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IMF Working Paper-Fiscal Policy and the Government Balance Sheet in China
August 4, 2023--Summary:
In this paper, we present the most comprehensive estimates of China's government balance sheet to date. Based on these estimates, we show how major shifts in fiscal policy over the last two decades have shaped the health of the public sector prior to the Covid-19 pandemic. We find that, at US$12.5 trillion, China has the largest stock of financial assets in the world.
However, its net financial worth as a percent of GDP-though still higher than the large majority of countries-has declined over the last decade. This trend can be traced back to the turn of the century when China undertook a major restructuring of its state-owned enterprises but left important shortcomings in the intergovernmental fiscal system unaddressed. Compounding these risks, reform momentum stalled in the aftermath of the global financial crisis leading to high leverage and falling profitability among state-owned enterprises.
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Source: imf.org
Malaysia's first fund investing in an inverse ETF faces hurdles
July 21, 2023--Maybank AM fears promoting the ability to capitalise on a US market downturn could send the wrong signals
Maybank Asset Management is gearing up to launch Malaysia's first mutual fund that invests in an inverse exchange traded fund amid persistent gloomy market outlooks that have kept investors largely on the sidelines since last year.
But the firm, which will target sophisticated investors due to regulation on the sale of complex products, is wondering about how to promote the new strategy, given the potential for mixed signals to investors -essentially that the manager is forecasting even choppier markets.
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Source: ft.com
ETF Review: Industry breaks $150 billion barrier (June 2023)
July 19, 2023--Australian ETF Industry breaks $150 billion barrier
The Australian ETF industry ended the financial year on a high, reaching the $150 billion mark in total assets under management after recording robust growth for the half year, a particularly strong result considering the tough conditions being faced in the asset management industry more broadly.
We would very much categorise the Australian ETF industry as an 'absolute/relative' story at the moment: On an absolute basis the industry is growing more slowly than the 2 years preceding this one, with investors being far more guarded about investment allocations. On a relative basis, however, the Australian ETF industry has never been in a stronger position, particularly when compared to the unlisted active funds which have been plagued by outflows in recent times.
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Source: betashares.au
China Growth Disappoints as Beijing Hints at Muted Stimulus
July 16, 2023--GDP growth was weaker than expected in second quarter
Citigroup says China's official growth target now at risk
China's economic recovery lost momentum in the second quarter, putting Beijing's growth target for the year at risk and adding to concerns about a slowdown in the world economy.
Gross domestic product grew at a slower-than-expected pace of 6.3% in the second quarter compared with a year earlier, when dozens of Chinese cities were in lockdown, but just less than 1% from the first quarter. Deflation is a major risk now, the data showed, with economy-wide prices declining for the first time since 2020, while youth unemployment climbed to above 21%.
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Source: Bloomberg
India's Financial System: Building the Foundation for Strong and Sustainable Growth
July 6, 2023--Summary:
India has experienced a prolonged period of strong economic growth since it embarked on major structural reforms and economic liberalization in 1991, with real GDP growth averaging about 6.6 percent during 1991-2019. Millions have been lifted out of poverty.
With a population of 1.4 billion and about 7 percent of the world economic output (in purchasing power parity terms), India is the third largest economy-after the US and China.
As such, developments in India have significant global and regional implications, including via spillovers through international trade and global supply chains. At the same time, India's economic development has not been linear and has been impacted by external and domestic shocks, some directly related to the financial sector.
Indeed, India was not spared from external regional and global shocks, such as the Asian financial crisis (1997), the global financial crisis (2008), and more recently, the devastating impact of the COVID-19 pandemic (from 2020) and the war in Ukraine (2022). The economy has also been hit by domestic shocks. The book covers how to strengthen the financial system to support growth and reduce vulnerabilities by discussing the linkages between the financial sector and growth, improvements in bank lending to foster productivity, and measures to further develop India's corporate bond market. The book reflects on India's success in leveraging digitalization to foster financial inclusion and highlights how the financial system can help to address climate issues. This book digs deeper into the various facets of India's financial sector to understand its strengths and opportunities and to elicit policy actions that could help the financial sector better support India's growth potential.
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Source: imf.org
Indonesia: Selected Issues-Not All Investors Are the Same: Lessons for a Changing Investor Base in Indonesia
June 30, 2023--Against the backdrop of a significant shift in the investor base of local currency (LC) sovereign debt in Indonesia, this paper finds that: (i) NR holdings of LC debt in Indonesia are mostly driven by global factors, while Bank of Indonesia (BI) acts as a residual financier;
(ii) higher NR holdings support the bond market and domestic credit, but increase exchange rate volatility; and episodes of rapid and large declines in the NR share of LC debt in EMs are associated with higher future market volatility and lower credit to the private sector; and (iii) domestic nonbanks play a key role in absorbing new LC debt, especially during episodes of large and rapid nonresident outflows. These results call for a further deepening of the investor base, especially domestic nonbanks, to support market depth and reduce volatility.
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Source: IMF.org
Van Eck moves to match BlackRock in Australia ETF price war
June 29, 2023--The reduced fees will affect a global infrastructure and an international property fund
US-based exchange traded fund provider VanEck has announced huge fee cuts for its Australia-listed global infrastructure and international property ETFs, after BlackRock undercut its rival by rolling out similar low-cost ETFs last month.
VanEck, the fourth-argest ETF provider in Australia as of the end of May, with A$12.7bn ($8.7bn) in funds under management, is the latest to join the escalating price war in the market.
The A$808mn VanEck FTSE Global Infrastructure (Hedged) ETF will be available to investors for an annual rate of 0.2 per cent, down 32 basis points from 0.52 per cent.
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Source: ft.com
Thai Economy to Accelerate in 2023 as Demand from Major Economies Picks Up, Tourists Return
June 28, 2023--Addressing Flood, Drought Risk Key to Sustaining Robust Growth
Thailand's economy is projected to accelerate to 3.9 percent in 2023 from 2.6 percent last year due to stronger-than-expected demand from China, Europe, and the United States, private consumption growth, and a recovery in tourism, the World Bank said in its semi-annual Thailand Economic Monitor.
Growth in 2024 is expected to moderate to 3.6 percent and to 3.4 percent in 2025, with tourism and private consumption remaining the primary drivers of growth while external demand weakens, according to the report. Inflation is expected to moderate in 2023 to 2 percent amid easing global energy prices and price caps, although when volatile food and energy prices are stripped out, core inflation has remained higher than before the pandemic. The return of tourists, particularly from China, has strengthened the tourism outlook. Arrivals are projected to reach a greater-than-expected 28.5 million, 84 percent of the 2019 level, and to the pre-pandemic level by the second half of 2024.
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Source: worldbank.org
BBH 2023 Greater China ETF Investor Survey: Greater China ETF Market Grows as Product Platform Expands and Investors Evolve Usage
June 27, 2023--The number of investors with more than 25% of their portfolio invested in ETFs is up 11% from 2022
Greater China ETF investors are expanding their usage of ETFs and accessing new and diverse products, despite challenging market conditions, according to the findings of the 6th Annual Greater China ETF Investor Survey from Brown Brothers Harriman & Co. (BBH), a global ETF custodian and administrator.
The report, released today, is a subset of BBH's 10th Annual Global ETF Investor report, and represents the opinions of more than 100 institutional investors, financial advisors and fund managers from the Mainland, Hong Kong and Taiwan. In total, 59% of respondents manage over USD 1 billion in assets.
Key Findings:
ETFs are integral components of investors' portfolios: Investors in Greater China continue to allocate capital to ETFs and 75% of investors expect their use of ETFs to increase this year.
view the 2023 Greater China ETF Investor Survey
Source: Brown Brothers Harriman
Indonesia Growth Seen Moderating in 2023 as Pandemic Rebound Fades
June 26, 2023--Economic growth in Indonesia is projected to moderate to 4.9 percent in 2023 from 5.3 percent last year with the normalization of domestic demand following the post-pandemic jump last year, and the projected global economic slowdown, according to the < a href="https://openknowledge.worldbank.org/server/api/core/bitstreams/e276a12e-4a4c-4429-812f-fd14f77337c5/content" TARGET="_blank">World Bank's semi-annual Indonesia Economic Prospects report.
Inflation is easing more quickly than initially anticipated thanks to the decline in global oil prices, an improved harvest, government interventions to ease supply bottlenecks, notably for food, and the appreciation of the Rupiah. As inflationary pressures subside, growth is expected to be supported by private consumption, while exports are projected to decelerate with easing commodity prices and global demand. Declining inflation helps restore monetary policy space to support the economy.
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Source: worldbank.org
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