Global ETF News Older than One Year
ETFS Precious Metals Weekly: Greece Steps Back from the Abyss, but Spain Remains Vulnerable
June 18, 2012--Greece avoids immediate worst case scenario, but Spain is now the epicentre of the crisis. Spain voted in the pro-reform New Democracy
party by a decent margin on Sunday, reducing the risk of an imminent
break-up of the Euro.
Spain, however, is now contending with 10 year government bond yields near 7%, a level that threatens to drive the country into a self-perpetuating debt confidence crisis. The situation in Spain is of particular concern as it follows a Euro 100bn bank bailout loan package only two weeks ago, indicating that only extreme measures have a chance of pulling Spain bank from the brink that Greece has temporarily stepped back from. If the European authorities and the ECB do not step in forcefully, the crisis risks spiralling out of control. At the same time, weaker US growth and inflation prints are opening up room for the Fed to consider implementing another round of quantitative easing. Both of these scenarios are likely to be bullish gold and this has been reflected in rising physical gold ETP purchases and increasing net long positions in gold futures.
Platinum and palladium prices hit 5-week highs as labour unrest adds to South African production problems. Last week, reports of violent clashed at South African mines raised the spectre of strikes, likely resulting in production stoppages, and lifting platinum and palladium prices to 5-week highs. The platinum price jumped 5%, while palladium rallied 3% last week. Additionally, Aquarius Platinum, the world’s fourth largest producer of platinum, announced its intention to cease production at its Marikana mine. The shutdown, just weeks after Eastern Platinum cut investment at another South African mine, highlights the ongoing cost pressures affecting the miners. Citing poor economic conditions, Aquarius has shut down the mine until, ‘an improved economic climate merits their extraction in the future’. The combintion of mine closures and strikes at operating mines continues to add support to the palladium, and partularly the platinum price.
visit www.etfsecurities.com for more info
Source: ETF Securities
Advisers keen for model ETF portfolios
One-stop strategies are freeing up time for client service
June 17, 2012--The growing popularity of exchange-traded funds has led to a boom among money managers who specialize in using low-cost passive investments to build go-anywhere portfolios.
These model ETF portfolios typically use ETFs to invest globally across all asset classes, such as equities, fixed income and commodities, to shoot for a real return.
Financial advisers increasingly are outsourcing some of their client assets to these managers so that they can spend more time on clients and less time managing portfolios.
Source: Investment News
IOSCO Publishes A Report On The Credit Default Swap Market
June 16, 2012--The International Organization of Securities Commissions has published today a report on the Credit Default Swap Market, which seeks to inform the ongoing regulatory debate on CDS and highlight some of the key policy issues involving these financial swap agreements.
The report was mandated by the Group of 20 leading industrialized and emerging nations at the Cannes Summit in November 2011, where IOSCO was called on “to assess the functioning of credit default swap (CDS) markets and the role of those markets in price formation of underlying assets” by the next G20 Summit that begins on Monday in Los Cabos, Mexico.
view the Credit Default Swap Market report
Source: IOSCO
FSB publishes its third progress report on implementation of OTC derivatives market reforms and press release.
June 15, 2012--The Financial Stability Board (FSB) published today its third six-monthly progress report on the implementation of over-the-counter (OTC) derivatives market reforms.
The report reviews progress made by international standard-setting bodies, national and regional authorities and market participants towards meeting the commitments made by G20 Leaders at the Pittsburgh 2009 Summit that, by end-2012, all standardised OTC derivative contracts be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties (CCPs); that OTC derivative contracts be reported to trade repositories; and that non-centrally cleared contracts be subject to higher capital requirements. The report notes that, since the previous FSB progress report in October 2011, encouraging progress has been made in setting international standards, the advancement of national legislation and regulation by a number of jurisdictions; and practical implementation of reforms to market infrastructures and activities. But much remains to be completed by the end-2012 deadline.
view the OTC Derivatives Market Reforms-Third Progress Report on Implementation
Source: FSB
Economic Outlook June 2012 - Uncertainty weighing heavily on the economy
June 15, 2012--ECONOMIC SITUATION
The increase in political and financial uncertainty associated with the euro and, in particular,
the banking system has damaged business confidence. BUSINESSEUROPE expects GDP
growth to be 0.1% this year and 1.4% in 2013 in the EU 27.
Net exports will be the only main demand component contributing positively to GDP growth this year as businesses take advantage of growth in the global economy.
Unemployment is expected to reach its highest level in almost 20 years. While both labour market and overall economic performance differ widely among Member States, average EU unemployment levels will reach 10.5% this year, and 10.8% in 2013.
Investment is being constrained by both weak demand and access to finance. BUSINESSEUROPE expect the cost and difficulty of access to finance to increase even more over the next 6 months, placing further pressure on business survival and expansion.
Source: European Business
IMF Working paper-Government Bonds and Their Investors: What Are the Facts and Do They Matter?
June 15, 2012--Summary: This paper introduces a new dataset on the composition of the investor base for government securities in the G20 advanced economies and the euro area. During the last decades, investors from abroad have increased their presence in government bond markets.
The financial crisis broke this trend. Domestic financial institutions allocated a larger share of government securities in their portfolios, as Japan has done since its crisis in the 1990s. Increases in the share held by institutional investors or non-residents by 10 percentage points are associated with a reduction in yields by about 25 or 40 basis points, respectively. The data show a varied lead-lag relationship between bond yields and investor holdings. Portfolio balance estimates suggest that a change in statutory or regulatory holdings of government securities to the tune of 10 percent of the outstanding stock causes expected returns to decline by 7 to 25 basis points.
Source: IMF
EPFR Global Fund Data-Investor flows adopt "anywhere but Europe" strategy, however Global Equity managers increase allocation to Europe
June 15, 2012--With Spain's sovereign ratings dragged closer to junk territory by the admission its banks need to be recapitalized to the tune of $120 billion and Greece about to head to the polls for the second time in as many months,funds with European mandates found themselves shunned during the second week of June.
EPFR Global-tracked Europe Bond Funds experienced their biggest weekly redemptions since early December and Europe Equity Funds posted outflows for the tenth time in the past 12 weeks as investors again looked to the US and tangible assets such as gold.
Developed Market Equity Fund Flows
Flows into EPFR Global-tracked Developed Markets Equity Funds during the second week of June were, at first glance, surprisingly robust. But short-term trading of US ETFs and commitments to Japanese ETFs tied to the Bank of Japan’s asset purchase program again underpinned the week’s flows.
Predictably, Europe Equity Funds posted outflows for the fourth straight week as Spain joined the Eurozone’s bailout club and Greeks prepared to vote in an election many believe is their last chance to avoid leaving -- or being pushed out of -- the currency union. Less predictably, German Equity Funds also posted outflows for the fourth week running. "In addition to the problems in its backyard, Germany’s export story is coming under scrutiny as key emerging markets such as China continue to slow," said Cameron Brandt, EPFR Global’s Director of Research.
Visit http://www.epfr.com for more info
Source: EPFR
Liquidity remains a priority for investors
June 15, 2012--Private clients are still seeking reassurance from wealth managers that their portfolios are flexible enough to negotiate stock market volatility.
During the financial crisis of 2008, clients of several wealth management firms discovered that their portfolio managers were unable to sell holdings and cut losses – because they had committed so much money to illiquid assets that had no functioning secondary market.
Source: FT.com
OPEC Maintains Oil Quota as Price Decline Brings Compromise
June 14, 2012--The Organization of Petroleum Exporting Countries kept its production ceiling unchanged, as concern that global growth is shrinking outweighed calls by some members for supply cuts to stem sliding prices.
The 12-member group agreed to leave the limit at 30 million barrels a day, Youcef Yousfi, Algeria’s Minister of Energy and Mines, said today in Vienna at the end of the producer group’s first meeting of the year. Venezuela, Angola and Ecuador were among nations that backed keeping the quota unchanged prior to the decision. Saudi Arabia, whose minister, Ali al-Naimi, had said this week he might favor a production increase, said he was “happy” with today’s outcome.
Source: Bloomberg
IOSCO Publishes a Report on Institutional Investors in Emerging Markets
June 14, 2012--The International Organization of Securities Commissions has published today a report on Development and Regulation of Institutional Investors in Emerging Markets, which focuses on a wide range of developmental
issues and challenges faced by emerging markets seeking to develop their institutional investor base.
Some of these challenges include limited capital market size and liquidity, competition to capital market investment from substitute services, regulatory restrictions, overly dominant distribution channels and constraints on cross-border activities. Additional discussions on related macro-economic and capital market conditions in the emerging markets and analysis of cross-border activities of institutional investors are also included in the report.
view the IOSCO report-Development and Regulation of Institutional Investors in Emerging Markets
Source: IOSCO
