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Normalize monetary policy
December 10, 2010--The recent rise in China's inflation has grabbed the attention of the public and policymakers alike. Consumer price inflation rose to 4.4 percent in October and a further increase is expected. This is higher than we are used to in China, although it is modest in an emerging market perspective. To determine the best policy response to the rise in inflation it is important to know its cause and how much inflation we should expect in the coming 12 months. It is also good to decide what an acceptable rate of inflation is for a country like China.
So far, the rise in inflation is because of higher food prices. The food component of the consumer pice index in October was up 10.1 percent year-on-year, contributing two-thirds of overall inflation, while non-food prices were up 1.6 percent on this basis. In looking for the cause of the higher food prices, monetarist explanations are common.
After the massive monetary expansion since the end of 2008 there is a lot of liquidity sloshing around, potentially putting upward pressure on prices, especially asset prices. In this setting, there are reports that speculative activity has driven up prices of several food products.
It is also true that in the long run sustained monetary expansion drives up inflation. However, the link from money to inflation is more indirect and complex than simplistic monetarist interpretations suggest and, in the meantime, inflation is basically determined on the markets for goods and services.
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Source: World Bank
Publication of Interim Draft for “The Action Plan for the New Growth Strategy” view The Action Plan for the New Growth Strategy” (Interim Draft) Timetable Transforming China: Insights from the Japanese Experience of the 1980s- IMF Working paper read Transforming China: Insights from the Japanese Experience of the 1980s FTSE and Value Partners launch custom Taiwanese and Korean Value Indices read more Taiwan A-Shares ETF Variety Is Widened by BOCI-Prudential Through Its Cross-Listed ETFs The Fund is an index-tracking ETF which seeks to provide investment performance (before taxes) that tracks the performance of the SSE 50 Index. SSE 50 Index consists of the 50 largest stocks of good liquidity listed on Shanghai Stock Exchange which cover the large capitalization or blue chip segment of the PRC market. The index is compiled and managed by China Securities Index Co., Ltd. Mr. MAK Tat Cheung, CEO of BOCI-Prudential, said “In the hope of broadening the A-Shares ETF variety available to the Taiwan investors, BOCI-Prudential brings the Fund to Taiwan, following the W.I.S.E. Polaris CSI 300 last year. Mainland China’s strong economic growth not only leads the global recovery, but also makes its A-Shares markets become the focus of global investors. Given the shifting of world economic gravity to the east, we will continue to contribute to the cross-strait ETF development in response to the market needs.” Dr. TANG Hing Sing, Managing Director and Head of Quantitative Strategy Business Unit of BOCI-Prudential, added “We are delighted to have the Fund approved for cross-listing on the Taiwan Stock Exchange, widening the opportunities of Taiwan investors to invest in the China A-Shares markets. The Fund tracks the most well recognized China big-cap index, which allows Taiwan investors to optimize their China A-Shares exposures with regard to their diverse investment objectives along with the broad based A-Shares ETF – W.I.S.E. Polaris CSI 300”
Ms. Li Ching Ching, Chairman of KGI SITE, stated “Taiwan has been devoted to enhancing the interflow among the cross-strait regions and encouraging financial innovation in recent years. To echo this devotion, KGI SITE has introduced the first cross-strait dual-listing A-Shares ETF to Taiwan. We believe the cross-listing of the Fund has integrated the strengths of KGI SITE, BOCI-Prudential, KGI Securities and Grand Cathay Securities Corporation, forming the most competent team and providing Taiwan investors with the opportunity to invest in the Mainland China market.” China’s first gold fund eyes global ETFs The fund plans to raise up to 3.3 billion yuan (RM1.56 billion) that would be converted into hard currencies to buy gold ETFs in the global market. The fund is scheduled to be launched on Dec. 10. Rival E Fund Management Co is planning a similar fund. read more
Asian Expansion of Deutsche Börse Algo News Feed AlphaFlash Continues In Singapore, AlphaFlash will be hosted in the Kim Chuan and Comcentre III data centers, both operated by SingTel Group. The data feed can easily be accessed by all financial companies and trading firms.
Starting 3 January 2011, AlphaFlash will deliver economic events from China, Japan and Australia. The new data content covers indicators such as CPI, industrial output, FX reserves, money supply, employment figures and GDP. Data sources are the respective country’s central banks, the national statistics offices and government institutions. read more State Street Global Advisors names new regional head of ETFs read more Access Economics Report on ASX-SGX Combination improving Australia’s chances of becoming a financial services hub in Asia;
improving the ability of Australians to diversify their savings; and
lowering the cost of capital for Australian companies.
Furthermore, the report finds that the merger is not contrary to Australia’s national interest since:
ASX will continue to operate in Australia and be regulated by Australian authorities.
The report also finds that SGX is the most logical merger partner for ASX given that the bulk of future capital flows into Australian investment projects will come from Asia, and because ASX and SGX have many complementary business features.
view the ASX-SGX: why the combination is in Australia’s national interest DB Global Equity Index & ETF Research: Asia Pacific ETP Market Weekly Review Monthly average daily turnover declined 5.4% in the last week. Turnover for the previous week was USD 1,482m. The largest ETF by turnover was the iShares Asia Trust - iShares FTSE/Xinhua A50 China Tracker issued by BlackRock with USD 265m accounting for 17.9% of total turnover.
Assets Under Management
AUM rose 1.1% in the previous week. AUM as of Dec 3rd was USD 75.1bn. The largest ETF by AUM is the TOPIX ETF managed by Nomura Asset Management with AUM of USD 8.1bn. To request a copy of the report If you are looking for a particuliar article and can not find it, please feel free to contact us
December 10, 2010--On December 7, 2010, the Financial Services Agency (FSA) published the interim draft for “The Action Plan for the New Growth Strategy”.
view The Action Plan for the New Growth Strategy” (Interim Draft) Outline
Source: Financial Services Agency, The Japanese Government
December 9, 2010--Summary: China is poised on the brink of a transition to a service-based economy. The Japanese experience of the 1980s provides several insights about the way to manage such a transition and the downsides to avoid.
In particular Japan offers useful insights on (1) the limits to an export-oriented growth strategy; (2) the role of exchange rate, macroeconomic policies, and structural reforms in rebalancing the economy toward the nontradables sector; and (3) the risks associated with financial liberalization. The similarities between the Chinese economy today and the Japanese economy of the 1980s make these insights relevant for China. However, with the benefit of analyzing the Japanese experience and, given the important differences between the two economies, China should be able to successfully rebalance its growth pattern while avoiding the downsides encountered by Japan
Source: IMF
December 8, 2010--FTSE Group (“FTSE”), the leading global index provider, and Value Partners Index Services Limited (“Value Partners”), a wholly-owned subsidiary of Value Partners Group, today launched two custom indices that will offer new unique investment opportunities for the Taiwanese and Korean markets - the FTSE Value-Stocks Taiwan Index and FTSE Value-Stocks Korea Index.
The new indices are based on Value Partners’ unique value methodology and calculated and maintained using FTSE expert custom index solutions. They capture the performance of quality, liquid value stocks selected from the investable universe of companies listed on the Taiwan and Korea’s exchanges. The FTSE Value-Stocks Taiwan Index and FTSE Value-Stocks Korea Index will be calculated alongside the FTSE Value-Stocks China Index which was launched in July 2009. The FTSE Value-Stocks China Index is the basis of the Value China ETF which listed in December 2009. The year-to-date performance of the FTSE Value-Stocks China Index is 18.48% which outperforms the FTSE China 25 Index by 7.51%. The key characteristics of the indices are listed in Table 1 in appendix.
Source: FTSE
Taiwan A-Shares ETF Variety Is Widened by BOCI-Prudential Through Its Cross-Listed ETFs
December 7, 2010--BOCI-Prudential Asset Management Limited (“BOCI-Prudential”), a leading asset management firm in Hong Kong, is pleased to announce the planned cross-listing of “W.I.S.E. – SSE 50 China Tracker®” * (* This is a synthetic ETF) (the “Fund”; HK stock code: 03024.HK; Taiwan stock code: 008201.TW) on the Taiwan Stock Exchange.
The Fund being a sub-fund of BOCI-Prudential’s W.I.S.E. ETFs series, has been approved by the Taiwan Financial Supervisory Commission to cross list in Taiwan after the signing of the bilateral Memorandum of Understanding concerning ETF cross-listing last year. KGI Securities Investment Trust Co. Ltd. (“KGI SITE”) is appointed as the master agent while KGI Securities Co. Ltd and Grand Cathay Securities Corporation are the participating dealers of the Fund in Taiwan. The Fund will be listed on the Taiwan Stock Exchange and commence trading on 8th December, 2010.
Source: China Securities Index Company Limited
December 7, 2010--China’s Lion Fund Management Co, which is launching the country’s first gold fund worth up to US$500 million (RM1.57 billion), is examining a dozen gold-backed exchange-traded funds (ETFs) on the global market as potential targets, including SPDR Gold Trust, a senior executive said today.
Lion Fund won regulatory approval last week to launch the gold fund under the country’s Qualified Domestic Institutional Investor scheme (QDII), which enables participants to invest client’s money overseas within set quotas.
Source: The Malaysian Insider
Two new data centers in Singapore / “AlphaFlash” to deliver macroeconomic indicators from China, Japan and Australia
December 7, 2010-Deutsche Börse – Market Data & Analytics is making its algorithmic news feed “AlphaFlash” available in two data centers in Singapore and adding macroeconomic data from China, Japan and Australia.
The total number of indicators will increase to 240. Deutsche Börse has been preparing the expansion of AlphaFlash to the Asia-Pacific region since launch of the feed in April 2010. Data centers in Sydney and Tokyo were connected in November.
Source: Deutsche Börse
December 7, 2010--State Street Global Advisors (SSgA), the investment management business of State Street Corporation has named Frank Henze to a newly-created role, head of exchange traded funds, Asia Pacific.
Based in Hong Kong, Henze has oversight of SSgA regional ETF expansion strategy and reports to Bernard Reilly, head of SSgA's business in Asia Pacific, and James Ross, senior managing director and global head of exchange traded funds at State Street Global Advisors.
Source: The Asset
December 6, 2010--ASX Group (ASX) has today released a report prepared by Access Economics entitled ‘ASX-SGX: why the combination is in Australia’s national interest’
ASX engaged Access Economics to examine the Australian national interest implications to help inform the
debate about the proposal to merge ASX Limited and Singapore Exchange Limited (SGX) to create the fifth largest securities exchange group in the world.
The Access Economics report concludes that the formation of ASX-SGX would promote Australia’s national
interest since it is highly likely to raise the economic welfare of Australians by:
Source: ASX Group
December 6, 2010--Market Overview
There are 245 equity based ETFs in the Asia Pacific region with 340 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 39.19% of the whole market, whilst China has the largest market share by turnover with 39.19%.
There was one new listing on the previous week. Simplex Asset Management launched a new ETF listed on the Osaka Securities Exchange. The objective of this fund is to track the performance of the Jasdaq-top 20.
Turnover
Source: DB Global Equity Index & ETF Research
