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DB - Equity Research - Asia Pacific ETF Weekly Review : Robust inflows of $2.7bn but assets remain flat
June 9, 2011--Market Review
Last week, Australia reported its biggest quarterly fall in gross domestic product in 20 years saying its economy contracted by 1.2% in the first three months of the year. This was due to the fact that the twin natural disasters, floods and cyclones, had hurt Australia's economy hard earlier this year. The news impacted the S&P ASX 200 also and it declined by 2.15% in the last week. Other markets in the region were mixed as Japan (NKY) lost 0.31%, Korea (KOSPI2) gained 0.54%, China (CSI300) advanced by 0.78%, Hong Kong (HSI) was down by 0.73% and Singapore (FSSTI) appreciated by 0.32%.
As global ETP providers are looking to increase their product range in the Asia-Pacific market, Blackrock launched two new fixed income ETFs on Singapore Exchange during last week. These ETFs track the Barclays Capital Asia Local Currency Diversified Bond Index and the J.P. Morgan USD Asia Credit Bond Index, respectively, providing exposure to corporate and sovereign debt issuers across Asia.
ETP Monthly Flows: Robust cash flows of $2.7bn
Asia-Pacific ETP market witnessed strong cash flows of $2.7bn in the month of May which is the highest monthly flows since the start of 2011. Total monthly flows were primarily contributed by Equity ETPs with $2.6bn of inflows. Among other asset classes, this was the fourth month in a row when Commodity ETPs have witnessed cash inflows while Fixed Income ETPs have had four consecutive months of cash outflows over the same period. We believe that cash flows in the Asia-Pacific region have been driven mostly by increased product adoption rather than by pure asset allocations.
This year, from January to May, Commodity ETPs have recorded monthly cash flows of -$19m, $56m, $106m, $100m and $91m, respectively; whereas for the same respective months Fixed Income ETPs have recorded $55m, -$86m, -$22m, -$31m and -$15m of flows. Within Equity products, Asia Pac Developed Country ETPs and Emerging Country ETPs recorded $1.2bn and $1.1bn of inflows respectively. In the Commodity category, Gold and Silver had positive flows of $49m and $44m, respectively. Year-to-date cash flows climbed to $3.5bn with the May month boost.
Turnover Review: On Exchange activity above $5bn
Similar to the previous week, Asia-Pacific weekly turnover was above $5bn ending the last week with a total of $5.3bn. Major activities were in Hong Kong ($1.4bn, 10.7% up), China ($1.2bn, 8.2% up), Korea ($1.1bn, 1.6% down), Japan ($786m, 6.9% up) and Singapore ($353m, 1.4% down) markets. Asia Pac Developed Country ETPs experienced the largest week-over-week turnover increase trading an additional $149m or 13.2% up from the previous week.
Asset Under Management Review: AUM remain sticky at $87bn
For the past six weeks Asia-Pacific ETP assets are hovering around $87bn and did not experience strong growth. Nevertheless, since the start of the year, frequent new product launches in the region have been adding to the total ETP assets which have grown by 3.6% or $3bn year-to-date.
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Source: Deutsche Bank - Equity Research - Asia
BlackRock New Report ETF Landscape: Celebrating 10 Years of ETFs in Australia - June 2011
June 8, 2011--The first ETFs to list in Australia were the SPDR S&P/ASX 50 Fund (SFY AU) and SPDR S&P/ASX 200 Fund (STW AU) on the Australian Securities Exchange (ASX) on 27 August 2001.
At the end of April 2011, there were 29 locally domiciled ETFs/ETPs listed in Australia and 21 cross-listings with assets of US$6 Bn from seven providers on one exchange.
Australia’s ETF industry is on track to follow global trends and increase by 20-30% per annum.
We expect Australian ETF/ETP assets to surpass US$10 Bn assets by the end of 2013, growing from the current US$6 Bn assets.
Retail use of ETFs is expected to grow significantly in Australia as a result of regulatory changes from Australia’s Future of Financial Advice Reform (FOFA), effective in 2012.
The number of institutional users embracing ETFs will continue to grow with asset managers, private banks, and family offices increasing their use of ETFs as building blocks in new life style and model portfolios offered as separately managed accounts and as funds of ETFs.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Sovereign Spreads and Contagion Risks in Asia-IMF Working paper
June 8, 2011-- This paper explores how much of the movements in the sovereign spreads of Asian economies over the course of the global financial crisis has reflected shifts in (i) global risk aversion; (ii) country-specific risks, directly from worsening fundamentals, and indirectly from spillovers originating in other
sovereigns and the uncertainty surrounding exchange rates. Earlier in the crisis, the increase in market-implied contagion led to higher Asian sovereign bond yield spreads over swaps. But, after the crisis, Asia’s sovereign spreads normalized, despite the debt crisis in the euro area, reflecting a fall in both exchange rate and spillover risks.
view IMF Working paper-Sovereign Spreads and Contagion Risks in Asia
Source: IMF
HKEx To Expand Synthetic Futures Trading In Its Stock Options Market From 13 June
June 7, 2011--Hong Kong Exchanges and Clearing Limited (HKEx) will introduce synthetic futures series in five more stock option classes - Agricultural Bank of China (ABC), Bank of China (BOC), Industrial and Commercial Bank of China (ICBC), iShares FTSE A50 China Index ETF (A50 ETF) and PetroChina - from 13 June this year.
HKEx introduced synthetic futures trading on 9 May this year to help investors manage delta exposure in stock options portfolios and reduce their capital outlays in options-related trading. The current batch of stock option classes with synthetic futures series comprises China Construction Bank (CCB), China Life, China Mobile, HKEx and HSBC.
ABC, BOC, CCB, China Life, China Mobile, HKEx, HSBC, ICBC, PetroChina and A50 ETF are among the most actively traded stock option classes at HKEx.
“Following the smooth introduction of synthetic futures trading in the first half of May, we will offer series in five additional very actively traded stock option classes from mid-June,” said HKEx’s Head of Trading Calvin Tai. “We are optimistic about synthetic futures and their long-term prospects.”
Key market arrangements for synthetic futures and other details are in the HKEx circular to Exchange Participants issued on 11 March this year. Additional information on synthetic futures is in HKEx news release issued on 4 May this year and the Fact Sheet on the HKEx website.
Source: Hong Kong Exchanges and Clearing Limited (HKEx)
Bloomberg Launches Malaysian Foreign Currency Sukuk Index
Benchmark on sukuk issues formed with Malaysian Central Bank
June 7, 2011--)--Bloomberg executives today announced the launch of the Bloomberg Malaysian Foreign Currency Sukuk Index (BMSSUTR), a non-ringgit denominated index developed in conjunction with Bank Negara Malaysia.
The new Bloomberg index provides a global benchmark for the performance of sukuk bonds and the ability to track movements of foreign currency issues.
"The Islamic financial marketplace is growing rapidly and there is high demand for more transparency, pricing, risk and return information," said Gerard Francis, a Bloomberg Professional service executive. “We believe that this latest index will become the instrument of choice to help investors and fund managers maximize their investments in Shariah finance. It is also another sign of our 20 years of experience and commitment to the region."
"The launch of the benchmark index for the Malaysian foreign currency sukuk market is timely given the growth of foreign currency sukuk issuances in the country, and this marks another key milestone that will contribute towards internationalization of Islamic finance," commented Muhammad bin Ibrahim, Deputy Governor of Bank Negara Malaysia.
The Development of Local Debt Markets in Asia-IMF Working paper
June 7, 2011--: The paper makes an assessment of the progress made in developing local debt markets in emerging Asia. Market development has been limited by hurdles confronting borrowers and lenders, current and potential liquidity providers, and insufficient support from government policies and regulations.
Besides fostering a credit culture to deepen local debt markets, the issue of critical size can be addressed through an integrated regional market for local currency bonds that provides greater scale, efficiency, and access. With rapid economic growth in Asia, a key challenge is to generate financial assets that can provide the underlying collateral for expanding fixed-income markets, and hence domestic and regional investment opportunities.
view IMF working paper-The Development of Local Debt Markets in Asia
Source: IMF
Tokyo Stock Exchange, Inc. And ICJ, Inc. Begin Calculation Of The “TSE ICJ Index”
June 6, 2011--The TSE and ICJ, Inc. will jointly calculate and publish the “TSE ICJ Index,” whose constituents are comprised of companies listed on the Tokyo Stock Exchange that participate in the “Electronic Voting Platform” operated by ICJ, Inc.
Reductions in cross-shareholdings and other trends in the securities market in recent years have prompted expansion in the shareholdings of both domestic and foreign institutional investors. In addition, both listed companies and investors alike have grown more conscious of corporate governance in recent years, and companies are taking a more proactive stance towards the exercise of voting rights at general shareholder meetings (GSMs) through efforts such as setting guidelines for such voting.
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Source: Tokyo Stock Exchange (TSE)
Shanghai Stock Exchang, China Securities Index Co. Updating Industry Classification Of Listed Companies
June 3, 2011--Shanghai Stock Exchange (SSE) and China Securities Index Co., Ltd. (CSI) have recently published the adjusted industry classification of A-share listed companies on the SSE and the Shenzhen Stock Exchange according to the annual reports of 2010. The adjustment involves 46 A-share listed companies.
For the results of industry classification, please refer to the SSE website (www.sse.com.cn) or the CSI website (www.csindex.com.cn). The adjustment will take effect on July 1, 2011.
Source: Shanghai Stock Exchange
Thai Bourse Confident In Capital Market Growth Under New Government
June 3, 2011--The Stock Exchange of Thailand (SET) is convinced that the visions of the various political parties relating to the capital market will be beneficial to
the market's growth and are compatible with the Capital Market Development
Master Plan. The SET's policies will thus essentially continue no matter which party leads the next government, and the new administration will be able to utilize the capital market's full potential to drive the economy forward and strengthen the market further.
Major political parties outlined their visions for the capital market should
they form the next government in a recent seminar, "The Thai capital market and promoting Thailand's competitiveness under the new government".. Policies worth
implementing include promoting the Thai agricultural market to lead the region
through merging the Thailand Futures Exchange and Agricultural Futures Exchange, developing the bond market for retail investors, listing quality state enterprises on the Thai Exchange, and promoting the capital market to be the fund-raising center for large-scale utility projects. The seminar was organized by the Federation of Thai Capital Market Organizations.
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Source: The Stock Exchange of Thailand
ETF turnover up 85% on-year in last five months
June 2, 2011-- Turnover for exchange traded funds (ETFs) grew 85 per cent on-year in the last five months, according to the Singapore Exchange (SGX).
And most recently, ETFs have accounted for 10 to 15 per cent of overall trading volume on the exchange - reaching 92 million units in the month of May.
Investment firms like BlackRock are seeing tremendous potential for such passive income investments in Asia and has launched two more ETFs on the SGX on Thursday.
The SGX saw over a billion dollars worth of ETFs changing hands in the month of May, according to its monthly statistics released on Thursday - signalling investors' gradual acceptance and understanding the benefits of ETFs.
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Source: Channel News Asia
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