Global ETF News Older than One Year
DB Global Markets Research-Fundamental Index Views-Equities: S&P500 (Buy) "Go with the flow"
February 2011--S&P 500’s +ive momentum backed by strong fundamentals
Our US economists have raised their 2011 GDP forecast from 3.3% to 4.3% on
the back of an improved outlook on the unemployment rate (2011 YE forecast
lowered to 7.8% from 8.8% previously) and rising output due to the combination
of strengthening demand and negligible inventory (should result in inventory
accumulation which is likely to propel output up to +4.5%).
Further, bottom-up aggregated fundamentals of S&P 500 companies (ex Financials) look strong where EBIT margins have recovered above pre-crisis levels, reasonable deleveraging is accompanied by a comfortable cash position and high net interest cover ratios. Also, strong positive momentum in earnings revisions is building up. We estimate 96$ in 2011E and a fair value multiple of 16.4x which brings us to our YE target of 1,550. We estimate 2011E sales growth of 8.8% and EPS growth of 12.4%.
…and a strong Q4’10 reporting so far (see pages 6, 7)
Out of 245 S&P 500 companies, 71% have reported sales above expectations
(strongly ahead of Q3 2010) and 71% above earnings expectations (as of 4 Feb
2011). In contrast, out of 68 Stoxx 600 companies in Europe, only 56% have
reported earnings above expectations and 61% came in with sales surprises. On
the sector level, Technology (largest sector weighting in the S&P 500 of ~19%,
see middle chart on the right) stands out positively with 81% out of 37 companies having positively surprised on the earnings level and even 84% on the sales level.
In a nutshell, 16 out of 19 sectors have beaten on an earnings level and only Construction & Materials as well as Utilities disappointed so far.
Fund flows supportive for DM and our case for US Equities (see page 5) A key theme since Nov 2010 has been investors’ move from ‘nominal’ to ‘real’ assets with major flows out of US Bonds into Equities (with Japan, EMEA and the US as key beneficiaries) and Corporate High Yield Bonds. Moreover, inflows into Emerging market (EM) equities have continuously faded since Nov 2010 and have finally turned into record outflows of 1.0% of total assets over the last week (a 3-year record) while Developed market (DM) equity funds and particularly the US continued to see inflows with an improving trend. US equities have seen inflows of 0.2% of total assets last week (inflows in 8 out of the last 9 weeks). The stronger than expected US January ISM may also have been supportive.
To request a copy of the report
Source: Deutsche Bank Global Markets Research
BlackRock * New Report * ETF Landscape: Industry Review - Year End 2010
February 11, 2011--The industry grew in all major dimensions during 2010 and we expect this to continue in 2011. With products and assets both growing by 26.6%, the global ETF industry had 2,459 ETFs with 5,554 listings and assets of US$1,311.3 Bn, from 136 providers on 46 exchanges around the world, at year end 2010. This is up significantly on 2009's year end of 1,943 ETFs with 3,827 listings and assets of US$1,036.1 Bn, from 108 providers on 41 exchanges.
Demand for ETFs globally has surged as professional and retail investors alike have discovered their unique combination of benefits, such as versatility, transparency and significant cost advantages. The availability of cost effective, flexible, liquid, and diversified investment products that enable rapid implementation of a comprehensive range of investment strategies has struck a chord with investors – during both bull and bear markets.
Factors driving expanding use of the vehicle include the number and types of equity, fixed income, commodity and other indices covered, more fund platforms embracing ETFs, more active marketing of ETFs by online brokers, greater involvement by fee based advisors, the growing number of exchanges planning to launch new ETF trading segments, and regulatory changes in the United States, Europe and many emerging markets that allow funds to make larger allocations to ETFs.
We expect global AUM in ETFs and ETPs to increase by 20-30% annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion in Europe in 2013.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Conformism and Public News -IMF Working Paper
February 9, 2011--Summary: We study a model where investment decisions are based on investors’ information about the unknown and endogenous return of the investment. The information of investors consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return of the investment.
We assume that the return of the investment is correlated with the aggregate investment. This results into a beauty contest among analysts (or a "conformism" effect). In equilibrium, analysts sell all the information they have to all the investors. A striking result is that there are sometimes multiple equilibria. There are equilibria where the beauty contest is exacerbated. Because of the correlation across analysts' information sources, not all the information available in the economy is transmitted to investors.
view IMF Working paper-Conformism and Public News
Source: IMF
IEA-Highlights of the latest Oil Market Report
February 10, 2011--HIGHLIGHTS
Crude prices were propelled higher at end?January by political
unrest in Egypt, with Brent crude reaching $100/bbl on fears that
the turmoil might disrupt Suez canal and SUMED pipeline flows or
spread in the region. Although prices have since eased, Brent futures
remain around $100.50/bbl and WTI at $87.20/bbl at writing.
Global oil product demand for 2010 and 2011 is revised up by 120 kb/d on average on higher?than?expected submissions in non?OECD Asia and improved economic prospects for OECD North America. At 87.8 mb/d in 2010, global oil demand rose by 2.8 mb/d year?on?year, and should reach 89.3 mb/d in 2011 (+1.5 mb/d year?on?year).
World oil supply rose 0.5 mb/d in January, to 88.5 mb/d, on higher OPEC crude and NGL output. Non?OPEC supply was unchanged from December at 53 mb/d, as outages continued to constrain production. 2010 estimates remain at 52.8 mb/d, while the 2011 outlook is nudged up 0.1 mb/d to 53.5 mb/d on higher North American output.
OPEC crude supply scaled two?year highs in January at 29.85 mb/d, with Iraq underpinning the 280 kb/d monthly increase. OPEC NGLs in 1Q11 rise by 200 kb/d to 5.7 mb/d on gains from Qatar and UAE. The 2011 ‘call on OPEC crude and stock change’ now averages 29.9 mb/d after upward revisions to demand, close to observed January OPEC output levels. OPEC effective spare capacity stands at 4.7 mb/d.
Source: International Energy Agency (IEA)
IEO Releases Evaluation of IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07
February 9, 2011--The Independent Evaluation Office (IEO) of the International Monetary Fund (IMF) released today its evaluation of the IMF Performance in the Run-Up to the Financial and Economic Crisis. This evaluation was discussed by the IMF’s Executive Board on January 26, 2011. In releasing the report, IEO Director Moises Schwartz explained that the evaluation’s main aim is to improve the effectiveness of IMF surveillance in
warning the membership on emerging risks and vulnerabilities to the global economy.
The evaluation focused on the performance of IMF surveillance during the 2004-2007 period. The report found that the IMF provided few clear warnings about the risks and vulnerabilities associated with the impending crisis before its outbreak. During the run-up to the crisis, the banner message of IMF surveillance was characterized by overconfidence in the soundness and resiliency of large financial institutions, and endorsement of the financial practices in the main financial centers. The risks associated with housing booms and financial innovations were downplayed, as was the need for stronger regulation to address these risks.
The IEO found that the IMF’s ability to identify the mounting risks was hindered by a number of factors, including a high degree of groupthink; intellectual capture; and a general mindset that a major financial crisis in large advanced economies was unlikely. Weak internal governance and an institutional culture that discourages contrarian views also played an important role.
Source: Independent Evaluation Office (IEO)
Dow Jones Index Data Monthly Reports
February 9, 2011--The following Dow Jones Index Data Monthly Reports for OCtober 2010 are now available.
Index Data Monthly Report: Dow Jones-UBS Commodity Indexes
Index Data Monthly Report: Latin America Edition.
Index Data Monthly Report: Dow Jones Brookfield Infrastructure Indexes
Source: Dow Jones Indexes
French oil giant Total facing investor resolution on tar sands
Company to face questions at AGM in May
February 9, 2011--French activist investor PhiTrust Active Investors is to quiz Total SA on the tar sands issue at the oil major’s forthcoming annual shareholder meeting.
PhiTrust says it will table a resolution on the risks involved in its tar sands operations in Alberta, Canada. Fellow oil firms BP and Shell have faced similar shareholder resolutions on the tar sands issue in the past, but PhiTrust claims it is the first such resolution in France. Total is set to hold its Annual Shareholders’ Meeting in Paris on May 13.
Source: Responsible Investor
NYSE Euronext, Deutsche Boerse shares suspended
February 9, 2011--Officials at stock exchange operators NYSE Euronext and Germany's Deutsche Boerse AG say trading of their own shares has been halted — after shares of the New York-based stock exchange operator soared 12 percent.
Caroline Tourrier, spokeswoman for NYSE Euronext, said the stock exchange's shares were suspended pending a press release. She declined further comment.
A Deutsche Boerse spokesman declined to comment on why trading in its shares has been halted.
Two rival exchanges — the London Stock Exchange Group PLC and TMX Group Inc., which operates the Toronto Stock Exchange — announced a merger earlier Wednesday.
NYSE Euronext shares last traded at euro27 ($36.81), up 12 percent, while Deutsche Boerse's last quoted share price was euro58.42, up 1.7 percent.
Source: Associated Press
The World Federation of Exchanges Publishes 2010 Market Statistics
February 7, 2011-- Global equity market capitalization on regulated exchanges increased 14.9 percent to $54.8 trillion (USD) in 2010 as markets continued their rebound from the 2008 financial crisis, the World Federation of Exchanges (WFE ) reported in its annual publication of market statistics.
The 2010 total market capitalization for the more than 50 WFE-member exchanges, which had increased 45.5 percent increase in 2009, approached its record high of $60.8 trillion (USD) last achieved at the end of 2007. The Asia-Pacific region’s capitalization gained 19.5 percent, followed by the Americas (+17.1 percent) and Europe-Africa-Middle east (+7.4 percent).
Source: WFE
Investors back onshore hedge funds
February 7, 2011--A majority of hedge fund investors are eschewing traditional offshore funds in favour of tightly regulated onshore vehicles – a sign of the lasting impact of the Madoff scandal and 2008 liquidity crisis.
According to a comprehensive industry survey, 55 per cent of hedge fund investors would now prefer to allocate money in onshore so-called Ucits funds compared with just 21.7 per cent in traditional offshore Cayman Island funds.
Source: FT.com
