Global ETF News Older than One Year
Businesses told of rising risk
November 18, 2009-Companies that operate abroad face increased risks to their investments in 2010 as the impact of the recession creates new challenges, a London-based consultancy has said.
Businesses typically face the greatest risks in the years following a recession, Control Risks Group, the risk consultancy, says in its annual Risk Map report.
Companies are liable to be caught out in the early stage of a recovery because management lowers its guard thinking the worst is over although social effects are still being felt.
Source: FT.com
BofA Merrill Lynch Fund Manager Survey Finds Investors Ruling Out U.S. Fed Rate Hike Before Second Half of 2010
Commodities Most Popular in Four Years as Demand for Inflation Protection Grows
November 18, 2009--A majority of investors expects the U.S. Federal Reserve to hold off from raising interest rates until the second half of 2010, according to the BofA Merrill Lynch Survey of Fund Managers for November
Asked when they think the Fed will first increase rates, more than three quarters of the panel predict the second half of 2010 or beyond. One in six respondents believes the Fed will not act before 2011.
While inflation has become a nagging worry for investors, they have expressed no conviction that they expect more than a minor increase from the current low level. A net 47 percent of respondents expect global core inflation to be higher in 12 months, up from a net 39 percent in October. At the same time two thirds of the panel believe that existing monetary policy is "about right."
Demand for assets that protect against inflation, such as gold, oil and emerging market equities, has increased. Commodities are at their most popular with the panel since the survey first asked about the asset class in 2005. A net 25 percent of the panel is overweight commodities, up from 11 percent in October. A net 53 percent of the panel is overweight emerging market equities, up from a net 46 percent in October. Assets that protect against deflation, such as fixed income and utilities, are less popular.
"Investors see inflation as a greater risk than deflation and are hedging that risk with overweight positions in emerging markets and commodities, and an underweight position in the U.S. dollar," said Michael Hartnett, chief global equity strategist at BofA Merrill Lynch Global Research.
Concern over corporate balance sheets eases as risk appetite ticks up
Just two months ago, investors were sending a clear message that corporates should put debt reduction first and investment, or capital expenditure, second. Now they're less sure. Indeed recent trends suggest that next month they could be willing CFOs to put capex first.
The number of respondents suggesting companies use cash for capital spending has risen to 32 percent this month from 25 percent in September. The proportion asking companies to put the balance sheet first has fallen to 36 percent this month from 50 percent in September. Demands for higher dividends are muted with 22 percent asking companies to prioritise returning cash to shareholders. This was down slightly from 23 percent in October. "The last time we saw a shift towards prioritising capex ahead of balance sheet repair was in 2003, and it served as a clear buy signal for equities. It could signal the transfer of risk from equity to credit," said Gary Baker, head of European equity strategy at BofA Merrill Lynch Global Research.
This shift reflects how risk appetite among investors is tip-toeing upward. The proportion of panelists taking lower than normal risk has shrunk to a net 1 percent, down from a net 16 percent in September.
Higher risk appetite is also evident in emerging markets. "We are seeing a vivid and extreme bent towards high-beta markets, such as Russia, and movement away from lower beta markets, such as Chile and Malaysia," said Michael Hartnett.
Europeans swing out of cyclicals back to defensive stocks
While a net 22 percent of global asset allocators view Europe as the most undervalued global market, investors within Europe are wary of their region's equities. European survey respondents made substantial moves out of cyclical stocks and into defensive sectors over the past month.
More than a quarter of Europeans surveyed increased their positions in Healthcare/Pharma. A net 16 percent are overweight the sector in November, compared to a net 10 percent underweight in October. Over the same period Europeans swung to a net 5 percent underweight Technology from a net 23 overweight in October. These changes came despite more panelists predicting stronger economic growth in Europe over the coming year.
One notable factor weighing against European equities, however, is currency. A net 49 percent of the global panel view the euro as overvalued and a net 36 percent view the dollar as undervalued.
Survey of Fund Managers
A total of 218 fund managers, managing a total of US$534 billion, participated in the global survey from 6 November to 12 November. A total of 177 managers, managing US$361 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.
SOURCE BofA Merrill Lynch Global Research
Institutions and financial advisers optimistic about alternative investments
November 17, 2009--Institutions and financial advisers continue to view alternative investments optimistically, despite their questionable performance, correlation and liquidity during last year’s global downturn, according to a survey by Morningstar and Barron’s.
The majority of participants to the survey said they plan to increase allocations to alternatives, but with greater scrutiny and due diligence given to those investments.
Source: ETF Express
iShares sees growing demand for sector ETFs
November 17, 2009-A report from Barclays Global Investors, the parent company of iShares, has highlighted expanding investor interest in sector exchange-traded funds.
According to the report, 2009 net new flows into sector ETFs in Europe already total more than USD2.5bn.
Year-to-date, basic resources has been the most popular sector with USD410m in net new assets, followed by banks with USD350m.
Source: ETF Express
Asia To Play a Leading Role in Reshaping the Post-Crisis Global Economy, IMF Managing Director Dominique Strauss-Kahn Says
November 13, 2009--In a speech today at a conference organized by the Monetary Authority of Singapore, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn called on Asia to play a leading role in guiding the global economy to a new, more sustainable path for global growth. “This is not only appropriate given Asia’s economic weight,” he remarked, “but also necessary, since Asia is such an important part of the solution.”
The strength of Asia’s economies has helped them weather the global financial crisis, and the region is leading the world into economic recovery, he said. The IMF expects Asia’s GDP growth to be 5 ¾ percent next year—almost double the 3 percent rate forecast for the global economy. “Thanks to strong fundamentals and quick and forceful policy responses to the crisis, Asia has performed considerably better than other regions of the world—and has thus played an important role in supporting global recovery,” he said.
To succeed over the long term, Asia will need to adapt to the new challenges presented by the post-crisis economy. “In particular,” he said that “because there are limits to the pace of export growth, domestic and regional demand will need to play an increasingly important role in underpinning Asia's growth.” Pointing to Asia's increasing role in international fora—including the G-20 and the IMF—Mr. Strauss-Kahn said that “now is the time for Asia to use its stronger voice to contribute to global efforts to reshape the economic and financial landscape.”
Source: International Monetary Fund (IMF)
Semi-Annual Changes to the NASDAQ Biotechnology Index
November 13, 2009--The NASDAQ OMX Group, Inc.
(Nasdaq:NDAQ) announced today the results of the semi-annual re-ranking
of the NASDAQ Biotechnology Index(R) (Nasdaq:NBI), which will become
effective with the market open on Monday, November 23, 2009.
The re-ranking will result in the following eight securities being added to the Index:
China Sky One Medical, Inc. (Nasdaq:CSKI), Hi-Tech Pharmacal Co., Inc. (Nasdaq:HITK), Poniard Pharmaceuticals, Inc. (Nasdaq:PARD), SIGA Technologies, Inc. (Nasdaq:SIGA), Spectrum Pharmaceuticals, Inc. (Nasdaq:SPPI), Targacept, Inc. (Nasdaq:TRGT), Vical Incorporated (Nasdaq:VICL), and Vanda Pharmaceuticals Inc. (Nasdaq:VNDA).
All securities are classified according to the Industry Classification Benchmark (ICB) as either biotechnology or pharmaceutical. The securities that meet the classification criteria then must meet other Index eligibility criteria including listing on the NASDAQ Global Market or the NASDAQ Global Select Market and meeting minimum requirements for market value, average daily share volume and seasoning as a public company. The Index is ranked on a semi-annual basis in May and November. For more information about the NASDAQ Biotechnology Index, including eligibility criteria, visit https://indexes.nasdaqomx.com/.
As a result of the re-ranking, Matrixx Initiavies, Inc (Nasdaq:MTXX) will be removed from the Index.
The NASDAQ Biotechnology Index is the basis for the iShares Nasdaq Biotechnology Index(SM) Fund (IBB), which seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the NASDAQ Biotechnology Index. In addition, options based on the NASDAQ Biotechnology Index and the iShares Nasdaq Biotechnology Index Fund trade on various exchanges.
Source: NASDAQ OMX
IASB completes first phase of financial instruments accounting reform
November 12, 2009--The International Accounting Standards Board (IASB) issued today a new International Financial Reporting Standard (IFRS) on the classification and measurement of financial assets. Publication of the IFRS represents the completion of the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement with a new standard - IFRS 9 Financial Instruments. Proposals addressing the second part, the impairment methodology for financial assets were published for public comment at the beginning of November, while proposals on the third part, on hedge accounting, continue to be developed.
The new standard enhances the ability of investors and other users of financial information to understand the accounting of financial assets and reduces complexity – an objective endorsed by the Group of 20 leaders (G20) and other stakeholders internationally. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the many different impairment methods in IAS 39. Thus IFRS 9 improves comparability and makes financial statements easier to understand for investors and other users.
The IASB has received broad support for its approach. This became evident during the unprecedented global scale of consultation and outreach activity it undertook in order to refine proposals contained within the exposure draft published in July 2009. Round table discussions were held in Asia, Europe and the United States. Interactive webcasts, each attracting thousands of registered participants, have been held, often on a weekly basis. In addition, more than a hundred meetings have been held with interested parties around the world during the past four months.
Project Summary and Feedback Statement- IFRS 9 Financial Instruments
Source: International Accounting Standards Board (IASB)
The time has come to make the hard choices needed to combat climate change and enhance global energy security, says the latest IEA World Energy Outlook
November 11, 2009--"World leaders gathering in Copenhagen next month for the UN Climate summit have a historic opportunity to avert the worst effects of climate change. The World Energy Outlook 2009 seeks to add momentum to their negotiations at this crucial stage by detailing the practical steps needed for a sustainable energy future as part of a global climate deal,” said Nobuo Tanaka, Executive Director of the International Energy Agency today in London at the launch of the new WEO – the annual flagship publication of the IEA.
“WEO-2009 provides both a caution and grounds for optimism. Caution, because a continuation of current trends in energy use puts the world on track for a rise in temperature of up to 6°C and poses serious threats to global energy security. Optimism, because there are cost-effective solutions to avoid severe climate change while also enhancing energy security – and these are within reach as the new Outlook shows,” added Mr. Tanaka.
Although, as one of the consequences of the financial crisis, global energy use is set to fall this year, WEO-2009 projects that it will soon resume its upward trend if government policies don’t change. In this Reference Scenario, demand increases by 40% between now and 2030, reaching 16.8 billion tonnes of oil equivalent. Projected global demand is lower than in last year’s report, reflecting the impact of the economic crisis and of new government policies introduced over the past year. Fossil fuels continue to dominate the energy mix, accounting for more than three-quarters of incremental demand. Non-OECD countries account for over 90% of this increase, and China and India alone for over half. In addition to increasing susceptibility to energy price spikes, the Reference Scenario projects a persistently high level of spending on oil and gas imports which would represent a substantial financial burden on import-dependent consumers. China overtakes the US around 2025 to become the world’s biggest spender on oil and gas imports. The energy poverty challenge also remains unresolved with 1.3 billion people still without electricity in 2030 from 1.5 billion today; though universal access could be achieved with investment of only $35 billion per year in 2008-2030.
WEO-2009 demonstrates that containing climate change is possible but will require a profound transformation of the energy sector. A 450 Scenario sets out an aggressive timetable of actions needed to limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million of carbon-dioxide equivalent and keep the global temperature rise to around 2°C above pre-industrial levels. To achieve this scenario, fossil-fuel demand would need to peak by 2020 and energy-related carbon dioxide emissions to fall to 26.4 gigatonnes in 2030 from 28.8 Gt in 2007.
view executive summary of the World Energy Outlook report
Source: International Energy Agency (IEA)
Fed and Wall St in talks over CoCos
Novembr 11, 2009--The US Federal Reserve is in talks with Wall Street executives and others over whether US financial groups should raise capital through a new type of bond that converts into equity when a bank is in trouble.
The talks over the hybrid security, which was pioneered by Lloyds Banking Group of the UK last week, are in their early stages but underline regulators’ desire to find novel ways to bolster banks’ balance sheets in times of crisis. The new securities – known as contingent convertibles, or CoCos – operate as bonds in normal times, paying coupons to investors.
Source: FT.com
Investment banks gain by going with the flow
November 11, 2009--Another bank earnings season, another round of outrage about bonuses as institutions such as Goldman Sachs, JPMorgan Chase and Credit Suisse report bumper profits.
In spite of the usual seasonal slowdown as bankers decamp to summer hotspots such as the Hamptons and Sardinia, the top 13 global investment banks raked in $73bn in net revenues in the third quarter, according to research from analysts at Morgan Stanley.
Source: FT.com
