 2010--At its 12 September 2010 meeting, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced a substantial strengthening of existing capital requirements and fully endorsed the agreements it reached on 26 July 2010. These capital reforms, together with the introduction of a global liquidity standard, deliver on the core of the global financial reform agenda and will be presented to the Seoul G20 Leaders summit in November.
The Committee's package of reforms will increase the minimum common equity requirement from 2% to 4.5%. In addition, banks will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress bringing the total common equity requirements to 7%. This reinforces the stronger definition of capital agreed by Governors and Heads of Supervision in July and the higher capital requirements for trading, derivative and securitisation activities to be introduced at the end of 2011.
Source: Bank for International Settlements
OECD composite leading indicators show signs of possible peak in expansion
September 13, 2010--OECD composite leading indicators (CLIs) for July 2010 point to clearer signs of a moderation in the pace of expansion compared to last month’s assessment. The CLI for the OECD area decreased by 0.1 point in July 2010.
In Canada, France, Italy, the United Kingdom, China and India there are stronger signals of a slower pace of economic growth in coming months than was anticipated in last month’s release. Stronger signals that the expansion may lose momentum have emerged in Japan, the United States and Brazil. Tentative signals have also emerged that the expansion phases of Germany and Russia may soon peak.
The OECD Development Centre’s Asian Business Cycle Indicators (ABCIs) show that the recovery of ASEAN economies keeps on track with some signs of moderation.
Source: OECD
Confidence in FDI recovery growing as TNCs look beyond the crisis, UNCTAD survey reveals
September 12,2010-- Transnational corporations (TNCs) are increasingly optimistic about the international investment environment and their own prospects for foreign direct investment (FDI) this year and beyond, this year´s World Investment Prospects Survey 2010-2012 (WIPS) shows. The results point to a recovery in global FDI flows in 2010 and further growth in 2011 and 2012. The annual survey seeks to ascertain the FDI plans of the world´s largest TNCs. This year´s results are based on the responses of 236 TNCs and 116 IPAs (investment promotion agencies) to an UNCTAD questionnaire.
Reflecting other forecasts of improving global economic activity, TNCs´ perceptions of the international investment climate are on an upswing. Compared to last year´s survey, in which some 47 per cent of respondents expressed pessimistic views regarding 2010, only 36 per cent of respondents this year expressed pessimistic views for the current year. Looking beyond 2010, the outlook is markedly brighter, with 47 per cent of respondents expressing an optimistic view for 2011 and a solid majority (62 per cent) expressing an optimistic view for 2012 (fig. 1). These results suggest that while TNCs are continuing to face short-term difficulties, the crisis has not structurally shifted their plans for the future.
The results from the survey also suggest that the crisis was less destructive to FDI than had been feared. While investment budgets, including those for FDI, were squeezed during the crisis, TNCs did not engage in wholesale divestment of their foreign affiliates (fig. 2). The crisis did, however, accentuate one recent trend, namely the shifting of TNCs´ geographical focus to developing and transition economies. These economies, which weathered the downturn better and are leading the global recovery, are playing an increasingly important role in TNC strategies. Nine of the top 15 priority FDI destinations for the period ending 2012 are developing or transition economies (fig. 3).
view the World Investment Prospects Survey 2010-2012
Source: UNCTAD
FTSE4Good Semi Annual Review September 2010
September 10, 2010-- FTSE Group (“FTSE”), the award-winning global index provider, announces that thirteen companies will be added and eight removed from the FTSE4Good Global Index Series following the FTSE4Good September semi-annual review held today.
Review decisions are made by the independent FTSE4Good Index Policy Committee (“Committee”) made up of experts from the fields of responsible investment, fund management, academia and the business community. Additions and deletions are based on environmental and social criteria set out in the FTSE4Good Index Rules.
Additions
Most of the companies added are from the United States and the United Kingdom. As part of the review, new stringent criteria regarding nuclear safety and waste disposal were also introduced for companies involved in nuclear power generation. This is in line with the Committee’s ongoing commitment to replace activity screens with entry criteria that identify companies meeting internationally recognised environmental and social standards. To be included in the index, companies involved in nuclear power generation are assessed on their nuclear safety and waste disposal policies, management systems, disclosure and performance as well as the existing FTSE4Good requirements. Only one company globally, Iberdrola, has met all the requirements for inclusion at this review. The new criteria will also encourage other companies in this sector to improve their practices.
Source: FTSE
Risk management is top priority, say global investors
September 10, 2010--Solving the risk management challenges they face in the next decade is the top priority for institutional investors, according to a survey by Pyramis Global Advisors, the institutional arm of Fidelity.
Respondents said the top three lessons they had learned from the financial crisis were the need for more downside protection (62%), improved risk management (54%), a better match of assets and liabilities (49%) and a realisation that they were less diversified than they thought (42%).
The survey covered chief investment officers, treasurers and executive directors at 466 corporate and public pension plans in the US, Canada and 11 European countries, with a total $2trn in assets.
The main concern of pension plan sponsors was their current funded status (23%), followed by volatility (21%) – either the volatility of a plan's funded status or its asset volatility – and a low investment return environment (19%).
Source: IP&E
New Forum Report Identifies Smart Grids as Key for a Greener Economy
September 9, 2010-- Accelerating Successful Smart Grid Pilots, a new World Economic Forum report to be presented at the “Summer Davos” in Tianjin on 13 September developed with Accenture and industry experts, sets out the centrality of smart grids as a key enabler for a low-carbon economy and in response to increasingly growing energy demands. Today, 40% of energy is consumed in creating electricity; yet, electricity systems are based on technologies that are over 50 years old. The outdated electricity grids of today require smart grids as a dramatic upgrade to be able to support 21st century energy requirements.
Over 60 industry, policy and regulatory stakeholders were engaged in the Accelerating Successful Smart Grid Pilots report, to identify the factors that determine the success, or otherwise, of smart grid pilots. The research unearthed a number of “lessons learned” from existing pilots, and the report puts forward pragmatic recommendations to accelerate the success of smart grid pilots.
“With an estimated US$ 150 billion lost in a year in the US due to power cuts, smart grids can deliver a more reliable system with flexibility to utilize the full capacity of renewable energy,” said Espen Mehlum, Head of Electricity Industry at the World Economic Forum. “However, utilities are struggling to create the business case for smart grids, as regulatory incentives often fail to provide the right incentives and reflect the low-carbon agenda.”
The report identifies that, through information and communication technologies, the electricity grid would become “smarter”. The efficiency and carbon reduction gains would be substantial. Moreover, consumers would obtain access to new solutions to optimize their electricity consumption.
view full report- Accelerating Successful Smart Grid Pilots
Source: World Economic Forum
United States Falls in Competitiveness Rankings
The United States falls two places to fourth position, overtaken by Sweden and Singapore in the rankings of the World Economic Forum’s Global Competitiveness Report 2010-2011
The People’s Republic of China continues to move up the rankings, with marked improvements in several other Asian countries
September 9, 2010--Switzerland tops the overall rankings in The Global Competitiveness Report 2010-2011, released today by the World Economic Forum ahead of its Annual Meeting of the New Champions 2010 in Tianjin. The United States falls two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd), after already ceding the top place to Switzerland last year.
In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets. The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th. Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position.
The People’s Republic of China (27th) continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30. Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable. Several Asian economies perform strongly, with Japan (6th) and Hong Kong SAR (11th) also in the top 20. In Latin America, Chile (30th) is the highest ranked country, followed by Panama (53rd) Costa Rica (56th) and Brazil.
Several countries from the Middle East and North Africa region occupy the upper half of the rankings, led by Qatar (17th), Saudi Arabia (21st), Israel (24th), United Arab Emirates (25th), Tunisia (32nd), Kuwait (35th) and Bahrain (37th), with most Gulf States continuing their upward trend of recent years. In sub-Saharan Africa, South Africa (54th) and Mauritius (55th) feature in the top half of the rankings, followed by second-tier best regional performers Namibia (74th), Botswana (76th) and Rwanda (80th).
view full report-The Global Competitiveness Report 2010-2011
Source: World Economic Forum
Dow Jones Indexes and SAM to Launch European Sustainability Indexes
September 9, 2010--Dow Jones Indexes, a leading global index provider, and SAM, the investment boutique focused exclusively on sustainability investing, today announced the launch of its European sustainability index series. The Dow Jones Sustainability Europe indexes complement the global Dow Jones Sustainability index series and include broad benchmark as well as blue chip indexes for Europe and the Euro zone. The new indexes are designed to serve as benchmarks and to underlie index-linked investment products such as funds, exchange-traded funds, structured products, futures and options.
The Dow Jones Sustainability Europe Index measures the performance of the leading companies in terms of sustainability in Europe. As of September 8, 2010 the index includes 150 components, which is 47% of the free-float market capitalization of the Dow Jones Europe Total Stock Market Index. The index is calculated in euro and U.S. dollars and components are weighted by free-float market capitalization. The Dow Jones Sustainability Europe Index is reviewed annually in September. The top five components of the index are Nestle S.A., HSBC Holdings PLC (UK Reg), Novartis AG, Total S.A. and Banco Santander S.A.
Source: Dow Jones Indexes
