Global ETF News Older than One Year
New Shocks and Asset Price Volatility in General Equilibrium
May 6, 2011--Summary: We study equity price volatility in general equilibrium with news shocks about future productivity and monetary policy. As West (1988) shows, in a partial equilibrium present discounted value model, news about the future cash flow reduces asset price volatility.
We show that introducing news shocks in a canonical dynamic stochastic general equilibrium model may not reduce asset price volatility under plausible parameter assumptions. This is because, in general equilibrium, the asset cash flow itself may be affected by the introduction of news shocks. In addition, we show that neglecting to account for policy news shocks (e.g., policy announcements) can potentially bias empirical estimates of the impact of monetary policy shocks on asset prices.
view IMF Working paper-New Shocks and Asset Price Volatility in General Equilibrium
Source: IMF
Why ETFs give an uneasy sense of déjà vu
May 5, 2011--When the Financial Stability Board was established a couple of years ago, it declared that one of its goals was to produce better “early warning” systems of looming financial trouble spots. Now it is starting to turn this rhetoric into reality. Investors should pay attention.
Last month, the FSB issued a small advisory report entitled “Potential financial stability issues arising from recent trends in Exchange-Traded Funds”. Unsurprisingly, this did not cause a storm. After all, ETFs seem as dull as ditchwater to most politicians; almost as boring as the world of CDOs (collateralised debt obligations) looked back before 2007.
Source: FT.com
Climate Change Already Hurting Agriculture
May 5, 2011-- As the planet warms, dire predictions of coastal flooding, inland droughts, ruined farmland, and global food shortages fill the news and research journals. But for all the talk of the future, scientists have little data on how climate change has already affected agriculture. A new study hopes to shed some light on this area.
"It's a frustration having to always answer questions about the future and having everyone think of climate change as something in the future," says David Lobell, an agricultural scientist at Stanford University in Palo Alto, California. "It's not something we have to anticipate. It's something we have to learn from and deal with right now."
Source: Science
CME launches London clearing house
May 5, 2011--CME Group is considering offering clearing services to exchanges in Europe as the largest US futures exchange establishes a beachhead in the region by launching a new clearing house in London on Friday.
The move into clearing in Europe highlights the Chicago-based operator’s ambitions to expand into Europe, where CME’s two biggest rivals, IntercontinentalExchange (ICE) and Deutsche Börse, have established clearing businesses.
Source: FT.com
BlackRock New Report ETF Landscape: Industry Review - Q1 2011
May 5, 2011--At the end of Q1 2011, the global ETF industry had 2,605 ETFs with 5,905 listings and assets of US$1,399.4 Bn from 142 providers on 48 exchanges around the world. This compared to 2,131 ETFs with 4,133 listings and assets of
US$1,081.9 Bn from 123 providers on 42 exchanges at the end of Q1 2010.
Additionally, there were 1,119 other ETPs with 1,835 listings and assets of US$183.7 Bn from 58 providers on 23 exchanges. This compared to 718 ETPs with 1,025 listings and assets of US$153.6 Bn from 42 providers on 18 exchanges at the end of Q1 2010.
Combined, there were 3,724 products with 7,740 listings, assets of US$1,583.2 Bn from 178 providers on 52 exchanges around the world at the end of Q1 2011. This compared to 2,849 products with 5,158 listings, assets of US$1,235.4 Bn from 147 providers on 44 exchanges at the end of Q1 2010.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Combination of Deutsche Börse and NYSE Euronext: Commencement of acceptance period for shareholders of Deutsche Börse
German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) has approved the publication of the offer documents The acceptance period will commence on 4 May and will end on 13 July 2011 Shareholders will receive one ordinary share of Alpha Beta Netherlands Holding N.V. for each Deutsche Börse share
May 4, 2011--Under the exchange offer, shareholders of Deutsche Börse AG can tender their shares to the joint holding company of Deutsche Börse and NYSE Euronext (Alpha Beta Netherlands Holding N.V.) effective immediately. For each share of Deutsche Börse AG shareholders will receive one share of the Dutch holding.
On 2 May 2011 the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) approved the publication of the offer documents in the context of the combination of Deutsche Börse and NYSE Euronext. Deutsche Börse AG has thus made another important step forward on its route towards combining with NYSE Euronext.
The acceptance period during which shares can be exchanged will commence on 4 May and end on 13 July 2011. Acceptance of the exchange offer will be carried out via the relevant custodian banks. Until the conclusion of the transaction, the shares of Deutsche Börse tendered for exchange can be traded under a new securities identification number (ISIN DE000A1KRND6).
Reto Francioni, CEO of Deutsche Börse AG, said: "The publication of the offer document is a further milestone on our way towards the planned combination. Our shareholders now have the historic opportunity to participate in the new stock exchange group by exchanging their shares. They will benefit not only from the immediate increase in value from the expected synergies but also from attractive growth opportunities of the combined group."
Source: Deutsche Börse
Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements-IMF Working Paper
May 4, 2011--Summary:
This paper uses a DSGE model with banks and financial frictions in credit markets to assess the medium-term macroeconomic costs of increasing capital and liquidity requirements.
The analysis indicates that the macroeconomic costs of such measures are sensitive to the length of the implementation period as well as to the adjustment strategy used by banks, and the scope for monetary policy to respond to the regulatory changes.
view the IMF Working paper-Macroeconomic Costs of Higher Bank Capital and Liquidity Requirements
Source: IMF
Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions- IMF
May 3, 2011--EXECUTIVE SUMMARY
Most tax systems today contain a “debt bias,” offering a tax advantage for corporations to finance their investments by debt. This has grown increasingly hard to justify.
One cannot compellingly argue for giving tax preferences to debt based on legal, administrative, or economic considerations. The evidence shows, rather, that debt bias creates significant inequities, complexities, and economic distortions. For instance, it has led to inefficiently high debt-to-equity ratios in corporations. It discriminates against innovative growth firms, impeding stronger economic growth. Debt bias also threatens public revenues, because it enables companies to reduce tax liabilities by using hybrid financial instruments as well as by restructuring their finances internally, moving debt between affiliates.
view the paper-Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions
Source: IMF
Factories in China, US slow as those in Europe, India see boom
May 3, 2011--Manufacturing growth in the world’s two biggest economies softened in March but firmed in Europe and India, according to reports highlighting the fractured nature of the global economic recovery.
The United States and China both saw a tempering of factory production in April, with the pace of US manufacturing expansion easing for a second straight month. Still, US activity remained firm and input prices rose to their highest in nearly three years, according to data from the Institute for Supply Management released on Monday. ISM said its factory index fell to 60.4 in April from 61.2 the previous month, slightly above forecasts for a reading of 60. It has held above the 50-threshold that separates growth from contraction since August 2009 and peaked in February2011.
Source: Todays Zaman
Statistics : Annual inflation accelerates to 2.7% in March 2011
May 3, 2011--Consumer prices in the OECD area rose by 2.7% in the year to March 2011, compared with 2.4% in February. This increase was driven by an acceleration in energy prices which grew by 12.4% in March, compared with 10.2% in February. Food prices continued to rise at relatively high rates: 3.2% in March (compared with 3.1% in February).
Excluding food and energy, consumer prices rose by 1.4 % in March 2011, the highest rate since March 2010.
Inflation accelerated strongly in the year to March 2011 in Canada (to 3.3%, up from 2.2% in February) and the United States (to 2.7%, up from 2.1%). It also accelerated in France (to 2.0%, up from 1.7%) and Italy (to 2.5%, up from 2.4%) but was stable in Germany (2.1%) and Japan (0.0%). In the United Kingdom, inflation remained relatively high compared to other major economies but slowed to 4.0% in March compared with 4.4% in February. Euro area annual inflation (HICP) rose to 2.7%, up from 2.4% in February.
Source: OECD
