Global ETF News Older than One Year
Deutsche Bank 2010/2011 ETP Review & Outlook : ETFs walk an equity-able path towards $1.8 trillion in 2011
January 20, 2011--By all counts, 2010 was a very strong year for ETPs across all three major global regions. The global ETP market grew (in US$ terms) by an impressive 28%. The European market led the [percentage] growth registering 36% (in Euro terms), followed by the Asian market with growth of 31% (in US$ terms) and the US market registered growth of 28%. Growth in all three major regions was bolstered by very healthy cash flows (totaling $176.2 billion) that contributed to 16% of the year’s growth. Recovering asset markets also gave ETP assets a strong push, contributing an average of 13% increase to AUM from market appreciation.
We expect the global ETP market to continue growing by close to 30% [probability weighted scenario: 27.5%] in 2011. In our view, the ETF part of the market will lead the [dollar] growth, fueled by returning domestic equity investors both in the US and Europe. Market consensus growth estimates predict [ETF AUM weighted] average growth of 23.0% in North America and 13.2% in Europe, something which will benefit ETF AUM both from a market appreciation point of view as well as from increased allocation to the industry’s biggest asset class, equity.
2010 was the strongest product launch calendar for the industry with an impressive 648 new product launches. Europe led the way with 391 new product launches, followed by the US and Asia with 176 and 81 product launches respectively. Most of the new products launched, 533, were ETFs, with ETCs in Europe taking second position (106) and ETVs in the US taking third place (9).
Emerging markets were undoubtedly the biggest success story of 2010 in the global equity ETF market. In search of return opportunities and in light of increased mid-year volatility in both the US and European domestic markets, investors elevated ETFs to one of the major emerging market investment tools. The global ETF industry saw a total of $42.0 billion of new flows to this corner of the market, with both the US and European markets strongly supporting this trend.
US equity emerging market inflows reached $26.5 billion, while the respective number for Europe registered at €9.1 billion. The most popular ETF emerging markets benchmark, MSCI Emerging Markets, saw its ETF assets appreciate by $41.3 billion over the year, while the index itself (NDUEEGF) rose by 19.0% in 2010. This follows returns of 78.5% in 2009. With US and European domestic investors returning to their own markets, the debate has now moved to whether this segment of the equity market has perhaps had its run. Several short emerging market ETF products have been launched in anticipation of this scenario materializing. Equity research analysts are however predicting continued average growth in emerging markets of close to 12%.
In the US market, fixed income had a very strong run. The asset class took in a total of $33.0 billion of new money, with corporate and high yield ETF benchmarks gaining the lion’s share, amassing inflows of $14.3 billion. The European fixed income market, while it received positive flows of €5.8 billion, it experienced much weaker activity [than the US], despite a major fixed income product push by many European providers. Fixed income investors’ interest in the European Union in the first three quarters of the year revolved around sovereign ETF indices (2010 inflows €3.6 billion), while corporate ETF benchmarks also saw a fair level of interest (2010 inflows €2.0 billion) especially in the third quarter of the year.
Gold, another one of the year’s big success stories, significantly contributed to bolstering ETC and ETV flows over 2010 and it single-handedly carries the credit for lifting the fortunes of the commodity ETP space in 2010. The US market saw $13.1 billion of precious metals ETP inflows, while gold accounted for $9.2 billion of those. In Europe, the picture was very similar to that in the US. The European commodity ETP market gathered €6.0 billion of inflows, while gold accounted for €5.1 billion. As equities markets continue to rebound, the spotlight this year is firmly set on ETFs, where we expect to see most of the cash flows in 2011. Subject to gold price dynamics, gold ETPs will continue to receive inflows, but unless we see a significant downward change in equity market sentiment, gold is likely to be on the slow burner [in terms of ETP flow growth] for the year ahead.
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Source: Deutsche Bank Global Equity Index & ETF Research
Economy: Well functioning housing markets are key for stability and growth
January 20, 2011--Poorly managed housing markets played a key role in triggering the recent global financial crisis and may be slowing the recovery. A new OECD study offers governments a roadmap for sounder housing policies.
“Housing and the Economy: Policies for Renovation” says reforms to financial sector regulation, taxation, land-use, rental market rules and the provision of social housing will improve both the real estate sector and spill-over to the economy as a whole.
OECD countries have seen the damage caused by badly designed policies through their effects on housing markets,” said OECD Secretary-General Angel Gurria. “As we search for new sources of growth, as we seek to restore trust in our financial sectors, as we try to green our economies, policies related to housing can have a huge impact on our future”.
The OECD says that easy credit over the past two decades amplified price volatility, with real housing price jumps of 90% or more in Australia, Belgium, Finland, Ireland, Netherlands, New Zealand, Norway, Spain and the United Kingdom over the study period. Deregulation and innovation in mortgage markets – coupled with inadequate supervisory frameworks – contributed to a significant relaxation in lending standards, an increase in non-performing loans and the sub-prime crisis.
view the report Housing and the Economy: Policies for Renovation
Source: OECD
NYSE Euronext Global Index Group Announces 2010 Performance of Indices
New Indices and Services Introduced
January 20, 2011--NYSE Euronext’s Global Index Group today announced the 2010 performance of its benchmark indices.
New Indices and Other Initiatives
In Europe, the NYSE Euronext’s Global Index Group added seven new indices. These new indices included the NYSE Alternext OSEO Innovation Index®, which covers French small cap companies which have been identified as innovative. Several new indices were also introduced that support trading strategies around the main proprietary indices, CAC 40® Index; leverage and short offering three, four and five times exposure.
The Global Index Group continued to harmonize its European index offering, in which the AEX-Index® was converted from a fixed divisor basket index to a floating divisor portfolio index. Additionally, corporate action rules were further harmonized removing inconsistencies among the country indices. As of December, both net and gross total return index levels are available for the European country indices.
Source: NYSE Euronext
The Credit Outlook Navigating a Risk Laden Recovery
January 20, 2011--Highlights
A global economic recovery is occurring but it remains fragile with possible pitfalls. In this environment, Fitch Ratings expects macro factors to continue to dominate credit markets. Accommodative policy support and emerging market dynamism are
important drivers of growth.
Although macro risks remain, Fitch’s rating outlooks are continuing to stabilise across most sectors. This reflects both improved credit profiles and downgrade action, followed by stabilisation at such lower levels.
In the US, Fitch has recently upgraded GDP forecasts. However, the economy is vulnerable to shocks, with weak labour and housing markets. There has been determined positive action to boost growth, notably through the extension of tax relief and a second round of quantitative easing (QE2), to which the financial markets have responded enthusiastically. However, there is a risk that QE2 could undermine confidence in the US dollar and raise inflation expectations. It also poses challenges for the rest of the world, including fast?growing developing and emerging economies. Together with exceptionally low interest rates, quantitative easing may result in yield?seeking capital and financial flows undermining economicand financial stability in stronger?growing emerging markets (EMs).
In the euro area, support measures have been substantial, although at times hampered by inconsistent communication from the region’s policymakers. Confidence in the sustainability of public finances and bank liquidity and asset quality will remain fragile and sovereign credit profiles will continue to be under pressure.
Source: Fitch Ratings
IEA Oil Market Report
January 19, 2011--Highlights
Marker crudes approached $100/bbl in early January, prompting concerns over the impact of high prices on the global economic recovery. December futures prices rose for the fourth month running, trading in a range of $88-$92/bbl. Robust economic growth in Asia,
especially China, coupled with stronger thanexpected oil demand in
the OECD has pushed crude above the $70-$80/bbl range seen for
much of 2010.
Global oil product demand for 2010 and 2011 is revised up by an average of 320 kb/d on higher?than?expected submissions, reflecting buoyant global economic growth and cold northern hemisphere weather. Global oil demand, assessed at 87.7 mb/d in 2010 (+2.7 mb/d year?on?year), rises by 1.4 mb/d to 89.1 mb/d in 2011.
Global oil supply fell by 0.3 mb/d to 88.1 mb/d in December, as non? OPEC output was reduced, on short?lived outages. An Alaskan pipeline leak and a fire at a Canadian oil sands upgrader also cut January output. Overall, 2010 and 2011 non?OPEC estimates are unchanged at 52.8 mb/d and 53.4 mb/d, respectively. OPEC NGLs contribute 5.3 mb/d in 2010 and 5.8 mb/d in 2011.
OPEC supply gained 250 kb/d to reach 29.58 mb/d in December, continuing a rising trend evident since the spring. In light of stronger demand estimates for 2H10, output in 3Q10 and 4Q10 has been lagging the underlying ‘call’, which is revised up to 29.9 mb/d for 2011. OPEC effective spare capacity has nudged below 5 mb/d for the first time in two years.
Source: IEA ( International Energy Agency)
‘Countries must act now to achieve a secure and cleaner energy future’ – IEA’s Executive Director
January 19, 2011--Nobuo Tanaka speaks on opening day of World Future Energy Summit
The International Energy Agency’s Executive Director, Mr Nobuo Tanaka, has said that renewable sources of energy “will need to play a central role” in reducing carbon emissions and diversifying energy supplies.
Although encouraged by the 70 countries which have policies in place to foster both the deployment and development of renewable sources of energy, such as wind, solar and biomass, he stressed the urgent need for others to follow.
“We cannot wait for a global climate deal,” said Mr Tanaka, speaking on the opening day of the World Future Energy Summit, taking place in Abu Dhabi. “A lack of ambition in the Copenhagen Accord pledges has increased our estimated cost of reaching the 2ºC goal by USD1 trillion and undoubtedly made it less likely that the goal will actually be achieved.”
Source: IEA ( International Energy Agency)
TABB Group Launches Eight-Part Commentary Series Examining the European Commission’s MiFID II Review
January 19, 2011--TABB Group announced today it is introducing an eight-part series of commentaries based on the public consultation on the review of the Markets in Financial Instruments Directive (MiFID) published December 8, 2010 by the European Commission.
According to TABB, the London- and New York-based strategic advisory and research firm, the review attempts to fix some of the gaps in the initial MiFID document and takes on the challenges of key market issues: market fragmentation; pre- and post-trade transparency; market-data aggregation; actionable indications of interest (IOIs); dark pools; high frequency trading; and, in conjunction with the European Markets Infrastructure Regulation (EMIR), OTC derivatives regulation.
The review, says TABB Group founder and CEO Larry Tabb, is one of the most significant regulatory initiatives undertaken by the European Commission. “The Consultation paper on the review, referred to as MiFID II, contains a vast number of proposals packed into its 83 pages. Like it or hate it, whether you’re an investor, broker, exchange or pensioner, implementation of these proposals will have an impact on the way you invest, trade, broke or match buyers with sellers in the European marketplace.”
The ramifications of these proposals, he adds, are so extensive that they will have an impact across asset classes and on market participants within the European Union as well as the global markets. “We believe that other regulators will look to copy, cherry pick or avoid similar rules. As a result, if you’re an investor, bank, broker or exchange, you will need to realign your offerings to either comply – or avoid – huge changes in how the financial markets will operate across Europe.”
Source: TABB Group
UN World Economic Situation and Prospects 2011
January 17, 2011--Highlights
After a year of fragile and uneven recovery, global economic growth started to decelerate on a broad front in mid-2010 and this slower growth is expected to continue into 2011 and 2012. The United Nations baseline forecast for the growth of world gross product (WGP) is 3.1 per cent for 2011 and 3.5 per cent for 2012, which is below the 3.6 per cent estimated for 2010 and the pre-crisis pace of global growth.
Weaknesses in major developed economies continue to drag the global recovery and pose risks for world economic stability in the coming years. The unprecedented scale of the policy measures taken by Governments during the early stage of the crisis has no doubt helped stabilize financial markets and jump-start a recovery. However, overcoming the structural problems that led to the crisis—and those that were created by it—is proving much more challenging and will be a lengthy process. This contrasts with the strong GDP growth in many developing countries and economies in transition, which has contributed more than half of the total expansion of the world economy since the third quarter of 2009.
view report-World Economic Situation and Prospects 2011
Source: UNCTAD
London Stock Exchange Group Signs Strategic Partnership With Mongolian Stock Exchange - Development And Technology Partnership Signed - Management And Market Expertise To Be Deployed As MSE Privatises
Development and technology partnership signed
Management and market expertise to be deployed as MSE privatises
January 18, 2011--London Stock Exchange Group (“LSEG”) and the Mongolian State Property Committee (“SPC”) today announce that they have signed an exclusive Strategic Partnership Agreement to restructure and develop the Mongolian Stock Exchange (“MSE”).
Speaking ahead of an event marking the twentieth anniversary of the MSE today, Xavier Rolet, Chief Executive of LSEG, said:
“We are thrilled to have been chosen to partner with the Mongolian Stock Exchange as it enters a new and exciting period in its development. Mongolia is predicted to become one of the world’s fastest growing economies and we are delighted to be providing our extensive expertise and assistance at this critical time. The London Stock Exchange Group is very much looking forward to working with business, government and the people of Mongolia in the growth and privatisation of its significant capital markets.”
Source: London Stock Exchange Group
‘Graying Revolution’ Reaches Low- and Middle-income Countries
Developing and middle-income countries must care for growing numbers of the elderly but often without enough money and experience.
In less developed regions, life expectancy increased by 26 years from 1950-55 to 2005-10.
Two World Bank reports address the economic impact of aging populations worldwide and offer direction on policy reforms.
January 18, 2011--Since the 1950s, smaller family sizes and longer life expectancies have steadily expanded the ranks of the elderly in many societies—a shift some commentators have dubbed the ‘Graying Revolution.’
Once considered a rich country phenomenon because of its origins in high national incomes and better personal health, the ‘graying’ trend has now reached developing and middle-income countries, according to new research by the World Bank. These countries are catching up, but largely without the economic means to cope with the social and economic challenges posed by such a profound demographic shift.
“Population aging is a global issue that is affecting, or will soon affect, virtually every country around the world, at a time when family support and other traditional safety nets have become less certain,” says Daniel Cotlear, co-author of a recent Bank report “Some Consequences of Global Aging,” and a lead economist in the World Bank’s Human Development Network.
view the report-Some Economic Consequences Of Global Aging
Source: World Bank
