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Macro Matters-Reverse repo- Not yet effective
September 19, 2012--Since late June, the PBoC has been using reverse repo as a major tool to manage the liquidity level. This is unprecedented as reverse repo in the past was only used during the Chinese New Year to manage the seasonal fluctuation in China.
In theory, reverse repo and RRR cuts are both tools to inject liquidity − despite some different features. But in reality, we see recent reverse repo failed to stabilize interbank market rates, suggesting that it’s not yet as effective as a RRR cut. In this aspect, the PBoC should further enhance its open market operation mechanisms, and the poor performance of A-shares may trigger more easing measures to boost confidence.
Reverse repo has its advantage of flexibility
The most obvious advantage is its flexibility. Most of the reverse repo used in China has maturity of seven or 14 days. On 13 September, reverse repo of 28-day maturity was introduced in the open market too. Compared with a RRR cut, the size and the timing of the reverse repo facilitates more flexible injections of liquidity, particularly when capital inflows are volatile.
But in reality, reverse repo is not yet as effective as a RRR cut in order to stabilize interbank market rates The two RRR cuts done in February and May led to a sustained decline in the interbank market rates. On the contrary, the reverse repo since late June has failed in achieving such objective. Particularly, the 7-day, 14-day, and 28-day SHIBOR rates continued to rise after the recent reverse repo of the same maturity.
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Source: Mirae Asset Financial Group
Chinese exchanges seek foreign funds
September 19, 2012--Chinese financial officials have started a global roadshow to persuade foreigners to invest in the country's stock market, a highly unusual move that reflects concerns that investors are turning their backs on China as its economy slows.
Officials from the Shanghai and Shenzhen stock exchanges are touring Europe, the US and Japan to meet institutional investors, according to three people briefed on the programme.
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Source: FT.com
12-232MR ASIC releases guidance on hedge fund disclosure
September 19, 2012--ASIC has finalised guidance on new disclosure benchmarks and principles for hedge funds to improve investor awareness of the risks associated with these products.
ASIC’s guide, Regulatory Guide 240 Hedge funds: Improving disclosure (RG 240), follows industry consultation earlier this year (refer: 12-30MR) and the Parliamentary Joint Committee on Corporations and Financial Services (PJC) report into the Trio collapse, and is part of ASIC's forward plan of work to improve the conduct of gatekeepers for managed investment schemes and strengthen the regulatory requirements applying to hedge funds.
In the final version of the regulatory guide, there are a number of changes made as a result of submissions received during the consultation, including:
defining ‘hedge funds’ as managed investment schemes which exhibit at least two out of five characteristics: complex investment strategy or structure; use of leverage; use of derivatives; use of short selling; charging a performance fee removal of an independent custody benchmark
simpler fee disclosure more in line with prevailing industry practice, and
view Regulatory Guide 240-Hedge funds: Improving disclosure
Source: ASIC
Deutsche Bank- Global Equity Index and ETF Research -Asia-Pac ETF+ Monthly Directory : August 2012 ETPs
September 18, 2012--This document includes all Asia-Pacific listed exchange-traded funds (ETFs) and exchange-traded commodities (ETCs).
The directory is organized by country and asset-class-related sub sections. Within each sub section it has been sorted by ETP issuer by alphabetical order and by AUM in descending order. A number of key information points per product have been included in order to enable the reader to get an overview in their own area of interest. Among the key numeric information we include avg. daily turnover, assets under management, and cash flows (all in $US). If you have any questions about any of the products listed, or any suggestions on how to improve the directory going forward, please do not hesitate to get in touch.
The following link will be available for 90 days. For more information, please click on the link for the full PDF.
If you have any trouble viewing the link, copy and paste the link in a browser.
http://pull.db-gmresearch.com/p/525-AAFC/4711273/Asia-Pac_ETF+_Monthly_Directory_18_Sep.pdf
Source: Deutsche Bank - Global Equity Index and ETF Research - Asia
Thomson Reuters Launches New Global Islamic Index To Monitor Sukuk Market
Transparent independent benchmark to price, measure market accountability and performance
September 18, 2012--Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today announced the launch of the Thomson Reuters Global Sukuk Index, an independent and transparent benchmark for investors seeking exposure to sukuk (Shariah-compliant) fixed-income investments, to be used to monitor the performance of the sukuk market.
The announcement of the launch of the index was made today at the Global Islamic Finance Forum (GIFF) 2012 in Kuala Lumpur, Malaysia.
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Source: Thomson Reuters
Singapore recession risk looms after August exports shrink
September 17, 2012--Singapore's non-oil domestic exports (NODX) in August fell more than expected, raising the prospect of the city-state entering into a recession as exports to the European Union plunged.
The trade-dependent Southeast Asian city-state said on Monday non-oil domestic exports (NODX) fell 10.6 percent from a year earlier, hurt by a 10.4 percent drop in electronics and a 28.7 percent plummet in shipments to the EU, its largest market. On a seasonally adjusted month-on-month basis, NODX shrank 9.1 percent after contracting 3.6 percent in July. Electronics exports contracted 14.8 percent in August from July after seasonal adjustments, while non-electronics NODX shrank 7.1 percent, trade agency International Enterprises Singapore said in a separate email.
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Source: Today's Zaman
China Macro-Is 7.5% still within reach?
September 17, 2012--Following our recent trip to Beijing, we revised our 2012 GDP growth forecast to 7.7% from 8.1%, and 2013 GDP growth to 8.3% from 8.5%.
Our growth forecasts used to be one of the lowest relative to others, but are now amongst the most optimistic. We think the GDP growth target of 7.5-8% this year is within reach, and see signs of stabilization in 3Q and 4Q followed by a mild bottoming out in 1Q13. Policy makers are cautious, which has made them more backward looking in this round of easing. While investors are waiting for them to act more decisively, policy makers are waiting for more bad data to justify their next move.
The low base effect will help enhance the YoY growth figure in 3Q
In previous reports, we pointed out that 3Q will benefit from a low base effect. Indeed, if we look at QoQ growth, 3Q08 recorded the worst growth since 2000 because of the global recession, and 3Q11 was the second worst due to tight policies. This low base effect will help enhance the YoY growth figure in 3Q. Similarly for 2013, the low base effect and accelerated policy easing after the new government takes power will facilitate a decent bottoming out.
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Source: Mirae Asset Financial Group
DB-Global Equity Index and ETF Research-Asia-Pac ETF Market Weekly Review : ETP AUM added $3bn amid bullish equity markets
September 17, 2012--Market Review
Last week, all the markets in the Asia-Pacific region were in positive territory except China. Compared to the week before, from north to south:
Japan (Nikkei 225) +3.24%
Korea (KOSPI2) +4.33%
China (CSI 300) -0.07%
Hong Kong (HSI) +4.18%
Singapore (FSSTI) +1.95%
Australia (S&P/ASX 200) +1.48%
New Product Launch Review
There was no new ETP listing in the last week.
Turnover Review
Asia-Pacific ETP turnover totaled $7.1bn last week, 8.2% up from the previous week’s total. South Korea continued to top the turnover ranking with $3bn, followed by China ($1.5bn), Hong Kong ($1.2bn), Japan ($0.7bn), and Taiwan ($0.2bn). Among Equity ETFs, the Emerging Country, Leveraged Strategy, Asia-Pacific Developed Country, and Short Strategy ETFs had total turnovers of $3.2bn, $1.5bn, $1bn, and $0.8bn respectively. Among the Commodity asset class, turnover in Gold ETPs totaled $232mn.
Assets under Management Review
Last week, Asia-Pacific ETP AUM increased by $3bn and ended at $118.1bn. On a year-to-date basis, Asia-Pacific ETP market is up by $26.6bn or 29.1% above last year’s closing.
The following link will be available for 90 days. For more information, please click on the link for the full PDF. If you have any trouble viewing the link, copy and paste the link in a browser.
http://pull.db-gmresearch.com/p/526-2C14/2694295/Asia-Pac_ETF_Market_Weekly_Review.pdf
Source: Deutsche Bank - Equity Research - Asia Pacific
Asia's Challenge: How to Be the Global Economic Growth Engine
While Asian economic growth is stronger than the rest of the world, the region must focus on how to remain the engine of global growth for the coming decades.
A key challenge for many Asian economies is how to address their ageing demographics, while not committing the same mistakes made by developed countries.
September 13, 2012--While the US economy remains weak and Europe struggles with its debt crisis, growth in Asia has been relatively robust, with fundamentals much stronger than when the region was hit by severe financial turmoil more than 15 years ago.
“The challenge for the region is not to survive but rather to remain leading global growth,” Min Zhu, Deputy Managing Director of the International Monetary Fund (IMF), Washington DC, told participants in a session on Asia’s economic outlook on the final day of the World Economic Forum’s Annual Meeting of the New Champions. “Asia has to be the global growth engine for decades.”
But Asian economies must address pressing challenges and pursue the reforms necessary for them to sustain strong growth, Zhu warned. They need, for example, to invest in infrastructure and further develop manufacturing capabilities so that they are more productive and efficient. The region has yet to develop the bond market that has long been recognized as essential to strengthen the financial markets. Said Zhu: “To be able to lead, Asia obviously has to do more. Not just China but the whole region has to move more to a domestic consumption model.”
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Source: WEF
CSOP Asset Management First RQFII ETF tops rankings from day one: Initial and second RQFII quotas totalling 7Bn RMB
September 13, 2012--FTSE Group ("FTSE"), the global index provider, is delighted to announce the CSOP FTSE China A50 RQFII ETF is now the largest RQFII ETF.
The initial RQFII quota of 5Bn Renminbi (RMB) was allocated for IPO on 28 August and was fully taken up on the same day, establishing the CSOP FTSE China A50 RQFII ETF as the largest RQFII ETF, with Assets under Management (AUM) of US$m771.1 on the first day of trading. A further RMB2Bn was granted by the State Administration of Foreign Exchange (SAFE) for release on 12 September, and creation of the units of the fund was resumed immediately.
This is the first Renminbi Qualified Foreign Institutional Investors (RQFII) ETF from CSOP Asset Management Limited (“CSOP”), the Hong Kong incorporated subsidiary of China Southern Asset Management, one of the top five asset managers in China.
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Source: FTSE
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