Global ETF News Older than One Year
IMF Working paper-Optimal Liquidity and Economic Stability
May 24, 2012--Summary: Monetary aggregates are now much less used as policy instruments as identifying the right measure has become difficult and interest rate transmission has worked well in an increasingly complex financial system. In this process, little attention was paid to the potential spillover of excess liquidity.
This paper suggests a notional level of "optimal" liquidity beyond which asset prices will start to rise faster than the GDP deflator, thereby creating a gap between the face value and the real purchasing value of financial assets and widen the wedge in income between those with capital stock and those living on salaries. Such divergence will eventually lead to an abrupt and disorderly adjustment of the asset value, with repercussions on the real sector.
view the IMF Working paper-IMF Working paper-Optimal Liquidity and Economic Stability
Source: IMF
Four steps to finding the right ETF-Deborah Fuhr
May 24, 2012--Increasingly investors are asking how to select an ETF, given the breadth and depth of products available in the market. The European exchange traded funds (ETF) industry had 1,295 ETFs, with 4,579 listings, assets of $291 billion, from 37 providers on 21 exchanges, based on the recent ETFGI monthly industry report.
The criteria investors use to select ETFs was analysed in the recent EDHEC-Risk Institute study, covering 174 institutional investment managers and private wealth managers based in Europe who already use ETFs.
It is important to remember that the majority of respondents said they primarily use ETFs to gain broad market exposures, while over half use ETFs for buy-and-hold investments and to implement dynamic asset allocation.
The findings indicate that users of ETFs go through a four-step decision-making process when selecting an ETF.
Source: CityWire
World Bank Database Shows Export Markets Are Dominated by Big Firms
Difficult for Newcomers to Survive
May 24, 2012-A few large companies dominate export markets in developing and developed countries, with the top one percent often accounting for more than half-sometimes nearly 80 percent - of total exports, according to a new World Bank database with a wealth of details on exporting firms.
The new Exporter Dynamics Database offers the most comprehensive picture yet of exporter characteristics and dynamics – a firm’s entry, exit and survival in the export market – in 45 developed and developing countries. The database mainly covers 2003-2009, though data from the 1990s are also available for some countries.
A key finding is that the export market is difficult to tackle for newcomers, with 57 percent of companies on average – and two-thirds in Africa – quitting within a year of entering the export market.
view the Exporter Dynamics Database -Overview
Source: World Bank
The World Bank and Gender
May 24, 2012--Overview
In September 2011, the World Bank launched the World Development Report 2012: Gender Equality and Development (WDR 2012), the first of the series to focus on gender. WDR 2012 highlighted impressive progress in educational enrollment, life expectancy, and economic opportunities, but also pointed out that these gains have not been universal.
In many parts of the world, too many women are still dying in child-birth, or, at alarming rates, not being born at all. Women continue to lack voice in the household and the ability to participate in decisions that affect them, their families, and their societies; and too often, their economic opportunities remain very constrained.
Source: World Bank
El Ezz Aldekhela Steel-Alexandria to Join Dow Jones EGX Egypt Titans 20 Index
Banque Centrale Populaire S.A. Added to Dow Jones Africa Titans 50 Index
Korea Exchange Bank Added to Dow Jones Emerging Markets Select Dividend Index
Shin Corporation PCL of Thailand Added to Dow Jones Emerging Markets Technology Titans 30 Index
May 24, 2012--Dow Jones Indexes, a leading global index provider, today announced Egypt's Egyptian Company for Mobile Services will be removed from three of Dow Jones Indexes' market gauges due to its acquisition by MT Telecom SCRL of France.
India's Patni Computer Systems Limited will be removed from the Dow Jones Emerging Markets Technology Titans 30 Index due to its acquisition by iGate Corporation of the United States.
Dow Jones EGX Egypt Titans 20 Index: El Ezz Aldekhela Steel-Alexandria replaces Egyptian Company for Mobile Services;
Dow Jones Africa Titans 50 Index: Banque Centrale Populaire S.A. replaces Egyptian Company for Mobile Services; and
Source: Dow Jones Indexes
Greece Raises Concerns over Global Economy
May 23, 2012--Highlights
PBoC's RRR cut fails to boost sentiment.
Hong Kong and China stock markets extended losses when the intensifying European debt woes and falling foreign investment in China overshadowed the reserve requirement rate (RRR) cut announcement.
The People’s Bank of China cut the RRR by 50 bps, effective May 18. However, the market’s response towards the third cut in six months was muted as talks on a coalition government and the eventual failure in Greece overwhelmed the market.
India
Markets hit by European debt woes.
The Indian equity market trended lower last week as the worsening concerns over the Europe debt crisis negatively affected the Asia markets.
Investors’ risk appetite decreased and moved investments from emerging markets to the US dollar, which is perceived to be a safe harbor.
Brazil
Further policy easing likely.
The equity market sell-off intensified in the week ending May 17th to erase YTD gains. Brazilian output data reinforced the dual speed dynamic within the local economy. Retail sales rose in March, whilst the GDP proxy (IBC-Br) missed expectations, paving the way for further monetary easing in the near term.
Russia
EM equities' compelling valuation.
Concerns regarding the potential exit of Greece from the Eurozone have triggered a spike in risk aversion, causing significant outflows from risk assets into perceived safe havens.
Spanish 10-year yields have risen to 6.22%. News that the ECB has suspended lending to selected Greek banks has raised fears over capital flight from the country’s financial system.
Source: Mirae Asset
IMF Working paper-The Volatility Trap: Precautionary Saving, Investment, and Aggregate Risk
May 23, 2012--Summary: We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth.
High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model.
Source: IMF
ISDA Publishes Paper Examining Differences In Derivatives Reporting Between US GAAP And IFRS Accounting Standards
May 23, 2012--The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of a paper, "Netting and Offsetting: Reporting Derivatives Under US GAAP and Under IFRS."
The paper examines how and why derivatives are treated differently under the International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP) and their impact on the new Basel III Leverage Ratio.
It notes that the terms of netting, offsetting and set-off are often used to express the same notion but they are very different concepts. A better understanding of the terminology and the way in which derivatives are traded, managed and settled provides an understanding of why US GAAP accounting standard setters have consistently agreed that derivatives be reported on a ‘net’ basis instead of on a ‘gross’ basis on the face of the balance sheet and why this differs from reporting derivatives under IFRS. Historically, the Europe-based International Accounting Standards Board (IASB) has permitted significantly less balance sheet offsetting than the US-based Financial Accounting Standards Board (FASB).
view the Netting and Offsetting: Reporting derivatives under U.S. GAAP and under IFRS paper
Source: ISDA
Report: Open Borders and Integrated Supply Chains Break Down Global Trade Barriers
New report finds that traditional notions of trade are becoming outdated, with global value chains requiring new measurements, policies and cooperation
The Enabling Trade Index assesses 132 economies worldwide on their ability to enable trade
Asian economies show strong performance, while the US, China and India fall in the rankings
May 23, 2012--East Asian economies have recorded marked improvements in their ability to enable trade, while traditional frontrunners Singapore and Hong Kong retain a clear lead at the top of the global rankings, according to the Global Enabling Trade Report 2012, released today by the World Economic Forum.
The report, which is published every two years, also confirms strong showings for Europe’s major economies, with Finland and the United Kingdom both advancing six places to 6th and 11th, respectively, and Germany and France remaining stable at 13th and 20. Other large economies fare less well: the US continues its decline to 23rd, as does China (56th) and India (100th). Among emerging economies, Turkey (62nd) and Mexico (65th) remain stable while Chile (14th), Saudi Arabia (27th) and South Africa (63rd) climb in the ranking. ASEAN members Thailand (57th), Indonesia (58th) and the Philippines (72nd) also improve.
As well as ranking nations’ trade openness, the report finds that traditional notions of trade are increasingly outdated as global value chains require new measurements, policies and cooperation. The report also finds that security, quality and trade can be mutually reinforcing through supply chain integrity efforts, but a knowledge gap in identifying buyers remains an important barrier.
view the WEF The Global Enabling Trade Report 2012
Source: World Economic Forum
Dow Jones Indexes to Launch the Dow Jones Parala Macro Allocation Indexes
New Series to Employ Parala Capital's Proprietary Methodology, Utilizing Economic Factors as Inputs for Passive Asset Allocation Strategy
May 23, 2012-- Dow Jones Indexes and Parala Capital LLP today announced the launch of the Dow Jones Parala Macro Allocation Indexes, a new family of stock indexes based on Parala Capital's proprietary macro-allocation methodology.
Formed in 2007, Parala Capital focuses solely on developing investable strategies using rigorous quantitative methodologies based on proprietary and academic research. The London-based firm's proprietary macro-allocation methodology seeks to identify the future performance of a universe of assets by utilizing economic factors as inputs for a passive asset allocation strategy.
Source: Dow Jones Indexes
