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DB Global Equity Index & ETF Research :European ETF Market Weekly Review:Market downturn shaves off €12 bil. from European ETP assets
September 28, 2011--Investment Outlook: Across the board cash outflows
In the week that ended on September 23rd, European domiciled ETPs registered net cash outflows of €683 million. Most of the European equity benchmarks ended significantly lower than the previous week's close: CAC, DAX, Euro Stoxx 50 & the FTSE 100 lost 7.3%, 6.8%, 6.2% and 5.6% respectively. Gold, a traditional safe heaven over the past year, also lost 9.0%.
Fixed Income ETFs registered cash outflows of €342 million over the last week. Money market ETFs alone, witnessed an exit of close to €600 million over the last week. Sovereign ETFs collected €192 million in cash inflows taking their YTD flows, close to €500 million.
Equity ETFs registered outflows of €298 million in the past week taking their YTD flows tally to €15.3 billion. Within equities, ETFs tracking emerging market (EM) benchmarks registered cash outflows of €430 million in the past week. Developed non-European ETFs (mostly Japan) attracted inflows totaling €244 million. ETFs offering exposure to large cap products and euro zone benchmarks witnessed cash out flows of €256 million and €116 million respectively. Inflows into ETFs offering inverse and leveraged exposure (€236 million) and outflows from broader equity segments over the last week, signals a persistent negative investor sentiment.
Cash flow activity within commodity ETPs was low in the past week, with flat flows totaling (€1 million) across all the commodity segments combined. Gold products witnessed modest inflows of €75 million over the past week taking its YTD cash flows to €2.7 billion.
Assets Under Management (AUM): Equity and commodity led decline
Total European ETP assets decreased by a massive 5.5% and ended the previous week at €218.5 billion. Equities lost close to €9 billion to end the week with €127.4 billion in assets. Overall commodity assets ended the week with €44.7 billion with a weekly loss of €3.4 billion. Gold ETPs lost close to €1.6 billion in assets mostly due to decrease in the [US$/oz] price of gold [9%]. Silver ETPs also lost close to €800 million due to declines [22.3%] in spot silver prices[US$/oz].Fixed income ETF assets declined by close to €300 million to end the week at €44.3 billion.
Exchange Total Weekly Turnover: Modest increase in Turnover levels
Weekly on-exchange ETP total turnover increased by a modest 2.1% to end the week at €15.8 billion. Equity turnover gained 3.7% from its previous levels and ended the week at €11.9 billion. Fixed Income turnover decreased by over €250 million from its previous levels and ended at €1.2 billion in weekly totals. Commodity turnover gained €115 million to reach €2.7 billion.
New ETP Product Launch Calendar: 3 New launches, 3 cross listings
Blackrock launched 3 equity thematic products which focus on companies engaged in agribusiness, oil& gas and gold respectively. All these ETFs, along with their cross listings were listed on the London Stock Exchange. Please refer to figure 10 for details.
To request a copy of the report
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
Assessment of the impact upon the markets of the Decision of 11th August 2011 prohibiting net short
September 28, 2011--In close coordination with the European regulators concerned1 and under the aegis of ESMA, the AMF has
been assessing both market conditions and the impact of the measures restricting net short positions on
ten French securities of the financial sector as decided in August 2011.
In the context of this assessment, regulators which had adopted comparable measures until 30 September, decided to extend their respective ban, while the AMF considered that the conditions for lifting the restriction were not met.
As a consequence, the AMF’s Decision of 11th August remains in force until
11th November. In the meantime, the AMF will continue to closely monitor, in coordination with the European regulators concerned, the markets and their developments. It may decide to lift the ban if market conditions allow it.
Source: AMF
SocGen's Newedge futures unit for sale
September 27, 2011--Societe Generale has put up for sale its stake in Newedge, a futures and clearing brokerage it co-owns with Credit Agricole, a source familiar with the situation said on Tuesday, as the No. 2 French bank looks to shrink its balance sheet and sell risky assets.
"Newedge is definitely for sale," the source said, adding that the bank could also sell its custody and securities unit SGSS but no firm decision had been reached on that.
"Both of these are fairly difficult to sell," the source said, adding: "I wouldn't hold my breath" on a successful sale.
Societe Generale, whose shares soared 17 percent on Tuesday as part of a broader rally in European banking stocks, declined comment.
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Source: Reuters
ETF industry braces itself for transparency push
September 27, 2011--Top heavyweights from the $1.3 trillion exchange-traded fund (ETF) industry are bracing themselves for a shift in how their fast-growing but relatively opaque products are marketed, distributed and regulated.
During a three-hour hearing in Paris on Monday, executives from ETF providers like BlackRock , Societe Generale unit Lyxor and Natixis unit Ossiam picked apart the European Securities and Markets Authority's (ESMA) recent proposals to make ETFs more transparent and ultimately less risky for investors.
But despite some pushback on details such as how ETFs should be labeled, what information should be disclosed and how their risk levels might be controlled, some executives acknowledged the broad push toward more transparency was inevitable.
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Source: Reuters
ESMA publishes the responses received to the Consultation on ESMA's draft technical advice to the European Commission on possible implementing measures of the Alternative Investment Fund Managers Directive in relation to supervision and third countries
September 27, 2011--To view the responses received to the Consultation on ESMA's draft technical advice to the European Commission on possible implementing measures of the
Alternative Investment Fund Managers Directive in relation to supervision and third countries.
view responses
Source: ESMA
EFSF: Eurozone rescue fund ratification latest
September 27, 2011--Eurozone leaders in July agreed to beef up the 440-billion-euro ($590 billion) European Financial Stability Facility -- the bailout fund set up last year as bulwark of the currency area's debt defences.
NEW POWERS
So far, eight of the 17 eurozone states have ratified new powers for the EFSF.
These will principally see the Luxembourg-based fund allowed to:
loan money to any country as a precaution before it gets too deep into trouble;
buy sovereign bonds of struggling eurozone states on the secondary market;
provide countries with money to recapitalise banks hard-hit by debt write-downs.
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Source: EUbusiness
Russian Federation: Selected Issues Paper
September 27, 2011--I. LEADING INDICATORS FOR INFLATION IN RUSSIA
The focus of monetary policy in Russia is shifting towards inflation targeting. This note develops two distinct but closely related analytical tools to inform monetary policy: trimmed
mean core inflation and a leading indicators model (LIM) for inflation forecasting. The trimmed mean core inflation measure tracks trend inflation in Russia better and is less
volatile than the Russian Federal Service of State Statistics (Rosstat) core inflation measure.
This core inflation measure indicates that the recent surge in headline inflation is not entirely
attributable to food price shocks as broad inflationary pressures are also evident. The LIM identifies a group of leading indicators that best fit Russia’s headline and core inflation
dynamics during 2003–11. The model suggests that headline inflation is strongly associated with past developments of broad money and food prices. These findings suggest that inflation at end-2011 will remain well outside the CBR’s targeted range of 6–7 percent.
view the IMF report-Russian Federation: Selected Issues Paper
Source: IMF
Russian Federation: Financial System Stability Assessment-IMF Report
September 27, 2011--EXECUTIVE SUMMARY
The Russian authorities maintained financial stability at home in the face of a major global shock. The economy is now recovering, the performance of financial institutions has
begun to improve, and the emergency anti-crisis measures have been unwound. The success in maintaining financial stability in the face of this major systemic threat reflected the
decisive and broad-based policy response by the government, the CBR, and the DIA, which cooperated extensively during the crisis.
However, the financial system is still fragile. Economic activity is projected to grow at a modest pace in the coming years and, given the structure of the Russian economy, the financial system will continue to be exposed to significant risks from fluctuations in
international commodity prices and capital flows. In addition, the reported data overestimate
loan quality and the level of provisions for nonperforming loans, though rising, is still too
low. For this reason, although financial soundness indicators are strong and stress tests suggest that the sector can withstand sizeable macroeconomic and financial shocks without extra help by the government or the CBR, increased vigilance is required.
The crisis, combined with certain long-standing governance weaknesses, has set back progress toward a strong, competitive financial system for the future. Post-crisis consolidation has reduced competition by strengthening mainly large, state-owned banks. Moral hazard has increased as a result of the emergency measures to maintain stability, which inevitably benefited systemically important institutions. In addition, the system continues to suffer from weak governance, including sometimes non-transparent ownership structures, deficiencies in financial reporting, and endemic perceptions of corruption in the Russian economy. These weaknesses were highlighted by the recent failure of the Bank of Moscow. The success of the authorities’ medium-term strategy for the development of the banking system requires tackling these challenges.
view the IMF Report-Russian Federation: Financial System Stability Assessment
Source: IMF
European investors pay higher costs for ETFs
September 27, 2011--European investors pay substantially higher transaction costs to use exchange-traded funds than their US counterparts, analysis of comparable US and European ETFs shows.
ETFs, which allow investors to track a broad basket of securities, for example an equity index, have gained popularity in recent years because they can be traded on exchanges and have low management fees.
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Source: FT.com
Five new RBS ETFs launched on Xetra
Two ETFs track MSCI indices on Brazil and Latin America with currency hedge for the first time
September 26, 2011-- Five additional ETFs issued by RBS Market Access have been tradable on Xetra® since Monday.
ETF name: RBS Market Access MSCI Brazil (ADR) EUR Hedged Index ETF
Asset class: equity index ETF
ISIN: LU0667622541
Total expense ratio: 0.60 percent
Distribution policy: non-distributing
Benchmark: MSCI Brazil (ADR) EUR Hedged Index
ETF name: RBS Market Access MSCI EM LatAm (Brazil ADR) EUR Hedged Index ETF
Asset class: equity index ETF
ISIN: LU0667622467
Total expense ratio: 0.65 percent
Distribution policy: non-distributing
Benchmark: MSCI EM Latin America (Brazil ADR) EUR Hedged Index
The MSCI Brazil (ADR) EUR Hedged Index, which is weighted according to free float market capitalisation, tracks the performance of Brazilian companies in the form of ADRs; the index is hedged against exchange rate fluctuations between the euro and the US dollar. The index currently comprises 28 of Brazil’s leading companies.
The MSCI EM Latin America (Brazil ADR) EUR Hedged Index currently represents the performance of 81 companies from Brazil, Chile, Columbia, Mexico and Peru. The index is weighted according to free float market capitalisation and is hedged against exchange rate fluctuations between the euro and the US dollar.
ETF name: RBS Market Access MSCI Frontier Markets Index ETF
Asset class: equity index ETF
ISIN: LU0667622202
Total expense ratio: 0.90 percent
Distribution policy: non-distributing
Benchmark: MSCI Frontier Markets Index
ETF name: RBS Market Access MSCI Emerging and Frontier Africa ex South Africa Index ETF
Asset class: equity index ETF
ISIN: LU0667622384
Total expense ratio: 0.85 percent
Distribution policy: non-distributing
Benchmark: MSCI EFM Africa ex South Africa Index
ETF name: RBS Market Access MSCI GCC Countries ex Saudi Arabia Top 50 Capped Index ETF
Asset class: equity index ETF
ISIN: LU0667622111
Total expense ratio: 0.70 percent
Distribution policy: non-distributing
Benchmark: MSCI GCC Countries ex Saudi Arabia Top 50 Capped Index
The MSCI Frontier Markets Index, which is weighted according to free float market capitalisation, currently comprises161 companies from 25 countries: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Nigeria, Oman, Pakistan, Qatar, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, United Arab Emirates and Vietnam.
The MSCI EFM Africa ex South Africa Index, which is weighted according to free float market capitalisation, currently comprises 32 companies from the following six African countries and excludes South Africa: Egypt, Kenya, Mauritius, Morocco, Nigeria and Tunisia.
The MSCI GCC Countries ex Saudi Arabia Top 50 Capped Index, which is weighted according to free float market capitalisation, currently tracks the leading 50 companies from the following Gulf State regions and excludes Saudi Arabia: Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. The weighting of each country is limited to 30% and an equity may only be represented in the index by a maximum of 5%.
The product offering in Deutsche Börse’s XTF segment currently comprises a total of 874 exchange-listed index funds, while average monthly trading volume stands at €14 billion.
Source: Deutsche Börse
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