Global ETF News Older than One Year
IMF Working paper-Emerging Market Local Currency Bond Yields and Foreign Holdings in the Post-Lehman Period-a Fortune or Misfortune?
February 12, 2014--Summary: The paper shows that foreign holdings of local currency government bonds in emerging market countries (EMs) have reduced bond yields but have somewhat increased yield volatility in the post-Lehman period. Econometric analyses conducted from a sample of 12 EMs demonstrate that these results are robust and causal.
We use an identification strategy exploiting the geography-based measure of EMs financial remoteness vis-à-vis major offshore financial centers as an instrumental variable for the foreign holdings variable.The results also show that, in countries with weak fiscal and external positions, foreign holdings are greatly associated with increased yield volatility. A case study using Poland data elaborates on the cross country findings.
Source: IMF
IMF Working paper-Monetary and Macroprudential Policies to Manage Capital Flows
February 12, 2014--Summary: We study interactions between monetary and macroprudential policies in a model with nominal and financial frictions. The latter derive from a financial sector that provides credit and liquidity services that lead to a financial accelerator-cum-fire-sales amplification mechanism.
In response to fluctuations in world interest rates, inflation targeting dominates standard Taylor rules, but leads to increased volatility in credit and asset prices. The use of a countercyclical macroprudential instrument in addition to the policy rate improves welfare and has important implications for the conduct of monetary policy. "Leaning against the wind" or augmenting a standard Taylor rule with an argument on credit growth may not be an effective policy response.
IMF Working paper-Monetary and Macroprudential Policies to Manage Capital Flows
Source: IMF
EMs are paying the price of ETF liquidity
Volatility inflamed by ability of exchange traded funds to exit quickly
February 12, 2014--Are exchange traded funds the best way to invest in emerging market equities?
Last week, I wrote a column arguing that the structure of ETFs, which allows trading through the day, had contributed significantly to the scale of the recent sell-off in emerging markets, and was helping to make the sector more volatile.
Source: FT.com
S&P Dow Jones launches S.Africa indices
Nine indices covering South Africa's equity market
S&P Dow Jones Indices has expanded its coverage of the South African equity market.
The index provider launched nine new indices covering the market.
February 12, 2014--The new series of indices will bring "greater index based measurement and transparency" to the market and investors, said Vinit Srivastava, senior director at S&P Dow Jones Indices.
The S&P South Africa Composite was introduced, which measures the performance of companies actively traded and listed on the Johannesburg Stock Exchange (JSE). It covers both foreign-domiciled and domestic-domiciled companies listed on the JSE with float-adjusted market values of $ 100m or more and annual dollar value traded of at least $50m.
Source: Global Investor Magazine
BATS Global Markets In January: Direct Edge Merger Closes
BATS Chi-X Europe Also Reports New Record in Depositary Receipts Trading;
48.4% Market Share for BXTR Pan-European Trade Reporting Service
February 12, 2014--BATS Global Markets (BATS) today announces highlights for January, including the successful merger close with Direct Edge Holdings LLC and new monthly market share records in Europe, including 18.2% in Spain's IBEX 35 and 9.0% in Depositary Receipts (FTSE ROIB).
As previously reported, BATS and Direct Edge completed their merger on Jan. 31, combining two customer-focused exchange operators as one of the world's largest stock market companies. In January, pro forma market share for the company's combined exchanges (BZX Exchange, BYX Exchange, EDGX, EDGA) totaled 20.54%.
Source: BATS Global Markets, Inc.
New Report Provides Blueprint to Close Infrastructure Financing Gap
New World Economic Forum report, Infrastructure Investment Policy Blueprint, provides recommendations on how governments can attract private capital to public infrastructure projects while creating clear social and economic value for citizens
Political risk emerged as one of the most pressing concerns for infrastructure investors
The report is part of the World Economic Forum's Global Strategic Infrastructure Initiative
February 11, 2014--The importance of infrastructure as a key driver of growth, competitiveness and social well-being is well established.
Yet, as highlighted in the World Economic Forum's new report, Infrastructure Investment Policy Blueprint, a significant number of economically viable infrastructure investments are not moving forward. The global investment shortfall in infrastructure is estimated to be at least US$ 1 trillion per annum.
Enhanced participation from the private sector, while not a complete panacea, could do much to close this gap.
Source: WEF (World Economic Forum)
Asset Management 2020: A Brave New World
February 11, 2014--The asset management industry stands on the edge of a number of fundamental shifts that will shape the future of the industry...
Most asset managers have afforded themselves little time to bring the future into focus and the way in which many of them will operate in 2020, will be significantly different compared with today.
Asset Management 2020-A Brave New World, sets out how the operating landscape for asset managers will change by 2020 and explains how asset managers can prepare for the challenges ahead and turn them into competitive advantages.
view the PwC report-Asset Management 2020 A Brave New World
Source: PwC
IMF Working paper-What is Shadow Banking?
February 11, 2014--Summary: There is much confusion about what shadow banking is. Some equate it with securitization, others with non-traditional bank activities, and yet others with non-bank lending.
Regardless, most think of shadow banking as activities that can create systemic risk. This paper proposes to describe shadow banking as "all financial activities, except traditional banking, which require a private or public backstop to operate". Backstops can come in the form of franchise value of a bank or insurance company, or in the form of a government guarantee. The need for a backstop is in our view a crucial feature of shadow banking, which distinguishes it from the "usual" intermediated capital market activities, such as custodians, hedge funds, leasing companies, etc
view the IMF Working paper-What is Shadow Banking?
Source: IMF
Economic crisis provides lessons for new approaches to forecasting, says OECD
February 11, 2014--Extreme volatility during the global financial crisis complicated economic forecasting, leading to large errors that underline the need for better modelling methods and new approaches for making and presenting projections, according to an OECD report.
OECD forecasts during and after the financial crisis: a post-mortem says that the Organisation's economic projections under-predicted the depth of the collapse in activity in 2008-09 and over-estimated the pace of recovery in recent years.
The degree of forecasting errors seen over the 2007-12 period is similar in size to that seen around the first oil shock in the 1970s.
view the OECD forecasts during and after the financial crisis: A Post Mortem report
Source: OECD
ESMA consults on new CRA transparency requirements
February 11, 2014--The European Securities and Markets Authority (ESMA) has published a Consultation Paper setting out the draft Regulatory Technical Standards (RTS) required for the implementation of the CRA3 Regulation (Regulation).
The draft RTS, which complements the existing regulatory framework for credit rating agencies (CRAs), cover:
disclosure requirements on structured finance instruments (SFIs);
the European Rating Platform (ERP); and
the periodic reporting on fees charged by CRAs.
view the ESMA Consultation Paper On CRA3 implementation
Source: ESMA
