Global ETF News Older than One Year
IMF Working paper-Interest Rate Rules, Endogenous Cycles, and Chaotic Dynamics in Open Economies
May 10, 2012--Summary: We present an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation.
We show that conditions under which these rules generate aggregate instability by inducing liquidity traps, endogenous cycles, and chaotic dynamics depend on specific characteristics of open economies. In particular, rules that respond to expected future inflation are more prone to induce endogenous cyclical and chaotic dynamics the more open the economy to trade
Source: IMF
Renminbi trade becomes two-way highway
May 10, 2012--As the price that affects all trade and investment between the world's two biggest economies, the renminbi/dollar exchange rate has long been a source of political controversy.
So it was last week that Tim Geithner, US Treasury secretary, told his Chinese counterparts once again that the renminbi “needs” to appreciate further against the dollar and other currencies.
Source: FT.com
Discrimination against women persists around the globe hampering development
May 10, 2012--Social and legal discrimination against women remains a major obstacle to economic development in emerging and developing countries, according to the latest edition of OECD's Social Institutions and Gender Index (SIGI).
Though women’s rights are improving in a number of countries, in others women are still barred from fully contributing to social and economic life.
“Despite promising progress in some areas, discrimination against women persists around the globe,” said Carlos Alvarez, Deputy Director of the OECD Development Centre. “Legal reforms, economic incentives and community mobilisation are critical to rectifying this social discrimination and economic injustice.”
Certain forms of discrimination against women remain widespread. Out of 121 countries covered in the 2012 SIGI, 86 have discriminatory inheritance practices or laws. On average across these countries, around half of women believe domestic violence is justified in certain circumstances. In some countries, like Niger or Mali, over half of girls between 15 and 19 are married. Such an environment is a massive obstacle for women to get an education and to contribute to their own wellbeing and their countries’ progress. The countries with the highest levels of discrimination among those ranked in the SIGI are in Africa and the Middle East.
Source: OECD
Industrial metal ETF inflows surge
Inflows into industrial metal exchange traded funds have surged, despite the European ETF market recording nearly €4bn in outflows last month.
May 10, 2012--Flows into copper and palladium last week reached monthly highs for both products.
Copper exchange-traded commodities saw the biggest inflows last week, of $17.1m. The London Metal Exchange’s copper stock piles fell to their lowest level in over three years, resulting in a tightening supply/demand balance.
Source: Efinancial news
Markit to acquire Cadis
May 9, 2012--Markit has today agreed to acquire Cadis, the global enterprise data management specialist. The need for enterprise data management (EDM) services has never been greater and we are excited to extend our offering into this critical area.
Established in 2007, Cadis prides itself on its highly successful implementation record. Its EDM platform consolidates data from multiple sources within a centralised software hub, providing users with reliable, transparent and auditable data. The best in class platform addresses a multitude of data management needs including front-to-back office integration and data frameworks for trading, pricing, risk and compliance management.
The combination of Cadis’ award-winning EDM platform with Markit’s global reach will enhance its offering significantly. The Cadis team will operate as a business unit alongside Markit’s other enterprise solutions including Markit Analytics, Markit Portfolio Management and Markit on Demand. Daniel Simpson, Cadis CEO, will continue to run the business post acquisition.
Source: Markit
Bids In The LME Ring
May 9, 2012--Market sources have indicated that bids have been received from CME Group, HKEx and NYSE Liffe,
the derivatives arm of NYSE Euronext. HKEx has confirmed that it has made a bid for the LME.
Source: Mondovisione
IMF Working paper-Country Stress Events: Does Governance Matter?
May 9, 2012--Summary: This paper analyzes the linkages between governance quality and country stress events. It focuses on two types of events: fiscal and political stress events, for which two innovative stress indicators are introduced.
The results suggest that weaker governance quality is associated with a higher incidence of both fiscal and political stress events. In particular, internal accountability, which measures the responsiveness of governments to improving the quality of the bureaucracy, public service provision, and respect for the institutional framework in place, is positively associated with fiscal stress events. However, external accountability, which captures government accountability before the public in general, through elections and the democratic process, seems to be more important for political stress events. These results hold when using balanced country samples where region, oil-exporter status, income level, and time are taken into account.
view the IMF working paper-Country Stress Events: Does Governance Matter?
Source: IMF
Federal Reserve grants first approval for Chinese bank to purchase US bank
May 9, 2012--The Federal Reserve has for the first time given approval for a large Chinese bank to purchase a U.S. bank. It also gave approval to two other large Chinese banks to expand their operations in the United States.
The Fed board announced Wednesday it was approving the application of the Industrial and Commerce Bank of China Limited, China’s largest bank, and two other Chinese firms to purchase The Bank of East Asia U.S.A., located in New York City.
Source: Washington Post
Investors take issue with ETF loan fees
May 9, 2012--Operators of exchange traded funds are making increasing sums of money by lending securities to short-sellers in return for cash or collateral as the funds surge in popularity.
Concern is growing among investors at the differences in how much of that revenue is returned to investors and how much is retained by operators, such as BlackRock and Vanguard.
Source: FT.com
Investors Watching Last week's Elections in Eurozone
May 9, 2012--The official PMI rose to the highest since March 2011.
Hong Kong and China markets rose on favorable policy and economic data.
The Shanghai and Shenzhen stock exchanges will lower the trading fees of A-share equities by 25%, effective from June 1, given that the exchanges are now sizable enough in terms of number of listed companies and trading volumes, to make up for lower trading fees in order to lessen investors’ costs and help further develop the market.
India
4Q and FY12 earnings reporting season will drive the stock market.
The Indian equity market trended lower last week, as weaker currency spurred concerns around the government’s difficulty in controlling inflation and curbing the fiscal deficit. A weak rupee lifted the cost of imported oil and other raw materials, potentially causing inflation to go higher and reducing the central bank’s scope to cut rates. India imports about 80 percent of its oil needs.
Brazil
Government took a major step to lower interest rate further.
Brazilian equities rose in local currency, falling in USD in the week ending May 3rd, as a result of significant currency depreciation. The Brazilian Real fell a further ~1% against the dollar as a result of a material fall in future interest rate expectations, and continued government intervention in currency markets.
Russia
Uncertainty over new government’s policies shakes the market.
The Russian market was closed on Monday for Bridge Day and Tuesday for Labour Day.
From a global perspective, near term focus is on last week’s elections within the Eurozone, with voters in both France and Greece going to the ballot box. Investors are concerned about the financial stability as the socialist candidate François Hollande came to power in France.
Source: Mirae Asset Management
