FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

July 16, 2010 • 9:12 pm 0

Brazil Investment Summit, Hong Kong Nov 30/Dec 1, 2010

FinanceAsia and AsianInvestor are pleased to announce that the inaugural Brazil Investment Summit will be the second event in our Spotlight on Emerging Markets series. The previous event, the Russia- Capital Raising and Investment Summit, was held in Hong Kong in April and attracted more than 300 delegates.

Throughout the economic crisis, Brazil was a case study for success; its economy remained stable while other nations foundered. As it leads Latin America out of recession, where should Asian investors look in Brazil for value?

This inaugural summit will gather Asian financial market participants exploring investment possibilities in Brazil, attendees include:

  • Asian Institutional investors looking to put money to work in Brazil
  • Deal facilitators, including investment bankers and business brokers
  • Asian/Chinese corporates looking at M&A opportunities
  • Alternative investment funds, including private equity and hedge funds
  • Brazilian corporations looking to raise capital in Asia
  • Commercial banks
  • Sovereign wealth funds
  • Insurance companies
  • Central banks
  • Investors in commodities and natural resources
  • Service providers, including consultants, law firms, and accounting firms
    		•
    For more information about the Brazil Investment Summit, please contact:
    Speaker/Delegate queries:
    Laura Brody, Conference Producer
    (+852) 3175 1917
    laura.brody@financeasia.com    		 Sponsorship queries:
    Kar Wee Ang, Conference Sponsorship Manager
    (+852) 2122 5233
    karwee.ang@financeasia.com
    www.financeasia.com/brazil

    Filed under: Asia, Banking, Brazil, Events, FiNETIK Events, Hong Kong, Latin America, News, Services, Wealth Management , , , , , , , , ,

    June 13, 2010 • 11:44 pm 0

    China: The collapse of the Asian growth model

    Over the last three decades there has been a dramatic shift in the stance of development policy with import-substitution being replaced by the export-led growth. A significant concern with this latter model is that it may risk turning global growth into a zero-sum game. This can happen if one country’s export growth comes by poaching of domestic demand elsewhere or by displacing exports of other countries.

    China on ‘Treadmill to Hell’ Amid Bubble, Chanos, Faber, Rogoff Say

    Rather than focusing on production for domestic markets, countries were advised to focus on production for export. This shift away from import-substitution toward the export-led growth was driven significantly by the economic troubles that emerged in the 1970s. At that time many developing countries, who had prospered under regimes of import-substitution, began to experience slower growth and accelerated inflation.
    This led to claims that the import-substitution model had exhausted itself, and that the easy possibilities for growth by substitution had been used up.second factor fostering adoption of the export-led model was the shift in intellectual outlook amongst economists in favor of market directed economic activity. Import-substitution requires government provided tariff and quota protections, and economists increasingly came to portray these measures as economic distortions that contribute to productive inefficiency and rent seeking.
    The shift in policy stance was also propelled by the empirical fact of Japan’s spectacular success in growing its economy in the twenty five years after World War II, and by the subsequent growth success of the four east Asian “tiger” economies – South Korea, Taiwan, Hong Kong, and Singapore. All of these economies relied on increased exports.

    The problem is that the export-led growth model suffers from a fallacy of composition whereby it assumes that all countries can grow by relying on demand growth in other countries. When the model is applied globally in a demand-constrained world, there is a danger of a beggar-thy-neighbor outcome in which all try to grow on the backs of demand expansion in other countries, and the result is global excess supply and deflation. In this connection, it is not exporting per se that is the problem, but rather making exports the focus of development. Countries will still need to export to pay for their imported capital and intermediate goods needs, but exporting should be organized so as to maximize its contribution to domestic development and not viewed as an end in itself.
    Export led growth model prompts countries to shift ever more output onto global markets, and in doing so aggravates the long-standing trend deterioration in developing country terms of trade. This pattern partakes of a vicious cycle since declining terms of trade and falling prices compel developing countries to export even more, thereby compounding the downward price pressure. This vicious cycle has long been visible for producers of primary commodities. However, as a result of the transfer of manufacturing capacity to developing countries who lack the consumer markets to buy their own output, the same process may now be present in all but highest-end manufacturing.
    In the 1950′s, Western opinion leaders found themselves both impressed and frightened by the extraordinary growth rates achieved by an Eastern economy, although it was still substantially poorer and smaller than those of the West.
    The speed with which it had transformed itself from a peasant society into an industrial powerhouse, and it’s perceived ability to achieve growth rates several times higher than the advanced nations, seemed to call into question the dominance not only of Western power but of Western ideology.
    The leaders of that nation did not share Western faith in free markets or unlimited civil liberties. They asserted with increasing self-confidence that their system was superior: societies that accepted strong, even authoritarian governments and are willing to limit individual liberties in the interest of the common good, take charge of their economies, and sacrifice short-run consumer interests for the sake of long-run growth that would eventually outperform the increasingly chaotic societies of the West.
    China’s economic growth has averaged 9pc a year over the past 10 years, compared with a paltry 1.9pc for the British economy. Last year, despite the credit crunch, China posted a remarkable growth rate of 10.7pc against a British contraction of 3.2pc.some are extrapolating present trends forward, and proclaiming that China will usurp the United States as the world’s largest economy.
    However, in the absence of expanding foreign demand for its exports, it has instead come to rely on a massive surge in domestic bank lending to fuel its growth rate. When measured relative to the size of its economy, the 27pc point jump in bank loans to GDP is unprecedented; at no point in history has a nation ever attempted such an incredible increase in state-directed bank lending.
    This appetite for cheap Chinese exports, which had at one point seemed insatiable, means that the West has come to owe China over 2 trillion $. China has become the world’s biggest creditor, but creditor nations running persistent trade surpluses has two historical examples. The US economy in the Twenties and the Japanese economy in the Eighties.
    In both of the previous examples a failure to allow exchange rates to adjust to the new reality created a large speculative pool of credit that, in turn, led to overvalued domestic assets and, eventually, an economic crisis.
    The banks in China are lending money at breakneck speed, but China’s state planners have favoured investment over consumption. High-speed rail networks, first-class infrastructure projects and the urban migration of 55 million people every year are common explanations for the ability of the nimble Chinese to overcome the frailties of this global economy. But the goal of economic policy, is to maximise households’ wellbeing and consumption. Unfortunately, and China’s share of consumption within its economy has fallen relentlessly, reaching 35pc of GDP in 2008.
    In China, investment spending has tripled since 2001 and the consequences are staggering. A country that represents just 7pc of global GDP is now responsible for 30pc of global aluminum consumption, 47pc of global steel consumption and 40pc of global copper consumption. The overriding problem is that the Chinese model leads to a deflationary spiral that is perpetual in nature. Domestic consumption never grows fast enough to absorb the supply, prompting the planners to commit to ever-higher levels of investment. Over-capacity inevitably plagues many sectors of the economy and Chinese profitability is already low.

    The story in China has been one of imperiled, marginally profitable enterprises relying on generous state-provided incentives for utilities, credit, etc. now having to deal with slowing global demand. The drying up of trade finance isn’t helping, either. The giant stimulus worldwide, and especially in China, helped the world economy for one year but that has now dried up.

    Source and full article at  Israel Financial Experts, 08.06. 2010,

    Filed under: Asia, China, Energy & Environment, Hong Kong, News, Risk Management , , , , , , , , , , , , , , , , , , ,

    May 19, 2010 • 2:47 am 0

    MetaBit Trading Technology and Services opens Hong Kong Office

    Tokyo/Hong Kong, 18 May 2010 – Specialist DMA and exchange connectivity solution provider MetaBit opens its Hong Kong office in May 2010 as part of its business expansion in Asia.
     
    The new Hong Kong office represents a further strategic milestone for MetaBit to accelerate the expansion of its rapidly growing Asian client base and support its strategic objective to service Asia’s financial markets with localized and low latency trading solutions.  The Hong Kong office will promote and support institutional DMA, algo and manual trading across fourteen Asian markets.
     
    MetaBit have also announced the appointment of Claus Kwon as managing director for the Asia Pacific ex-Japan business.
     
    “I am very pleased to have Claus Kwon taking responsibility to further expand MetaBit’s business outside Japan” says Daniel Burgin, CEO at MetaBit.  “With Mr Kwon’s appointment, MetaBit continues to proactively build on its success and reputation earned through the quality of its technology and MetaBit’s continuous efforts in helping its clients achieve greater trading efficiency. Headquartered in Tokyo, our company is firmly rooted in Asia.  The addition of the Hong Kong office strengthens MetaBit’s ability to deliver the best solution with service catered for local needs.”
     
    “I am excited to be joining MetaBit as their business expands in the region and as electronic trading continues to develop at an incredible rate in Asia,” says Mr Kwon. “MetaBit has a history of delivering innovative electronic trading solutions to both global and local clients in the Asia markets. Whilst MetaBit’s solutions are global by underlying technology, their unique infrastructure supports businesses that are serious about their Asia operations and want to stay competitive in this market.”
     
    Today, MetaBit covers all of Asia’s DMA and Algo markets through its flagship trading platform XiliX, its vendor neutral FIX hub MLH (Market Liquidity Hub), and Alpha, its ultra-low latency exchange connectivity solution.
    With the opening of a Hong Kong office, MetaBit – a pro-active promoter of the FIX Protocol – has formally joined the FPL.
     
    About MetaBit –
     
    MetaBit is a specialist low latency DMA trading solution provider in Asia reducing transaction processing times and  increasing trading opportunities by providing FIX enabled DMA and algorithmic trading access to market liquidity across fourteen Asia’s markets, including Japan.
     
    MetaBit’s flagship products are the XiliX™ intuitive buy side DMA trading platform and MLH, a vendor neutral Market Liquidity Hub. Other products are Alpha, ultra-low latency exchange connectivity to Japan’s exchanges and EXSiM – Japan exchange simulators.  All of MetaBit’s products are powered by the CameronFIX Engine.

    Source: Metabit, 18.05.2010

    Koji Ito
    +81-3-3664-4160
    sales@meta-bit.com

    Filed under: Asia, Australia, FIX Connectivity, Hong Kong, India, Japan, Korea, News, Singapore, Trading Technology , , , , , , , , , , , , , , ,

    March 11, 2010 • 7:06 am 2

    China’s QDII ETFs … taken with a pinch of salt

    Despite the fanfare from QDII ETF issuers and the Shanghai Stock Exchange, these products are unlikely to achieve the lofty aims set for them.

    If Shanghai Stock Exchange’s general manager, Zhang Yujun, is to be believed, China’s new generation of exchange-traded funds under the qualified domestic institutional investor (QDII) scheme will be ready for launch shortly.

    The Shanghai bourse is keen to put its hotly anticipated products onto the market as soon as possible. It has marked 2010 down as a year of innovation, with the number of domestic and overseas ETF launches potentially hitting 10 for this year.

    But it’s not the domestic ETFs that industry execs in Shanghai or around the region are buzzing about, but the overseas ETFs the SSE is championing. Market players are wondering what the developments will mean for the QDII market and what China’s fund flows in the region will look like after these products are made available.

    The names now lining up in the QDII ETF pipeline include: China Southern, with its planned launch of a S&P 500 tracker; Beijing-based China Asset Management, which is going with Hong Kong’s Hang Seng Index; Harvest Fund Management, the new proud owner of Deutsche Asset Management’s Asian investment platform, using the Dow Jones Industrial Average; Shanghai’s Fortune SGAM, which will soon see its foreign stake transferred to Société Générale’s alternatives arm, Lyxor, and whose ETF tracks the Topix Core 30; not to mention Huaan’s newly announced initiative to track the FTSE 100.

    In one fell swoop, the SSE is making available assets from around the world. Investors in China, at the click of a trade, will be able to access asset classes from US and UK equities to regional Asian exposures and Hong Kong and Japanese stocks.

    (The list above does not cover Guotai Fund Management, one of the earliest Chinese houses wanting to license an index for an overseas ETF, which recently realised it will not attract enough liquidity for a niche index such as the Nasdaq 100. It is now quietly calling its product an “index-tracking fund”, instead of an ETF. Nor does the list include Penghua Fund, whose high-profile announcement of its supposed deal to have contracted three MSCI Barra indices was never confirmed by MSCI.)

    Zhang says the Shanghai bourse wants to play its part in ‘standardising’ asset management. Index-based products are easily understood by investors, and through the standardisation process, the SSE believes it will bring transparency and even discourage moral hazards among asset managers.

    Better yet, since trading and management fees for ETF instruments are traditionally the lowest for products globally, the introduction of ETF competition into the Chinese market should help bring down the high fees usually seen in the active management sector. And the way Zhang sees it, passive and index-based investments will eventually outperform.

    Yet all these laudable ambitions should be taken with a pinch of salt. Far from having developed ETFs that come up to expectations, the SSE’s versions of these products and the underlying mechanism are hardly on a par with developed-market ETFs.

    In particular, sources say the SSE boss’s comments are meant for domestic consumption — the exchange has been publicly pressuring the China Securities Regulatory Commission (CSRC) into approving the ETF launches, which were planned to have happened as early as November last year.

    Why the regulatory hesitation? The CSRC was an early champion of introducing more liquid and transparent ETFs to China. But the SSE has not resolved the multiple technical barriers limiting the listing of an efficient overseas product in the country, as is revealed by an early blueprint for the Harvest Dow tracker jointly designed by Harvest and the SSE, and made public by the exchange. The SSE has made compromises in the design and the trading mechanisms of these supposed ETFs.

    Amid the fanfare created by the issuing fund houses and even the SSE itself, one key point appears to be overlooked. The unspoken truth is that since the bourse has failed to tackle the underlying issues, the planned ETFs could only trade on exchanges as closed-end funds and would largely fail to deliver the many benefits normally expected of genuine ETFs.

    These products will face challenges from day one, including: time differences in settlement cycles between the SSE and the exchange of the underlying index’s traded market; the lag in trading hours between China and underlying securities; the limitations of China’s lack of market-making mechanisms, and its reliance on its unique arbitrage mechanisms for levelling ETF traded prices and net asset values; and China’s foreign exchange restrictions, which currently only allow for monthly repatriation of capital. All of which the SSE has acknowledged in its white paper on ETFs that is available to the public.

    Bound by these limitations, these products will not be able, for example, to perform continuous creation of units like normal ETFs, unlike even the very same strategies traded in Hong Kong. The NAVs will be largely static during the trading hours in China, though the ETF prices will be subject to supply-demand swings. (Hong Kong’s platform is backed by market-makers, unlike Shanghai’s, which is highly sensitive to liquidity and the level of trading among arbitrageurs on underlying strategies.)

    The question then becomes: will China ever attract enough interest among arbitrageurs to trade on these faraway markets without real-time information? After all, when China trades, the US and the UK markets will be largely closed. Even for markets that sit in Asian time zones and close at hours overlapping China’s, there will be time differences on the settlement cycles. Arbitrageurs, therefore, will have to trade by assuming and incurring all risks themselves.

    For example, a Ping An Hong Kong subsidiary doesn’t trade on the books of Ping An’s mainland entity. Legal status still withstanding, they are very different entities. One unit south of the border going short, cannot be reconciled from an accounting perspective by a separate unit going long north of the border. So, from where and how will these arbitrageurs emerge?

    Because of the many compromises the Shanghai bourse has made to fit QDII ETFs into the existing — but highly unique — domestic ETF mechanism, the forthcoming international instruments can largely only be ETFs in name but not substance. An even better way to understand them is actually to see them as the equivalent of ‘listed open funds’ or ‘Lofs’ — products peculiar to China.

    Ultimately, QDII ETFs are no different from closed-end funds — so why the current fuss over them? Sources close to the Shanghai bourse’s advisory panel say there’s really no reason for it — they are just another group of products to add to China’s well stocked shelf.

    Nonetheless, they offer a slightly better alternative to the many internally managed and largely cost-return-inefficient QDII active funds now available in the market. And the idea of ETFs from a marketing perspective will no doubt catch on.

    But even the mere illusion of innovation in the QDII market may be a false dawn. Both active and passive QDII managers will continue to be plagued by domestic expectations of further renminbi appreciation and by the bad reputation of the first generation of QDII products still freshly and firmly fixed in the minds of Chinese investors.

    To wit, E-fund — the second biggest Chinese fund house, no less — kicked off the year with a fundraising attempt of just $86.6 million for its first QDII product.

    Source: AsianInvestors.net, 10.03.2010 by Liz Mak

    Filed under: Asia, China, Exchanges, Hong Kong, Japan, News , , , , , , , , ,

    February 2, 2010 • 11:30 am 0

    Santander starts marketing Latin American funds in Asia

    Banco Santander, a Spanish bank with a large presence in Europe and Latin America, has created a new role in Hong Kong to develop its asset-management business in Asia.

    With the necessary licences in place, Alexander de Laiglesia will concentrate on selling funds manufactured by Santander Asset Management in Latin America and Europe to Asian wholesale distributors and asset managers.

    De Laiglesia, a managing director, has been with the firm for 20 years, starting in Tokyo as a deputy branch manager. He returned to Japan from Madrid in 2002 with a secondment to Shinsei Bank. He moved to Hong Kong last year, and has been developing the asset-management role for the past several months. De Laiglesia has also worked in Hong Kong and the Middle East in the 1980s with Standard Chartered Bank, and he speaks Japanese.

    Santander pursues a universal banking model in its core markets of Spain, Portugal, the UK and the countries of Latin America, including Brazil, as well as the US. The bank has built investment teams in those countries.

    The group mainly provides local products to its local investors. It cross-sells some products to provide these local customers with international exposure and may also provide third-party funds. Worldwide, Santander Asset Management manages €120 billion ($168 billion) of assets.

    Asian markets are not core to this business. “We are not here to manage assets,” says de Laiglesia. “We are here to channel investments from Asia to our core markets.” That means competing in the niche of selling Latin America funds to Asian wholesalers and domestic fund houses. Santander will also seek to develop sales to institutional investors as well.

    “We are the largest regional asset manager in Latin America, with big investment teams in markets such as Brazil, Chile, Mexico and Argentina,” de Laiglesia says.

    Santander has already notched up business in Japan as adviser to a couple of Brazil equity funds launched by Daiwa Asset Management, and in Korea, where Industrial Bank of Korea sells a Latin America equities product. Japan, in particular, has wealth, its investors are comfortable with Brazilian securities and that’s an asset class where domestic asset managers do not have a local presence, de Laiglesia says.

    Santander is flexible with regard to the type of relationship it will pursue with Asian distributors; it may act as an investment adviser, a provider of white-label products or a provider of mutual funds from its Luxembourg range. The firm will also seek segregated mandates from or sales of its Luxembourg funds to Asian institutions.

    In addition to applying for regulatory licences, de Laiglesia is still researching which markets to focus on and which thematic products to highlight. Japan is the priority, but the region’s other large markets — Australia, Greater China, Singapore and South Korea — are also important.

    Source: AsianInvestor.net, 02.02.2010

    Filed under: Asia, Australia, Banking, Brazil, China, Colombia, Hong Kong, Japan, Korea, Latin America, Malaysia, Mexico, News, Peru, Services, Singapore, Wealth Management , , , , , , , , , , , , ,

    January 22, 2010 • 7:28 am 1

    HKEx And Shanghai Stock Exchange Agree On New Cooperation Initiatives

    Hong Kong Exchanges and Clearing Limited (HKEx) and Shanghai Stock Exchange (SSE) have met today to discuss the Closer Cooperation Agreement they signed in January of last year.  The agreement commits the two organisations to work together more closely towards the common goals of mutual prosperity and contributing to the greater development of China’s economy.

    “Through cooperation and exchanges with our friends at SSE, we can learn more about the behaviour and needs of Mainland investors and how we can further support the QDII (Qualified Domestic Institutional Investor) scheme,” said HKEx Chairman Ronald Arculli.  “We can also learn from each other about the market dynamics created by the growth and development of SSE and HKEx, and the latest market trends in the Mainland and Hong Kong.

    “According to an old Chinese saying, a single tree cannot make a forest,” Mr Arculli added.  “Jointly with our Mainland counterparts, we can accelerate China’s growth and financial development in a prudent manner.”

    As a result of recent discussions, HKEx’s Listing Division and SSE’s Company Management Department will establish a mechanism for regular exchanges, in order to more effectively regulate companies and securities listed in both Shanghai and Hong Kong and better protect shareholder interests.  Views will be exchanged every two months, with the focus on operational issues, including information disclosure by listed issuers.  The two organisations will take turns organising the meetings.

    HKEx and SSE also agreed to strengthen exchanges and cooperation on information technology that supports business development.  “The Shanghai and Hong Kong exchanges have their own technological advantages.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop our respective technology support infrastructure to accommodate further and broader cooperation between the two markets,” HKEx Chief Executive Charles Li said.

    In addition, HKEx and SSE have agreed to seek further cooperation in product development and to hold a forum on listed structure products later this year.

    Since signing the cooperation agreement in January last year, HKEx and SSE have also started a market data collaboration programme, shared information on the development of Exchange Traded Funds and other products, and arranged for HKEx executives to train at SSE and vice versa.

    HKEx believes its cooperation with SSE strengthens the two organisations’ positions in today’s rapidly changing financial market environment.

    The management of the SSE and HKEx met in Hong Kong on 21 January 2010.  The following joint statement was issued after the meeting.

    1. The management of the SSE and HKEx exchanged views and discussed their experiences regarding information sharing and cooperation in regulating companies and securities listed in both markets, market infrastructure development, product development, information service development, personnel exchanges, and so forth.

    2. Both sides agreed to strengthen information sharing and cooperation in regulating companies and securities listed in both markets.  With an increase in A+H share listings, as well as the development of Exchange Traded Funds (ETFs) on A shares and ETFs on Hong Kong stocks, closer ties between the Shanghai and Hong Kong markets have been fostered.  The SSE’s Company Management Department and HKEx’s Listing Division will set up a mechanism for regular exchanges, in order to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests.  An exchange of views will be held every two months, focusing on the operational issues in the regulation of securities listed in both markets and related information disclosure issues.  The two organisations will take turns organising the meeting.  The same mechanism may be extended to other departments, if proved effective.

    3. Both sides agreed to strengthen exchanges and cooperation regarding technology that supports business development.  Information technology development, particularly the development of trading and information dissemination systems, is crucial to the stock exchange business.  Exchanges and cooperation on technology issues between the two organisations can deepen mutual understanding of the merits of each market’s infrastructure and help further the markets’ business development.  The Shanghai and Hong Kong exchanges have their own technological advantages.  The SSE’s new generation trading system has cutting edge technology and advanced capacity, while HKEx’s systems support trading, clearing and information dissemination for a variety of products.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop the respective technology support infrastructure to accommodate further and broader cooperation between the two markets.

    4. Both sides agreed to strengthen cooperation in respect of the development of products.  ETFs have become the starting point of the two organisations’ cooperation on product development. At present, several Mainland fund management companies are actively making preparations for the issue of ETFs related to Hong Kong stocks.  It is hoped future cooperation on ETFs will be extended on a gradual basis to the development of ETFs on bonds and gold, as well as cross listings.  Besides ETFs, the two organisations may seek further cooperation in products such as securitised assets, warrants, Callable Bull/Bear Contracts and options.  The two organisations jointly participated in a forum on ETF market development last year and agreed to hold a forum in similar format on listed structured products later this year.

    5. Both organisations agreed to deepen cooperation in the development of information products.  For example, cooperation in compiling an index comprising securities listed in Shanghai and Hong Kong may be explored to increase the Shanghai and Hong Kong stock exchanges’ influence in the global market.

    6. Both organisations support continued exchanges and training involving their personnel.  The management of the two organisations agreed to meet twice a year to review the progress of exchanges and training, and work out plans for the next year’s exchanges and training.  The two organisations will take turns organising the meeting.  Training may take the form of meetings during which each side will be briefed on the other side’s market development, or short educational visits to each other’s offices.  Last year, the two organisations arranged for their executives to train in each other’s related departments, and agreed to continue the activities.

    Source: MondoVision, 21.01.2010

    Filed under: China, Data Management, Exchanges, Hong Kong, Market Data, News, Reference Data, Risk Management , , , , , , , , , , , , , , , , ,

    January 18, 2010 • 11:43 pm 0

    Goldman Sachs ‘to monitor potential Asian real estate bubbles’

    Fred Hu, Goldman Sachs’s chairman of Greater China, has said that the financial institution’s operations in Asia are keeping a close eye on the development of potential real estate bubbles.

    Among the countries causing the most concern to Goldman Sachs are Hong Kong, Singapore and China, Mr Hu said.

    China recorded its highest growth in property prices for 18 months in December, Singapore saw a record number of residential real estate sales in 2009 and Hong Kong house prices currently stand at their highest point in more than a decade, reports Bloomberg.

    Mr Hu gave a particular warning about growth in Hong Kong and Singapore.  “I would be very skeptical about this kind of pace,” he said.

    Last week, it was reported that Goldman Sachs is close to selling off a luxury real estate development in Shanghai. It is to sell the Shanghai Garden Plaza to Chinese property developer Shanghai Forte Land for $200 million, people close to the deal told Reuters.

    Source: Bobsguide, 18.10.2010

    Filed under: Asia, China, Hong Kong, News, Risk Management, Singapore , , , , , , , ,

    December 11, 2009 • 8:28 am 0

    ETF: BlackRock ETF Landscape Industry Review November 2009

    BlackRock has just published the November 2009 edition of its monthly ETF Landscape Industry Review. This report is a review of the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry through the end of October 2009.

    At the end of October 2009 the global ETF industry had 1,859 ETFs with 3,327 listings and assets of US$941.85, from 97 providers on 40 exchanges around the world.

    Download report hereBlack Rock ETF Lamdscape November 2009

    Source: MondoVisione, 11.12.2009

    Filed under: Argentina, Asia, Brazil, China, Hong Kong, India, Indonesia, Japan, Korea, Latin America, Library, Malaysia, Mexico, News, Risk Management, Singapore, Thailand , , , , , , , , , , , , ,

    • 7:54 am 0

    Dark Pools: HKEx chairman slams dark pools

    Ronald Arculli joins the ranks of those criticising alternative trading platforms for creating an unfair playing field.

    Much has been said and written in recent months about dark pools, and on Wednesday the chairman of Hong Kong Exchanges and Clearing threw his hat into the ring. Not surprisingly, Ronald Arculli is not in favour of such trading platforms, which only require prices to be published after a transaction is complete.

    He set out his stall in a speech at the Foreign Correspondents’ Club in Hong Kong titled ‘Roles and Challenges of Stock Exchanges’. Highlighting the benefits of exchanges (good risk management, transparency, liquidity fairness, a reliable infrastructure and central counterparty services, among other things), he said they demonstrated their worth during the crisis: “Almost all exchanges continued to function normally and remained open during the turmoil.”

    Arculli also remarked that governments worldwide have recognised the “unique value” of exchanges, with a number of moves afoot to standardise over-the-counter contracts and move them onto exchanges. This is in stark contrast to well publicised concerns of regulators, such as the US Securities and Exchange Commission, as to whether dark pools create unfair advantages for some in the market. Arculli believes they do and clearly outlined his concerns.

    Firstly, these platforms lack transparency, as they show buy and sell orders and deals that are not transparent or available to the general investing public, he argued, effectively creating a two-tiered market. They are typically run by broker-dealers and large market-makers looking to save on transaction costs and fees, and do not alert the broader market of impending deals which could affect a stock’s equilibrium.

    Powerful technology can be used to conduct high-frequency algorithmic trading in dark pools through both on- and off-exchange platforms to profit or arbitrage on small price differences, said Arculli. This has resulted in dark pools accounting for 12% of market trades in the US now, up from 1.5% just five years ago, while in Europe they account for some 4% of equity trades. In Asia, these venues make up a much smaller percentage of the average daily turnover, he added, but in a globalised marketplace, they still raise significant concerns.

    Besides transparency, another issue is that the proliferation of alternative platforms means liquidity is increasingly fragmented, diverting volumes away from publicly traded exchanges, he said. Smaller companies may suffer as high-frequency traders tend to prefer larger, more liquid shares. Such fragmentation not only affects effective price discovery, said Arculli, but also increases price volatility and adds to surveillance difficulties.

    Moreover, the lack of regulation and transparency of dark pools could result in notable systemic risk, he said, citing the problems surrounding Lehman Brothers and AIG last year. “As dark pools typically lack a central counterparty, the default of a large participant could have severe consequences on market stability,” he said.

    In addition, these platforms raise concerns over company ownership. “Arguably when shares are held only for fractions of a second, it is no longer about participating in the ownership of a company or ensuring it is well run,” he said. “The opaqueness of trading, and its fragmentation have negative implications for effective corporate governance.”

    Arculli suggests the rise of such platforms set up by investment banks might indicate a trend towards the re-mutualisation of stock trading. Originally stock exchanges tended to be set up as associations by their trading members, he said, but have since de-mutualised and become commercial, often listed, corporate entities to better serve their stakeholders.

    “Now as the bigger trading participants are getting together again to create their own networks, is the trend reversing?” said Arculli. “Complicating matters even further, some exchanges have decided to join the fray and team up with large institutions to set up their own dark pools.” Singapore Exchange’s recent tie-up with Chi-X is one such example. Other trading platform providers, such as Liquidnet, are also working on expanding into Asia.

    Arculli went on to say that regulators in the EU and the US have been reviewing dark pools and considering stricter measures to ensure a fair and stable trading environment. Investors — especially institutional ones — are seeking better, faster and cheaper services for more computerised methods of trading. Hence, he added, exchanges must continue to offer better execution and more efficient pre- and post-trade services to stay competitive, while protecting investors.

    Despite his worries, Arculli, said, competition is welcome. China, for example, has the capacity and the need for more than one successful financial centre. But he added a caveat.

    “We welcome challenges that strengthen our markets and make them more effective and efficient,” said Arculli. “But we are concerned by those that increase systemic risk or disadvantage a certain segment of investors to the benefit of others.”

    Source: AsianInvestor.net, 11.12.2009

    Filed under: China, Exchanges, Hong Kong, News, Risk Management, Singapore, Trading Technology , , , , , , , , , , , , , , , , , ,

    December 7, 2009 • 2:27 am 1

    China: Thanks but no thanks: E Fund declines help on QDII debut

    The Chinese fund house’s prospectus for its Asian equities product, slated for launch next week, indicates it will manage the fund without MOU partner State Street.

    Guangzhou-based E Fund Management, the second-largest Chinese fund house in asset terms, is poised to launch its first QDII fund, by itself, rather than with a foreign sub-advisor.

    The firm is set to launch an Asia-Pacific equities fund under China’s qualified domestic institutional investor programme on Monday, December 7. Despite having signed a memorandum of understanding last year with State Street Global Advisors, E Fund will manage the portfolio itself.

    The firm’s investment management team is in Guangzhou but it also has an office in Hong Kong run by Zhang Xiaogang that is expected to play a role. Calls and e-mails to E Fund were not returned by press time.

    Executives at investment firms in Hong Kong say Beijing-based Harvest Fund Management’s acquisition of the Asian equities platform of DWS, the retail arm of Deutsche Asset Management, was the watershed event. This proved the determination of China’s fund houses to manage their own overseas investment products.

    ICBC Credit Suisse Fund Management has also decided to run its own QDII funds. E Fund is the first firm independent of any foreign partnership to do so.

    Foreign executives downplay the notion that these moves are simply about fees, aware of cases such as China Southern Fund Management’s decision to discontinue a sub-advisory agreement with BNY Mellon Asset Management, which was partly based on fees. Rather they reflect the ambition among Chinese firms to build international expertise in house.

    “These fund-management companies have been supported by foreign advisors for 10 years, in some cases, and they’ve learned a lot,” says one banking executive in Hong Kong.

    A spokesperson at SSgA says the firm does not have a relationship with E Fund. The firm declined to discuss the terms in the MOU.

    Peter Alexander, principal at Shanghai consultancy Z-Ben Advisors, says E Fund’s move should not be interpreted as part of a wholesale trend. Although the biggest Chinese firms are keen to control their own products, the majority are probably not ready to follow suit.

    Alexander says other QDII funds slated for launch early next year still look as though they will work with appointed foreign partners, including China Universal Fund Management (with Capital International) and Bosera Fund Management (with Singapore’s Fullerton).

    But global asset managers that have written confident reports to headquarters regarding the QDII sub-advisory opportunity set may need to review the space, particularly if E Fund’s QDII product is rated a success, he warns.

    The State Administration for Foreign Exchange has allocated $1 billion to the E Fund Enhanced Asia Pacific QDII Fund. Safe has also allocated QDII quota to Bosera, China Universal and China Merchants Fund Management, a joint venture involving ING Investment Management.

    E Fund’s primary distributor in China is ICBC, which suggests little difficulty in attracting assets. Its QDII product will also be cheaper than its peers, charging 1.5% versus the 1.85% that has been charged for other QDII funds. Although called an Asian equities fund, it actually has a 60% ceiling on stocks, with a minimum 40% in cash or bonds. The Hong Kong market is expected to play a big role in the portfolio.

    The QDII launch comes on the heels of E Fund’s successful launch of an exchange-traded fund, which raked in $2.8 billion last week. The firm was ranked 54th in AsianInvestor magazine’s rankings of fund houses by assets sourced from Asia-Pacific clients (based on September figures; see our December edition); its recent exploits suggest it will have climbed a few more rungs.

    See also

    E-Fund (GF Securities) ETF raises $2.8 billion, as Bosera gets ETF approved

    Source: AsianInvestor.net, 04.12.2009

    Filed under: Asia, Banking, China, Hong Kong, News, Risk Management, Services, Wealth Management , , , , , , , , , , ,

    November 28, 2009 • 12:40 am 0

    HKEx Derivatives Market Transaction Survey Finds Strong Local And Overseas Investor Support For The Market

    Hong Kong Exchanges and Clearing Limited’s (HKEx) Derivatives Market Transaction Survey 2008/09 (covering the period from July 2008 to June 2009) found that Exchange Participants’ (EPs) principal trading supported half of the trading in HKEx’s derivatives (futures and options) market and the other half had strong support from both local investors (primarily individuals) and overseas investors (primarily institutions).

    In 2008/09, the turnover for the futures and options under study was 103 million contracts (referred to as the total market turnover in this survey), compared to 106 million contracts in 2007/08.  Stock options remained the dominant product by turnover (as measured by contract volume), albeit with a drop in their contribution to total market turnover (from 56 per cent in 2007/08 to 49 per cent in 2008/09).

    Some key findings of the 2008/09 survey

     

    • EP principal trading (comprising market maker trading and EP proprietary trading) contributed 53 per cent of total market turnover (down from 61 per cent in 2007/08), 82 per cent of stock options turnover (vs 89 per cent in 2007/08) and 24 per cent of turnover in other futures and options (vs 26 per cent in 2007/08)
    • Local investors contributed 25 per cent of total market turnover (up from 21 per cent in 2007/08), and overseas investors contributed 22 per cent (up from 19 per cent in 2007/08) .
    • Retail investors contributed 23 per cent of total market turnover (up from 19 per cent in 2007/08), mostly from local retail investors (20 per cent).  Institutional investors contributed 24 per cent in 2008/09 (up from 20 per cent in 2007/08), mostly from overseas institutional investors (19 per cent) (see Figures 2 and 3).
    • Major products-  For Hang Seng Index ( HSI ) futures, overseas institutional and local retail investors were the major contributors (34 per cent and 32 per cent respectively of the product’s turnover).
      -  For Mini-HSI futures, the dominant contributors were local retail investors (58 per cent).
      -  For H-shares Index (HHI) futures, overseas investors were the major contributors (54 per cent: 49 per cent from institutions, 5 per cent from individuals).
      -  For HHI options, EP principal trading and overseas institutional investors were the major contributors (34 per cent and 28 per cent respectively).
      -  For stock options and HSI options, EP principal trading was dominant (82 per cent and 51 per cent respectively).
    • UK investors contributed the most to overseas investor trading in 2008/09 (29 per cent, compared to 32 per cent in 2007/08).  US investors came second (19 per cent in 2008/09, down from 26 per cent in 2007/08).  Australian investors ranked third (14 per cent in 2008/09, up from 11 per cent in 2007/08).  Mainland China, European (excluding the UK) and Singaporean investors were also significant contributors (10-11 per cent in 2008/09).
    • Retail online trading contributed 43 per cent of total retail investor trading (39 per cent in 2007/08) and 10 per cent to total market turnover (7 per cent in 2007/08).

    The Derivatives Market Transaction Survey has been conducted annually along similar lines since 1994.  The surveys for the latest four years covered HSI futures, HSI options, Mini-HSI futures, HHI futures, HHI options and stock options.  These products together accounted for 98.9 per cent of the total turnover of the HKEx derivatives market during the study period of the 2008/09 survey.  The survey had an overall response rate of 90 per cent and the respondents contributed 99 per cent of the total turnover during the study period.

    The full report on the HKEx Derivatives Market Transaction Survey 2008/09 is available on the HKEx website at: http://www.hkex.com.hk/research/dmtrsur/DMTS09.pdf.

    Source:MondoVisione, 28.11.2009

    Filed under: Asia, Exchanges, Hong Kong, News , , , , , , , , , , , , ,

    November 19, 2009 • 9:56 am 0

    Asia:NPLs and SMEs to provide distressed opportunities

    Distressed specialists define their terminology and give their take on the market at the second AsianInvestor/FinanceAsia Distressed and Troubled Asset Investing Summit, held in Tokyo.

    “What exactly is distress?” reflected AsianInvestor editor Jame DiBiasio at a panel he moderated on Monday at the Tokyo Distressed and Troubled Asset Investing Summit. “Is it a good asset from a distressed seller, or an asset itself that is in bad shape?”

    The panel of distressed experts plumped for the former — they want good assets that are being flogged off by an imperilled owner.

    “We prefer something that requires re-engineering, assuming that there is some enterprise value left,” said Steve Moyer, a portfolio manager at Pimco. “Banks couldn’t afford to take the losses on clearing portfolios of loans until they rebuild capital. That accomplished, they can begin the process.”

    Edwin Wong, a former distressed-investing managing director at Lehman Brothers, and regarded by some in those halcyon days as the finest exponent of distressed investing practice in the hemisphere, recently started his own fund management company, SSG Capital Management.

    “Unlike the Asian crisis of the late 1990s, in which all sizes of companies went bankrupt, we’re not seeing it this time around so much with the big companies,” he said. “However, private companies and smaller corporates have built up a lot of leverage, and that’s where we see the main opportunity in China, India and Indonesia.”

    In answer to the old conundrum ‘what is the most famous thing that Belgium has ever produced?’, perhaps Michel Lowy will be a contender, if his new firm SC Lowy succeeds.

    Lowy says distressed investors have been sharpening their pencils for the past 18 months, expecting lots of deals, only to be disappointed by the available opportunities. He hopes that will change as commercial banks finally bite the bullet and sell off non-performing portfolios.

    He also perceives differences geographically in the structure of opportunities on offer. “In North Asia and other sophisticated Asian economies, there is a weighting towards public companies,” Lowy says. “Elsewhere in Asia, there are more family-owned companies. The latter are often in places where the creditor has more limited rights. It’s going to be harder to gain control of a company there by converting debt to equity.”

    Source: AsianInvestor.net, 18.11.2009

    Filed under: Asia, Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, News, Risk Management, Services, Singapore, Thailand, Vietnam , , , , , ,

    November 18, 2009 • 7:44 am 0

    Hong Kong: First A-share Industry Sector ETFs to Debut on HKEx

    Hong Kong’s Exchange Traded Fund (ETF) market further expands with a series of five Mainland A-share industry sector ETFs setting to debut on Wednesday, 18 November on the Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx).

    The new Mainland A-share index ETFs are:

    Stock Code Name of ETF Benchmark index
    2846 iShares CSI 300 A-Share Index ETF CSI 300 Index
    3050 iShares CSI A-Share Energy Index ETF CSI 300 Energy Index
    3039 iShares CSI A-Share Materials Index ETF CSI 300 Materials Index
    2829 iShares CSI A-Share Financials Index ETF CSI 300 Financials Index
    3006 iShares CSI A-Share Infrastructure Index ETF CSI 300 Infrastructure Index

    With the listing of these five new ETFs, there will be a total of eight ETFs on Mainland A-share indices listed on the Exchange, and HKEx will be the first exchange with Mainland A-share industry sector ETFs.

    All ETFs listed on the Exchange, including these five new iShares listings, are designated for market making and for short selling with tick rule exemption.  The market makers for these five ETFs are Citigroup Global Markets Asia Limited, Credit Suisse Securities (Hong Kong) Limited and UBS Securities Hong Kong Limited.

    On 18 November, the Exchange will have listed 42 ETFs.  There are eight ETFs on Mainland A-share indices, seven on Hong Kong equity indices, 22 on other regional and international equity indices, two on commodities and three on bonds and money markets.

    The three other Mainland A-share index ETFs are:

    Stock Code Name of ETF Benchmark index
    2823 iShares FTSE/Xinhua A50 China Index ETF FTSE/Xinhua China A50 Index
    2827 W.I.S.E. – CSI 300 China Tracker CSI 300 Index
    3024 W.I.S.E. – SSE50 China Tracker SSE50 Index

    Investors should note that all A-share ETFs use derivative instruments to synthetically replicate the performance of the underlying benchmarks.  These ETFs are subject to counterparty risk of the derivative instruments’ issuers and may suffer losses if such issuers default or fail to honour their contractual commitments. For a better understanding of the risks involved, investors are advised to read the ETFs’ prospectuses in full prior to making any investment decisions.  Information on the various risks of ETFs and their structures is available on the HKEx website.

    Source: MondoVisione 17.11.2009

    Filed under: Asia, China, Exchanges, Hong Kong, News , , , , , , , , , , ,

    November 17, 2009 • 11:17 am 0

    Asian dark pool BlocSec removes minimum order size requirement

    BlocSec, the first Asian dark pool to cater to the buy-side and the sell-side, owned by CLSA Asia-Pacific Markets (‘CLSA’), will remove the current minimum US$250k or 20% of the 30-day Average Daily Volume (‘ADV’) order size requirement 1.

    Removal of such minimum order size requirement will enable smaller size orders to flow into the system, increasing both liquidity and matching. BlocSec clients can continue to submit and trade large size block orders in BlocSec simply by specifying the minimum quantity fill for their executions.

    Christian Chan, Director of Electronic Execution Sales, CLSA said: “We continue to improve and respond to client needs and have removed our minimum order size to source and deepen our liquidity pool, so as to provide greater flexibility across the platform and markets in which we operate.”

    BlocSec has been designed to ensure complete anonymity for buyers and sellers. Order entry and matching occurs without the risk of giving away client name, side, position or price of an order which means zero information leakage.

    “In addition, we have added the ability for our Client Relationship Managers to accept manual orders and route any balances to the CLSA trading desk if instructed to do so. Again, ensuring more flexibility for clients and a smooth and seamless trade flow process,” Chan added.

    Since its launch in May 2008, BlocSec has become the preeminent Asian liquidity aggregator and electronic crossing network for Hong Kong, Japan, Singapore and Australian equities with an average daily liquidity flow over US$77m and an average cross size of US$1.04m.

    BlocSec provides traders the ability to place orders with complete anonymity and zero information leakage into the market. BlocSec continues to gather momentum and build liquidity in over 800 distinct names with 50% of all clients entering orders securing a match.

    As a CLSA group company, BlocSec has a substantial community of institutional investors with the ability to provide a deep pool of liquidity. Liquidity is also maximized as BlocSec is open to both buy and sell side clients.

    Source: FINEXTRA 17.11.2009

    Filed under: Asia, Australia, Exchanges, Hong Kong, Japan, News, Singapore, Trading Technology , , , , , , , , , , , , ,

    November 12, 2009 • 10:37 am 2

    Global warming threat for Asia financial hubs – Yangtze ‘facing climate threat’

    The report, produced by WWF, the environmental pressure group, puts the two financial hubs in the top 10 cities threatened by climate change in Asia, the region widely believed to be most vulnerable to rising global temperatures.

    It warns that Hong Kong is in danger from higher sea levels, which are likely to rise 40cm-60cm in China’s Pearl River delta by 2050, increasing the area of coastline that is vulnerable to flooding by up to six times.

    Costs imposed by typhoons are also likely to rise dramatically, the report says, noting that 14 of the 21 extreme storm surges between 1950 and 2004 occurred after 1986.

    The number of nights when Hong Kong temperatures rise above 28°C has risen almost fourfold since the 1960s, while the number of winter nights when the temperature falls below 12°C is predicted to fall from an average of 21 to zero within 50 years.

    For Singapore, the report says, the sea level is forecast to rise by 60cm by the end of the century, eroding coastal protection and decreasing the shoreline of the city state, making it more vulnerable to storm surges and flooding.

    The report says climate change could also increase the prevalence of dengue fever. The number of cases has been rising in periodic outbreaks and the last significant peak, in 2007, saw the third highest number of outbreaks ever.

    Dhaka, the Bangladeshi capital, heads the list of the most vulnerable cities, mainly because of its position in a big river delta already subject to periodic flooding, its low average height above sea level and its poverty, which makes protection and adaptation more difficult.

    Other cities at risk include Jakarta and Manila, which rank equal second, Calcutta and Phnom Penh, which are equal third, Ho Chi Minh and Shanghai, equal fourth, Bangkok, fifth, and Kuala Lumpur, which ties with Hong Kong and Singapore for sixth place.

    The report calls on developed countries to agree to shoulder the bulk of the costs required to reduce greenhouse gas emissions, to finance an adaptation fund to pay for changes required in developing countries, and to provide recompense for losses and damage caused by climate-related catastrophes.

    However, the report also says that vulnerable cities and national governments should take action themselves, including better management of coastal habitats and ecosystems.

    The report is timed to influence the 21 heads of government attending this week’s Asia Pacific Economic Co-operation summit in Singapore, before the global climate change summit in Copenhagen next month.

    Source: FT, 11.11 2009 by Kevin Brown in Singapore

    The Yangtze river basin is being increasingly affected by extreme weather and its ecosystems are under threat, environmentalists say.

    In a new report, WWF-China says the temperature in the basin area of China’s longest river has risen steadily over the past two decades.

    This has led to an increase in flooding, heat waves and drought.

    Further temperature rises will have a disastrous effect on biodiversity in and along the river, the report says.

    The WWF – formerly known as the World Wildlife Fund – predicts that in the next 50 years temperatures will go up by between 1.5C and 2C.

    The group’s report is the largest assessment yet of the impact of global warming on the Yangtze River Basin, where about 400 million people live.

    Data was collected from 147 monitoring stations. The report’s lead researcher, Xu Ming, said the forthcoming Copenhagen negotiations on climate change would have an obvious and direct influence on the Yangtze.

    “Controlling the future emissions of greenhouse gases will benefit the Yangtze river basin, at the very least from the perspective of drought and water resources,” he said.

    The report says the predicted weather events and temperature rises will lead to declines in crop production, and rising sea levels will make coastal cities such as Shanghai vulnerable.

    Some of the problems could be averted by strengthening river reinforcements, and switching to hardier crops, its authors suggest.

    Source: BBC, 10.11.2009

    Filed under: Asia, China, Energy & Environment, Hong Kong, India, Indonesia, Japan, Malaysia, News, Risk Management, Singapore, Thailand, Vietnam , , , , , , , , , , , , , , , , , , , , , , , , , ,