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

Deutsche Börse exclusive licensor of BSE (Bombay Stock Exchange) market data to international clients

Deutsche Börse will be exclusive licensor of BSE market data to international clients New partnership gives market participants easier access to market data and information products of both exchange groups Deutsche Börse Market Data + Services and BSE today announced a partnership under which Deutsche Börse will act as the exclusive licensor of BSE market data and information products to all international clients. The new cooperation will benefit existing and potential customers by giving them access to both exchanges’ market data products under a single license agreement. A signing ceremony was held in Frankfurt on 2 October 2013.

The partnership also allows Deutsche Börse to deepen its client service capabilities in important Asian markets such as India, as well as strengthen the strategic alliance between the two exchanges.

“By partnering with BSE we give customers access to the full suite of real-time, delayed and end-of-day data products offered by both exchanges under a single license agreement. This approach meets clients’ market data needs while reducing their administrative requirements and increasing overall efficiency,” said Georg Gross, Head of Front Office Data + Services, Deutsche Börse.

“BSE is once again happy to partner with Deutsche Börse as this will enhance BSE’s visibility with international clients in the area of market data and information products. BSE will also get access to the innovative product development expertise of Deutsche Börse, which shall help BSE to provide an improved customer experience,” said Balasubramaniam Venkataramani, Chief Business Officer, BSE Ltd.

Under the new cooperation, Deutsche Börse will be responsible for sales and marketing of all BSE market data products to customers outside of India, while BSE continues to serve its domestic clients. Deutsche Börse will also share joint responsibility for product development and innovation, which includes extending its existing and the creation of new market data solutions and infrastructure to support BSE’s product offerings.

Products covered under the cooperation agreement include Real-time, Delayed and End-of-day data for BSE’s Equity and Derivatives markets, corporate data such as Results, Announcements, Shareholding Patterns and Corporate Actions as well as Real-time and Delayed Indices.

This market data agreement also further strengthens the cooperation between Deutsche Börse and BSE that began earlier this year. In March 2013, the two exchanges announced a long-term technology partnership in which BSE will deploy Deutsche Börse Group’s trading infrastructure.

Source: Bobsguide, 07.10.2013

Filed under: Data Management, Data Vendor, Exchanges, India, Market Data, , , , , , , , , ,

Innovations in Accessing Asia: Listed Equity Derivatives and Delta One Products.

Institutional investors seeking exposure to emerging Asian equity markets face challenges in accessing many of the region’s closed markets and are turning to exchange-traded derivatives markets, as well as over-the-counter (OTC) instruments that can provide the exposure they need, says TABB Group in new research published today, “Innovations in Accessing Asia: Listed Equity Derivatives and Delta One Products.

Investment managers are active users of OTC equity derivatives, including contracts for differences (CFDs), equity swaps, participation notes and other structured products, says Andy Nybo, a TABB principal, head of derivatives research and the report’s author. “However, global regulatory efforts to reduce concentration of counterparty risk have driven investment managers to explore alternatives for exposure, leading them to centrally-cleared, exchange-traded products that can lower overall levels of risk.”

According to TABB, as the appeal of developed markets waned in recent years, investors began examining new markets, searching for investment opportunities offering higher alpha and greater returns, especially emerging markets in Asia. Hedge funds are focusing their attention on the APAC markets, with 33% of US and European funds targeting the region for new investments. However, Nybo explains, direct investment in the emerging equity markets of Asia has been hindered by low market capitalization, restrictive regulatory environments and capital constraints that prohibit direct access to cash markets.

“Asia’s relatively stable political and regulatory environment has done well to attract investor interest,” Nybo says, “but some of the region’s regulators seem to use regulation as a policy tool in an attempt to control market fluctuations.” He adds that markets with heavy-handed regulatory authorities face a backlash from investors seeking opportunities and provide an opening for regional exchanges to launch products designed to meet investor demand for exposure to more closed markets.

“Pent-up demand from investors will contribute to innovation and new product launches by these emerging Asian exchanges to capture investment flows from both international investors and Asian-domiciled hedge funds,” he adds. “Many of the region’s regulators are very keen to promote greater participation in the financial markets. They are eager to attract strong capital flows from investors all over the world.”

The 33-page report with 24 exhibits is available for download by TABB Research Alliance Derivatives clients and pre-qualified media at For an executive summary or to purchase the report, visit or write to

Other recent TABB derivatives research includes: Accelerated Expirations: The Growing Relevance of Short-term Options; US Options Trading 2011: Finding the Other Side of the Trade; Feeding the Options Beast: Big Data in the US Options Space; EU Equity Options Market Structure: Opening The Door To High Frequency Flow; VIX Trading: The Structure of Uncertainty; and TABB Group Options LiquidityMatrix.

Innovations in Accessing Asia:Listed Equity Derivatives and Delta One Products – Executive Summary

Source: MondoVisione, Tabb Group, 15.03.2012

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Hong Kong and Singapore as Asia´s Financial Gateways

Celent predicts a paradigm shift around access to Asia. There is likely to be two gateways, providing access to different Asian regions, with Singapore emerging as the preferred gateway to Southeast Asia and Hong Kong becoming the gateway to Mainland China.

In a new report, the third of a series looking at the financial markets in Hong Kong and Singapore, Celent aims to provide a comparative analysis of Asia’s two main financial gateways, focusing particularly on derivatives. Asia’s Tale of Two Cities: Hong Kong and Singapore as Financial Gateways begins by noting that Western governments have emerged from the financial crisis in a weakened state, with economic prosperity blunted by high unemployment and an emerging debt crisis. The question is no longer when or if we need to enter the Asian markets, but how to best think about the issues of accessibility, entering the market, developing products, and forming strategic partnerships. The fundamental question that needs to be asked now is: “Where do we go from here, Hong Kong or Singapore?”

Although the HKEx and SGX may not be the biggest derivatives players in Asia-Pacific, they tend to be the most accessible for segments located outside the region. Taking advantage of their geographic location, political climate, and internal strengths, these city-states are poised to become hubs for trading of Asia’s regional products while also being easily accessed by US traders via retail trading accounts.

There are several factors that are likely to continue to drive growth in the derivatives market. These include:

• A relatively muted response to regulating over-the-counter markets as compared with the US and Europe. The type of products that led to the financial crisis in the West are not widely established throughout Asia, and as a result, the regulatory structure governing OTC markets are unlikely to change significantly.

• Continued desire to manage foreign exchange risk.

• Continued enhancement of processes of structuring derivatives risk management policies.

“We are seeing changes in relation to access to Asia. Hong Kong is no longer destined to become the sole hub to Southeast Asia,” says Alexander Camargo, Analyst and coauthor of the report. “Inherent strengths in Singapore are making it an extremely attractive financial gateway. Both English and Chinese are frequently spoken in Singapore, making it an ideal cross-roads for East and West. Furthermore, Singapore is viewed by most Asian countries as a neutral party and less politically tied to China than Hong Kong. This is likely to entice Indian investors and even Japanese and Korean investors to Singapore’s shores.”

However, this does not mean that Hong Kong will recede as a major financial center in Asia. Hong Kong residents are often fluent in both English and Chinese; contract laws are strong; and there remain strong historical ties to the West. As a Special Administrative Region of the People’s Republic of China, Hong Kong has stronger political ties to China. Hong Kong has also been busy integrating its financial markets with mainland China. These factors make it likely that Hong Kong will become a key gateway to mainland China.

This report begins with an overview of each country’s financial infrastructure and regulations, providing an introduction to the countries’ various demand market segments, followed by a look at the main exchanges, HKEx and SGX. A summary of HKEx and SGX focuses on derivatives trading, providing a brief description of products offered, market access, alliances, and clearing on the exchanges. The report then looks at each country’s fixed income markets, OTC derivatives, and FX markets. It concludes with a discussion of market supremacy and also the countries’ ongoing efforts to improve market structure and access.

Source: Bobsguide, 10.02.2012

Filed under: Asia, China, Exchanges, Hong Kong, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Vietnam, , , , , , , , , , , , , ,

Metabit -Asia’s Trading Hub- Rebrand Marks 10th Anniversary

Metabit is celebrating its tenth anniversary in Tokyo on the 6th October 2010.  In acknowledgement of this milestone, the company which specialises in intuitive institutional trading platforms, exchange connectivity and a well established trading community, has commissioned a new corporate identity, website and advertising campaign.  These are to be launched at The FPL Japan Electronic Trading Summit 2010 on 6th October.

Daniel Bürgin, CEO of Metabit commented:

“We wanted to bring home to our clients and the market at large that our systems have been built out of Asia, for Asia.  It was important to demonstrate our intimate knowledge and understanding of Asian markets.“

“Metabit’s new brand image had to not only represent our commitment to Asia, but demonstrate our unique approach to client solutions and innate dynamism.  Our new positioning, Think Asia, Trade Asia, was developed to convey who we are and our area of speciality.”

A new advertising campaign will also be launched at the conference.  Metabit’s Metamorphosis Campaign, which features a butterfly with a map of Asia superimposed upon its wing, was chosen to symbolise the way in which the company operates. Bürgin continues:

“We wanted an original look that represents our approach. The metamorphosis theme was chosen to reflect the way we help clients transform and develop their business, enabling them to trade effortlessly and efficiently.”

Metabit has four offices in Japan, Australia, Hong Kong and Mainland China.  For more information about Metabit, visit or see the company at Stand 9 at the FPL Summit in Tokyo.

For more information, contact Claus Kwon on +852 3752 0674 or Kenichi Morita on +81-3-3664-4160 or mail to .


Filed under: Asia, Australia, China, FIX Connectivity, Hong Kong, Japan, Market Data, News, Trading Technology, , , , , , , , , , , , , ,

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, , , , , , , , , , , , , , , , , , , , ,

Liquidnet adds Metabit to its network / リクイドネットの発注管理システムネットワークにメタビットが接続

Lquidnet Japan, the global institutional marketplace, announced today that it has completed the system connectivity development with MetaBit, a Japan-based financial solution provider for institutional investors. Through MetaBit’s intuitive XiliX trading platform, MetaBit users can now join Liquidnet’s 592 Members (as of September 30, 2009) that trade large blocks of stocks among themselves anonymously, with significantly reduced transaction costs. Liquidnet’s patented technology allows institutional asset managers to link order management systems, giving buy-side traders a first look at the world’s largest pool of natural liquidity.

We are pleased to have established connectivity with Liquidnet,” said Daniel Burgin, CEO of MetaBit. “By enabling access to the Liquidnet system, our clients will have the opportunity to expand their block trading capacity to help achieve best execution.”

“We are very excited to partner with MetaBit, a well-respected financial technology provider that services some of the largest and most sophisticated asset managers in Asia,” said Lee Porter, head of Liquidnet Asia. “There is a strong interest among Asian institutions to be considered for inclusion in our marketplace. This agreement will allow those firms that join our marketplace to realize the effectiveness of our trading platform.”

In the third quarter of 2009, Liquidnet had an average trade size in Asian equity securities of US$897,829 which, in some cases, represented several days of average daily volume in some stocks. Despite the challenge of sourcing liquidity of that size, Liquidnet Members traded 95% of transaction within the bid/ask spread and 65% at the mid-price.

Also in the third quarter of 2009, Liquidnet continued to build momentum in the region, as it set quarterly records for principal traded and the number of executions. Liquidnet’s average daily liquidity in Asian equity securities increased over 10% quarter-over-quarter, as a result of the participation of 155 live Members in our system.

Source: Meta-Bit Systems, 01.12.2009







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Vietnam hikes interest rates and devalues currency

The central bank raises interest rates to 8% and devalues its currency – moves needed to keep inflation in check and growth on target.

Vietnam is first out of the gate in a race no one wants to be in. It is the first nation in Asia to raise interest rates in an effort to put a stop to rising inflation.

The State Bank of Vietnam will increase its benchmark interest rate to 8% from 7% as of December 1. This is the first increase since January, as for most of the year the government has been focused on achieving its 5% economic growth target. And indeed, while analysts said the hike was needed it was also a surprise — the central bank had earlier announced that the basic interest rate would be kept stabilised at least until the end of the year.

“The move came as a surprise, well sort of. We did expect interest rates to increase, but expectations were for early next year. The fact that inflation came in today at 4.4% year-on-year against 3.0% year-on-year last month, and that the currency kept weakening in the black market (not to mention the surging price of gold internationally)… probably prompted earlier action than what we believe authorities would have liked,” noted Ho Chi Minh-based analysts at VinaSecurities in a research report issued last night.

The State Bank of Vietnam also reset the US dollar reference rate to 17,961 dong from its current level of 17,034 dong, in its third devaluation of the currency in two years. The central bank will also narrow the trading band of the dollar against the dong to 3% from 5%.

This is an effort not only to bring confidence to the currency, but also to correct the difference versus where the dong is trading on the black market, which has been at about 19,700 per US dollar in recent weeks. The governor of the State Bank of Vietnam, Nguyen Van Giau, acknowledged to Vietnamese press on Wednesday that foreign currency is now overly hot and so the government had to intervene.

Investors were spooked by the moves, with the Ho Chi Minh City Stock Exchange’s VN Index falling 4.5% to a three-month low of 503.41, the biggest slide since April 20. But most analysts praised the government’s efforts as prudent.

At 4.4%, consumer price inflation is at its highest since May and more than double the multi-year low of 2% in August. The food part of the basket registered 3.5% inflation, up from 2.5% in October. Housing inflation rose to 8.4% from 2.4%, while transport/communication inflation went from -4.6% to 2.2%. Inflation isn’t a worry — it has arrived.

Also consider that total outstanding loans are currently up 34% versus this time last year, which means the nation is grappling with a rising credit problem. Non-performing loans, of course, have long been a concern.

“In summary, inflation is heading higher which, together with the recent and alarming deterioration in the trade deficit and associated downward pressure on the currency, has finally triggered a policy response from the authorities. The response is also most unlikely to be the last,” wrote Robert Prior-Wandesforde, senior Asian economist for HSBC, in a research note yesterday.

Other moves bandied about by specialists include the Ministry of Finance raising import tariffs and the Ministry of Industry and Trade taking measures to limit imports.

While Vietnam’s currency issue is unique, the inflation issue is potentially not. China, South Korea and Taiwan will no doubt have to start raising rates next year as their stimulus efforts to spur growth may also lead to inflation.

Source:, 26.11.2009

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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, , , , , , , , , , , , , , , , , , , , , , , , , ,

Asia’s affluent lose one-fifth of wealth in 2008 – CapGemini-Merryll Lynch Asia Wealth Report 2009

Hong Kong’s high-net-worth crowd were the hardest hit by the financial crisis, according to the annual wealth report from Capgemini and Merrill Lynch.

It was perhaps inevitable that after experiencing such rapid wealth growth in the past few years, Asia’s high-net-worth individuals suffered particularly keenly from the recent crisis. But there is still huge market potential in the region for those wealth advisory firms able to tap it.  Download: Asia-Pacific_Wealth_Report_2009_CapG_ML

The wealth of the region’s high-net-worth individuals (HNWIs) — those with $1 million or more in investable assets — fell by 22.3% to $7.4 trillion last year, below the level in 2006. That compares to a fall of 19.5% for global HNWI wealth, according to the 2009 Asia-Pacific Wealth Report, released yesterday by consulting firm Capgemini and Merrill Lynch.

Hong Kong HNWIs saw by far the biggest drop, losing 65.4% of their wealth, followed by those in Australia (29.7%), Singapore (29.4%) and India (29.0%). South Koreans got off lightest with a 13.4% decline in asset value, while Japan saw a fall of 16.7%.

In terms of market capitalisation, the Asia-Pacific region as a whole saw an average fall of 48.6% last year, with China (60.3%) and India (64.1%) suffering the biggest declines of the countries surveyed*.

With regard to asset allocation, the report noted three key trends. First, Asian HNWIs undertook a ‘flight to safety’ to cash-like assets with their allocation to cash-based investments rising to 29% in 2008 from 25% the year before. This reflected an increase in the global allocation to cash in 2008 to 21% from 17% in 2007. Taiwan had the highest allocation to cash/deposits at 41% of its total portfolio, while India had by far the least with 13%.

Another trend was an opportunistic shift back to real estate investment with an allocation of 22% in 2008, up from 20% the year before. Regionally, Australia had the highest allocation to real estate (41%), closely followed by South Korea (38%), while Taiwan had the least (15%).

As for other asset classes, India had the largest allocation to equities (32%), despite the heavy fall in the country’s stock market last year, while South Korea had the smallest (13%). And, perhaps surprisingly, Indonesia had the largest allocation to alternative investments (9%), covering structured products, hedge funds, derivatives, foreign currency, commodities, private equity and venture capital.

The third broad trend noted by the report was a retreat to home-region and domestic investments with HNWIs increasing their domestic investments to 67% in 2008 from 53% the year before. China was the top Asian market for investment by HNWIs in Asia-Pacific ex-Japan, while their peers in Japan preferred to invest domestically.

Allocations to mature markets are likely to increase through 2010 as Asia-Pacific HNWIs seek more stable returns. Allocations to North America, for example, are predicted to rise from 17% last year to 20% in 2010.

In terms of diversity of geographic distribution of investments, Japanese HNWIs were the most diversified beyond Asia in 2008 with 45% of their allocation outside the Asia-Pacific region. The least diversified were the Chinese with a 17% allocation outside Asia-Pacific, and India with a mere 14% invested outside the region.

On a wider level, the crisis resulted in many Asian clients shifting their assets towards regional and local firms, changing the competitive landscape. Such moves exposed “weaknesses in the capabilities of the region’s wealth management firms and especially revealed the disparate strengths and weaknesses of international firms versus regional and local competitors”, says the report.

In terms of the challenges faced by wealth management firms in Asia, they feel maintaining client trust/client retention is by far the biggest concern, according to a Capgemini survey carried out during July and August. Eighty-five percent of wealth management advisers cited this as the biggest challenge they face as a result of the crisis, and 45% cited as the next major issue the need to have the right skill set and talent to cater to HNWI clients.

A closer look at the issue of client attrition shows that 42% of wealth advisers lost clients last year; 63% of those advisers employed an individual-adviser model, while 37% used a team-based model. Meanwhile, younger advisers tended to lose more clients than older ones with 62% of those who lost clients being 40 or under. “Advisers were not mature enough to handle the intense market conditions,” says the report.

Experience is clearly key, and advisers in the Asia-Pacific region were less well able to handle the economic turmoil. The average amount of experience for the region was 9.7 years, versus the global average of 13.3 years. Wealth management firms need to remedy this situation if they are to make the most of the untapped market potential in China, India and elsewhere in the region.

* The report focuses on 11 markets: Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, South Korea, Taiwan and Thailand. Together, these account for 95.3% of Asia-Pacific gross domestic product.

Source: Asian Investor, 14.10.2009

Asian Investor

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SGX/Chi-X dark pool could revolutionise Asian trading

Buy-side traders, dark-pool brokers and technology providers are encouraged by Singapore Exchange’s announced dark-pool JV with Chi-X.

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The two biggest problems when it comes to trading equities in Asia have been fragmentation and monopolisation. The region is broken into a number of different markets, with their own regulation and structures, and about the only thing they have in common is that trading tends to be monopolised by a single exchange.

The advent of electronic trading and the emergence of alternative trading venues — first in America, then in Europe — offers potential solutions to these, but has been seen as a threat by the stock exchanges. As a result, alternative trading venues in Japan, for example, have struggled to get more than 1% of daily turnover.

This week’s announcement by Singapore Exchange (SGX) that it is setting up a joint-venture with Chi-X to establish a pan-Asian dark pool could prove a watershed event.

SGX is the smallest of the exchanges in developed Asia-Pacific (compared with Tokyo, Osaka, Sydney and Hong Kong), and has long had ambitions to punch above its weight by promoting itself as a regional hub. Although it has notched some successes in attracting international listings and tradable products (90% of its listed derivative products, for example, are from other countries), it has not been able to convince other markets to have their securities traded in Singapore, or vice versa.

The deal with Chi-X should change this. SGX has cast aside the typical aversion to new forms of electronic trading and embraced them instead, and as a result has furthered the cause of best execution across the region.

“To see Singapore Exchange back a crossing network has to be seen as positive,” says Richard Coulstock, regional head of trading at Prudential Asset Management. He and other buy-side traders welcome a platform that, by making itself available to both the buy and sell sides, could help aggregate other dark pools of liquidity.

Other electronic trading networks welcomed the deal. “We like this because it shows alternative trading venues are necessary for the region,” says Greg Henry, who runs Liquidnet in Singapore. “What’s now important is to get market participants to buy into it.”

Danny Lee, Asia director at NYFix in Hong Kong, says the next step is to enable regional crossing on the new dark pool, which requires a central counterparty to clear trades in other markets. If that happens, he says, “The Chi-X and SGX deal should light something up.”

SGX is confident the dark pool, once it goes live, can be extended to other markets without too much difficulty.

Chew Sutat, executive vice-president and head of market development at SGX, explains the main hurdle is getting other jurisdictions to amend some regulations. SGX has already received several expressions of interest from entities that could play the central counterparty role. Settlement can be handled by a custodian bank and depository agencies.

SGX is keen to extend the dark pool to onshore markets among other developed markets, with Japan, Australia and Hong Kong the priorities. The technical issues vary among them. For example, the SGX/Chi-X dark pool will be able to handle Japanese securities so long as they are traded among parties outside of Japan; but the dark pool will remain out of bounds to Japan’s domestic institutional investors. The JV expects to negotiate with officials in Tokyo to see if this can be changed. Hong Kong and Australia are more open but have regulatory hurdles of their own.

The regulatory side may remain an unknown, but Chew sounds confident that the new JV will attract participants. He says a number of fund managers and brokers have already been in touch, wanting to know when and how they can connect. “We still need to get a license,” he says, noting the application to be a recognised market operator is being sent to the Monetary Authority of Singapore.

The parties hope the JV, which has yet to be named, will go live in the first half of 2010. Chew says one reason for the interest is the prospect that such a dark pool will help grow the pie for all trading venues, by attracting more capital to the region.

He adds that SGX decided to partner with Chi-X not just for its technology but because its track record as a pan-European market segued with SGX’s ambitions to create a pan-Asian project.

Although dark pools are criticised for splitting up liquidity in already thin markets, the experience in the US and Europe suggests the opposite. Big trades placed on an exchange would have such a big market impact as to make them virtually impossible to do, except if done very slowly. Go into a dark pool — a Liquidnet, a BlocSec, an Instinet — and you can see if there’s a contra on an anonymous basis. If there is, fine, you can make a trade happen. If not, no harm done. The point is that dark pools should, in theory, make possible trades that would otherwise not occur in the ‘lit’ market.

Tony Mackay, CEO at Chi-X Global in Hong Kong, says the deal with SGX stemmed from Chi-X’s belief that each market should have a market for such block trades. The only way to do so, however, would be to collaborate with stock exchanges, rather than take them head on, and create a means of aggregating various dark pools. “In Asia, there is a real need among fund managers to concentrate liquidity,” he says.

He says the breakthrough was when SGX realised that, to be taken seriously as a pan-Asian trading hub, it had to allow others to trade Singapore shares first. The resulting JV should break the ice and encourage other regulators and exchanges to consider similar moves.

Australia is seen as the next likely domino. For years, brokers and institutional investors have agitated for recognised alternative trading venues other than the Australia Stock Exchange (ASX). Chi-X is among a handful of firms requesting such a license. The ASX is trying to build its own dark pool in time to meet what is considered an inevitable break on its monopoly. “We hope this [licensing alternatives] can be done quickly now,” says Mackay, adding he hopes Australia, Japan and Hong Kong can be added to the SGX JV dark pool sometime in 2010.

SGX’s Chew says the exchange would like to extend the dark pool from just cash equities to other products, including depository receipts and exchange-traded funds, which lend themselves to dark trading. But this is not the priority. “We will focus on where we see demand, which is in top-line blue-chip stocks,” he says.

Source:AsianInvestor, 14.08.2009

Filed under: Asia, Exchanges, News, Singapore, Trading Technology, , , , , , , ,

Chi-X Global and SGX to launch first exchange-backed dark pool in Asia-Pacific

Chi-X® Global Inc. (Chi-X) and Singapore Exchange Limited (SGX) have signed a Heads of Terms Agreement to develop and launch the first exchange-backed dark pool in the Asia-Pacific region. The non-displayed trading platform aims to initially offer block crossing facilities for equities listed on SGX, and on an offshore basis for the Australia, Hong Kong and Japan exchanges.

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A project implementation team has been formed with the goal of commencing operations and trading in the first half of 2010. The joint venture, which will be equally owned by the two sponsors, intends to implement specific strategies to equip its dark pool with ample liquidity and attract new capital flows to the region.

The dark pool will operate with appropriate regulatory approvals and controls, reporting, settlement systems and compliance standards.

“Chi-X is delighted to work with a forward-looking and market-focused partner like SGX to launch and operate this dark pool, with the aim of creating the deepest and most attractive dark pool liquidity in the Asia-Pacific region,” said John Lowrey, CEO of Chi-X Global. “Our experience has shown that users are looking for independent, genuinely neutral dark pools with high functionality and deep liquidity, and we believe that this joint venture will be able to deliver just that.”

“SGX is pleased to offer Asia the first exchange-backed dark pool, which will complement exchange trading by reducing the market impact of large trades. We believe it will be an important block trading venue for Asian markets, attracting new participants and improving the trading environment in the region,” said Gan Seow Ann, SGX Senior Executive Vice President and Head of Markets. “We are glad to have a strong partner in Chi-X, who shares with us common goals of being innovative and internationally oriented.”

Chi-X subsidiary Chi-X Global Technology, LLC (Chi-Tech), a provider of trading infrastructure solutions to global market centers and participants, will provide the technology for the platform. Around the world, Chi-X technology is powering a number of alternative and incumbent trading venues that are providing savings for investors through reduced market impact and improved liquidity.

SGX-listed stocks will be cleared and settled through The Central Depository (Pte) Limited (CDP), SGX’s securities clearing house and depository, via SGX’s securities clearing members. The JV intends to appoint a pan-Asian central counterparty to clear other trades executed on the dark pool.

Source: Automated Trader, 12.08.2009

Filed under: Asia, Exchanges, News, Singapore, Trading Technology, , , , , , ,

Asia: Survey sees softer growth in wealth management revenues – BarCap

The industry’s bright spots are China and India, which are viewed as the most attractive markets in Asia.  See Barcleys Capital Wealth Management Report 2009

Revenue growth in Asia’s wealth management industry is expected to soften significantly during the next two years, according to a Barclays Capital survey of Asia’s leading wealth managers who between them have more than $5 trillion of assets under management.

The wealth management survey involved 123 respondents from 53 wealth management organisations in seven countries across non-Japan Asia, including asset managers, insurance companies, local and global retail banks and private banks.

In last year’s survey, around 90% of wealth managers expected revenue growth in Asia of more than 5% per annum in the coming two years, while only 41% of respondents expect such growth in this year’s survey. Worse news still, this year 18% anticipate negative returns.

China and India continue to be viewed as the most attractive markets in Asia, both in terms of potential for business expansion and for their expected revenue growth rate. A majority of wealth managers see China as the most attractive market, with a quarter of them still forecasting the country to generate revenue growth of more than 15% per annum during the next two years. Next in line is India, with a fifth of respondents still anticipating such growth.

Korea is viewed as the least attractive market in Asia, with 29% of wealth managers forecasting negative revenue growth.

This is not a surprising result, as many banks, in anticipation of lower revenues, have cut back their global wealth management staff. And Asia has not been spared.

Challenges and strategies

The key challenge facing wealth managers is how to adapt to the changing regulatory environment. “It is evident that wealth managers share the view that the financial markets will operate under significantly different regulatory conditions in future,” says Kevin Burke, head of distribution, Asia-Pacific at Barclays Capital.

Capital protection continues to be the most common product strategy. Thematic investments dropped from the second most popular product strategy last year to sixth this year, reinforcing the continuing client trend towards simple and transparent products.

The three most important product features for clients are considered to be issuer risk, capital protection and a short maturity. This is a significant shift in investor attitudes away from liquidity and growth, which have typically dominated over the past three years.

“Evidently, risk aversion is currently top of mind for investors, as demonstrated by the great importance they place on protecting their underlying capital, assessing issuer risk and short maturity products for investment flexibility,” says Peter Hu, head of non-Japan Asia investor solutions at Barclays Capital. “This risk aversion is also reinforced by a shift towards increased use of structured deposits,” he adds.

Wealth managers’ recommendations for a balanced-risk investor portfolio have an increased weighting in cash products and bonds over last year’s survey, at the expense of equities and commodities, which is in line with the trend towards capital protection. Looking ahead, a majority of respondents are expecting the allocation to non-Japan Asia equities within their balanced-risk portfolio to increase during the next six months.

The survey also shows that equity and FX remain the most popular asset classes for both flow and structured products. The use of equity has generally declined from last year as investors search for capital protection, and the use of structured products has declined across the board as investors search for simpler and more transparent products.

Source: 20.04.2009

Filed under: Asia, Banking, China, India, Korea, News, Risk Management, , , , , , , , , , , , , ,

Asia Trader & Investor Convention 2009 (ATIC) in Singapore!

First launched in 2006, ATIC has traveled to 7 Asian Cities, i.e., Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Mumbai, Shenzhen and Tokyo.  With participation by over 300 financial services companies, including securities exchanges, retail and consumer banks, securities brokerage firms, asset/fund management firms, listed companies and other financial services providers, ATIC events have attracted over 80,000 active traders and serious investors across Asia.

A Singapore Exchange, Bursa Malaysia, Ho Chi Minh Stock Exchange, Tokyo Stock Exchange supported event, ATIC Singapore will showcase local and international exhibitors and provide participants with high quality educational seminars covering a wide range of investment topics.

Featuring the relevant theme in today’s financial markets – Beating The Depression: Equities or Derivatives, ATIC Singapore will host famous international and local speakers such as

Source: TheNextView, 16.04.2009

Filed under: Events, Singapore, , , , , , , , , , ,

Asian expansion top priority for cross-border banking – Sungard

Beyond the home market: The future of cross-border banking – from the Economist Intelligence Unit (EIU) reveals that, despite a tough economic climate, a significant number of banks, particularly in emerging markets led by Asia, are continuing to pursue expansion into foreign markets. The research, which involved a survey of over 270 executives from banks and financial services companies around the world, was commissioned by SunGard to investigate key drivers and markets for cross-border initiatives.

Survey results indicated that ailing market conditions are contributing to an overall scaling back of growth in the West with an increased focus on customer centricity, risk and improved infrastructure. Firms are leaning on improved technology and systems to strengthen operations and bring order back to organizations that have experienced global and domestic growth at a staggering pace. However, while growth by Western banks has slowed, expansion in Asia and other emerging markets is still continuing. The survey also found that branch transformation, customer relationship management and integrated risk management will be the key focus areas for many banks in the near future.

Over 45% of respondents believed that their banks would enter or expand into new markets in the near future, with 40% stating that following global customers into foreign markets was the key driver for expansion. Over a third of those surveyed said that customer service would be critical to achieving and maintaining competitive advantage in new markets, followed by product innovation (30%), distribution (19%) and cost (14%). The research also showed a strong focus on risk management, with 57% of respondents stating that this would be the most important area when assessing IT infrastructure needs in new markets. Finally, Internet Banking (53%) was highlighted as the most popular channel initiative by banks in foreign markets, followed by ATMs (35%) and mobile banking (5%). However, respondents believe that mobile banking will become a critical channel to engage with customers in the next three years.

Manoj Vohra, research director and senior editor from the Economist Intelligence Unit, commented: “It is clear that broadening the customer base is an overriding reason for expansion into foreign markets, cited by 49% of respondents. It is no surprise that many are looking to grow their presence in Asia, where a large unbanked population and relatively unsophisticated financial services infrastnfrastructure offer a good potential return on investment.”

David Hamilton, president of SunGard’s banking business, commented: “We commissioned this study in order to better understand the changing requirements and growth strategies of our banking customers. There is increased focus on issues such as cost efficiency, operational integration and risk and regulatory compliance, but it appears greater clarity is needed on how to effectively address these issues. We believe SunGard can help to provide that clarity – for instance by offering technology solutions for key areas such as customer relationship management and profitability analysis.”

Source: SunGard, 31 March 2009

Filed under: Asia, Banking, Latin America, Library, News, Risk Management, , , , ,

Guotai to develop QQQ replica with Nasdaq

Nasdaq is introducing one of the most heavily traded ETFs in the world to Chinese institutional and retail investors. Powershares QQQ, one of the most heavily traded exchange-traded funds (ETFs) in the world based on the Nasdaq 100 index, will soon find a replica in China especially targeted at institutional and retail investors looking for cheap access in the QDII niche.

Guotai Asset Management says it has signed an official deal with Nasdaq OMX. The deal will allow Guotai to work exclusively with Nasdaq OMX in developing the fund house’s first QDII product based on the Nasdaq 100 index. With the product application already submitted to the China Securities Regulatory Commission, Guotai’s lovechild with Nasdaq OMX will likely surpass China Southern Fund Management’s planned QDII with Standard & Poor’s in becoming the first passive QDII in China.

The announcement comes after a frustrating year of shopping for a H-share deal in Hong Kong by Shelly Yang, vice-director in charge of international business at Guotai. Yang was last spotted ringing the opening bells for Nasdaq on Thursday, March 26 in New York with Guotai CEO Xu Jin.

The fund house anticipates, pending final regulatory approval, that the product will be ready in six to nine months time.

Cao Dongjie, former chief marketing officer at Guotai who now heads up the company’s operations in Shanghai, says the deal is strictly between Guotai and Nasdaq OMX for now. Invesco, the current fund sponsor to the Powershares QQQ ETF in the US, is not in any way involved, he says.

The fund house will announce further details on the fund’s market making mechanism and custodian arrangements at a later date, once these deals are final.

The original QQQ was first launched in March 10, 1999 by Nasdaq OMX and then transferred to Invesco Powershares on March 21, 2007. Invesco has recently celebrated the tenth anniversary of the portfolio. At the height of its popularity in 2004, the fund boasted $21 billion under management. As of the end of 2008, according to Invesco’s disclosures, total assets under management for its combined portfolio of Powershares products equalled $9.15 billion.

Since inception, the fund is down 5.11%, compared to a 4.90% drop by the Nasdaq 100 index. (The S&P 500 is down by 1.89% over the same period.)

In the dot-com era, the fund was seen by investors as a proxy to liquidity for technology stocks. Now the fund has such a diverse holding of US listed stocks that most analysts find it hard to classify the fund.

As of March 27, the fund had 66.8% of its assets in large-cap growth stocks, 8.69% in large-cap value, 20.85% in mid-cap growth and 3.66% in mid-cap value.

The fund has a 12.84% exposure to consumer discretionary, 1.25% to consumer staples, 18.42% to healthcare, 5.27% to industrials, 61.09% to information technology, 0.56% to materials, and 0.57% to telecom services.

Its top holdings include: Apple Inc at 11.82%; Qualcomm 6.90%; Microsoft 4.94%; Google 4.52%; Gilead Sciences 3.54%; Oracle Corp 3.37%; Cisco Systems 3.15%; Teva Pharmaceutical 2.88%; Intel Corp, 2.67%; and Research in Motion 2.27%.

Source:AsianInvestor, 31.03.2009 by Liz Mark

Filed under: China, Exchanges, Trading Technology, , , , , , , ,