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ASEAN Exchanges plans on track to promote ASEAN as an asset class

Following the November 2011 ASEAN Exchanges CEOs meeting, the ASEAN Exchanges CEOs today announced that the collaboration framework is on track towards meeting its goals of collectively promoting ASEAN as a highly investable asset class.

The Philippine Stock Exchange President and CEO, Hans Sicat said, “the marketing of the ASEAN Stars and the work on an ASEAN index series continues as planned with the ASEAN Exchanges collaboration members. The 2012 marketing activities for ASEAN Exchanges will be finalised at our scheduled CEOs meeting on December 2nd in Hanoi.”

The seven ASEAN Exchanges have a combined market capitalization of approximately USD2.0 trillion and more than 3,600 companies listed on their exchanges. Some of these companies are the largest and most dynamic companies in the world, including leaders in finance and banking, energy, telecommunications, commodities, automotive manufacturing and other industrial sectors.

The CEOs also announced the awaited roll-out plan of the ASEAN Trading Link which will see the participation of member exchanges taking place progressively in stages. The first stage will see the connectivity of Singapore Exchange and Bursa Malaysia in June 2012 and the Stock Exchange of Thailand added in August 2012 after its new trading engine goes live. The participation dates of the other ASEAN Exchanges collaboration members, namely, Hanoi Stock Exchange, HoChiMinh Stock Exchange, Indonesia Stock Exchange and The Philippines Stock Exchange will be announced at a future date.

Tajuddin Atan of Bursa Malaysia Berhad said, “The three bourses that will participate in the first stage of the ASEAN Trading Link represent approximately 70% of the market capitalization of the 7-member collaboration, thus offering substantial investment opportunities for investors.”

Source: MondoVisione, 17.11.2011

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Filed under: Exchanges, Indonesia, Malaysia, Singapore, Thailand, Vietnam, , , , , , , , , , , ,

NYSE Euronext Accelerates Growth in Asia with Strategic Acquisition of Metabit, a Leading Provider of Market Access Products

— Strategically complements NYSE Technologies’ product portfolio and Asian offerings

— Addresses growing customer interest and expanding Asian financial marketplace

— In-line with NYSE Technologies’ strategy of building a global liquidity network

 New York and Tokyo – August 1, 2011 – NYSE Euronext (NYX) announced today it has entered into a definitive agreement to acquire Metabit, a leading Tokyo-based provider of high performance market access products throughout Japan and Asia. Metabit will operate as a product line within the NYSE Technologies portfolio. The transaction is expected to close in third quarter of 2011. Terms of the acquisition were not disclosed.

Skilled with in-depth experience and understanding of financial markets in Asia, Metabit specializes in streamlined, low-latency technology solutions that enable industry-leading access to financial markets across Asia. Metabit’s products connect buy-side order flow with sell-side exchange participants and are designed exclusively for low latency direct market access (DMA) and exchange connectivity to markets through-out Asia. The company is headquartered in Tokyo, with offices in Australia and Hong Kong. Metabit has built a trading community of more than 140 trading firms in Asia.

“Metabit’s products are built in Asia for Asia, and this combination fits our strategy, our connectivity business and our customer interests,” said Stanley Young, CEO of NYSE Technologies. “Metabit has a highly experienced and respected management team, and we recognize and value the success Metabit has had in Asia, especially in Japan. We will continue the further development of this local focus while also maximizing the value of the NYSE Euronext brand and relationships.”

Mr. Young continued: “Furthermore, Japan and Asia are priorities for NYSE Euronext and we believe this is absolutely the right time to further invest in the region. We fully expect this transaction to accelerate our efforts as a leading technology provider across the Asia-Pacific region. We look forward to welcoming Metabit and its customers to NYSE Euronext, and to delivering the benefits of Metabit to our customer community.”

Daniel Burgin, CEO of Metabit, said: “Our combination with NYSE Technologies will be highly beneficial to delivering innovative solutions to our customers and to accelerate achieving our long-term business goals. We remain committed to our local business focus and service quality in Japan and throughout Asia, whilst being strengthened by NYSE Technologies’ product suite that is highly synergetic to our local solutions. The people and products of our combined companies will provide significant expertise and scale to NYSE Technologies’ business in the region. Joining forces represents a truly exceptional opportunity to build on our local success in order to increase our value proposition to our Japan and Asia customer base. We now have the opportunity to leverage our assets with NYSE Technologies and move to the next level. For the benefit of Asia-based customers, we will now expand our reach and capabilities globally.”

 Metabit’s Asia franchise has seen excellent growth as a result of a persistent product and client strategy and investments into Asia. Today, Metabit covers all DMA sectors outside Japan, ranging from China (“B” shares), India, Hong Kong, Korea, Singapore, Taiwan, Thailand, Philippines, Malaysia, Indonesia, Pakistan, Australia and New Zealand. Metabit’s products, being built in Asia for Asia, focus to connect the local broker community in each country, in combination with the traditional group of global trading firms. Metabit will continue to resell and provide support to users of CameronFIX as they have since 2002.

 Upon closing, Mr. Burgin will head the NYSE Technologies Asia business and report to Mr. Young. Peter Tierney, Managing Director of NYSE Technologies will become the Chief Operating Officer of the combined business in Asia, and together they will lead the business operations.

Source; NYSE Tech, 01.08.2011

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

Metabit Expands Asian Trade Connectivity

Tokyo/Hong Kong, 29 March 2011: In the past year, Tokyo-based Metabit has concentrated on building its connectivity across Asia.  The company aims to be the local face of execution destinations in Asia and over the past eight months, it has added an extra 13 domestic DMA destinations, expanding domestic and cross-border access to Asian markets.

“Metabit is at the heart of  connectivity in Asia” comments Daniel Burgin, CEO of Metabit, “not just for providing access to Asia for global players, but also in particular for the local and domestic  industry in this region.”

“For example, in India we have 20 execution destinations of which 10 are domestic Indian brokers.  We are similarly successful with increased connectivity in other countries such as Korea and Taiwan.”

Overall, Metabit’s trading access has been extended to many markets ranging from Indonesia to Pakistan and Mainland China to Australia.  The company now has access to over 250 execution destinations, across all active DMA markets in Asia, including Japan.

“We want to maximise connectivity to and within Asia for our client base, who can directly access all execution destinations across the major and emerging markets in Asia either through Metabit’s intuitive XiliX trading platform, or through our MLH via a single FIX connection.”

Burgin adds a final comment, “Situated where we are in Tokyo, with offices in Hong Kong, Dalian and Sydney, we understand the needs of Asia market players, whether they want to trade globally or locally. You could say the mindset of Asia is in our blood – we think Asia, so our clients can trade Asia.”

About Metabit

Uniquely placed in Asia, with global experience and a real knowledge of Asian markets, Metabit provides the technology and support to help clients trade and connect effortlessly and efficiently.  The company delivers an intuitive trading platform that encompasses a well-established trading community and unrivalled exchange connectivity solutions.

Metabit provides ultra low latency DMA trading solutions for Asian markets, serving buy side and sell side clients.  It specialises in comprehensive compliance controls, whilst reducing transaction times and facilitating trading opportunities across all major markets across 14 Asian countries, including Japan.

Metabit’s flagship solutions are XiliX intuitive buy side trading platform and MLH a vendor neutral Market Liquidity Hub.  Alpha provides ultra-low latency exchange connectivity and Exsim simulates Asian and Japanese exchanges.  All Metabit’s products are powered by the CameronFIX engine.

Source: Metabit, 29.03.2011

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

BlackRock lista 7 nuevos ETF de indices de Asia, Polonia, Brazil y renta fija International en Mexico

Ciudad de México, 26 de diciembre de 2010 – El pasado jueves 23 de diciembre, empezaron a negociarse en el Sistema Internacional de Cotizaciones (SIC) de la Bolsa Mexicana de Valores (BMV) 7 nuevos ETFs iShares internacionales, patrocinados por Deutsche Securities, S.A. de C.V., Casa de Bolsa y administrados por BlackRock, en lo que constituye el cuarto paquete de ETFs iShares listados en el SIC el presente año.

Los 7 ETFs iShares que integran este paquete brindan exposición a índices de renta variable internacional de mercados emergentes y de Asia no emergente, así como de renta fija internacional.

Los ETFs iShares listados en el SIC son:

Nombre Clave de pizarra % Gastos Aprobado por CONSAR
Instrumentos de renta variable
iShares MSCI China Small Cap Index Fund ECNS 0.65 No
iShares MSCI Indonesia Investable Market Index Fund EIDO 0.65 No
iShares MSCI New Zealand Investable Market Index Fund ENZL 0.55 No
iShares MSCI Poland Investable Market Index Fund EPOL 0.65 No
iShares MSCI Brazil Small Cap Index Fund EWZS 0.65 No
Instrumentos de renta fija
iShares FTSE Gilts UK 0-5 IGLS 0.20 No
iShares DEX Short Term Bond Index Fund XSB 0.25 No

Estos 7 ETFs iShares permiten tener acceso a un perfil de inversión representado por el dinámico sector de empresas de baja capitalización de economías que han tenido desempeños recientes interesantes, como la china, indonesia, neozelandesa, polaca o brasileña.

Por ejemplo, el iShares MSCI China Small Cap Index Fund mantiene una posición diversificada en empresas chinas de baja capitalización del sector automotriz, minero, tecnológico, de bienes raíces, energético, cementero y de materias primas, entre muchos otros.

Las carteras, desempeños recientes, retornos históricos, prospectos y otros datos de interés de estos nuevos ETFs pueden ser consultados en www.iShares.com.mx.

“Con este cuarto paquete de ETFs iShares listados en el SIC este año, culmina un 2010 de intensa actividad para BlackRock en México, pues arrancamos con 126 ETFs, y estamos cerrando con un total de 168: 146 ETFs listados en el Sistema Internacional de Cotizaciones y 12 ETFs listados en el mercado local de la Bolsa Mexicana de Valores (BMV). Asimismo, pasamos de 10 mil millones a 14 mil millones de dólares en activos bajo administración para clientes en México a través de los ETFs iShares, en cuentas segregadas y clientes institucionales. Ambos indicadores ratifican nuestra posición de liderazgo en esta industria”, indicó Isaac Volin, Director Ejecutivo de BlackRock México.

A escala internacional, BlackRock también mantuvo su liderazgo este año con un total de activos gestionados globalmente por 3.45 billones de dólares (trillion dollars), al 30 de septiembre de 2010.

Con los ETFs iShares de BlackRock, los inversionistas mexicanos tuvieron por primera vez en 2004 acceso desde México a una amplia gama de vehículos de inversión con exposición a diferentes clases de activos internacionales, que les han permitido conformar portafolios mejor diversificados para optimizar rendimientos ajustados por riesgo.

BlackRock está firmemente comprometido a poner al alcance de los inversionistas mexicanos la familia más completa y diversificada de vehículos de inversión para tener acceso a todas las clases de activos disponibles a escala global. A su vez, ofrece acceso a inversionistas internacionales a instrumentos de activos mexicanos que contribuyen al financiamiento y desarrollo de México.

Source: BlackRock 26.12.2010

Filed under: BMV - Mexico, Brazil, China, Indonesia, Mexico, News, , , , , , , , , , ,

Asean exchanges select Nyse Technologies to build trading network

A group of Asean stock exchanges have appointed Nyse Technologies to build a direct market access electronic trading link.

Last February Bursa Malaysia, the Philippine Stock Exchange, Singapore Exchange and the Stock Exchange of Thailand outlined plans to create a single access point to ease cross-border trading and attract more international fund flows into the region. Indonesia’s exchange was initially part of the group but is no longer involved.

The partners have now signed a letter of intent appointing Nyse Euronext’s IT unit to design, build and manage the technology required for the trading link.

Nyse Technologies says its system will be underpinned by a resilient networking infrastructure that will interconnect the Asean member exchange’s and, through them, their respective communities.

The system will include services that tap this network to provide integrated market data feeds from all the participating markets and a standardised entry point for trading. Expansion of the trading link’s markets will be helped by the risk management and controls put in place, says Nyse.

In addition, the system will integrate with the Nyse Euronext communication network infrastructure, SFTI. This will give STFI members streamlined and cost effective access to trading in the Asean Trading Link markets.

Duncan Niederauer, CEO, Nyse Euronext, says: “The Asean Trading Link will strengthen the competitiveness of the member exchanges and enable them to better serve their customers. National and regional interest will be well served by giving investors greater access to global capital to facilitate new development, growth and wealth creation.”

Francisco Edralin Lim, CEO, Philippine Stock Exchange, adds: “Nyse Technologies brings to the table vast experience in the Exchange solutions business and we are confident that they will deliver cutting edge solutions that meet all our requirements. We are also excited about the possibilities of leveraging their extensive order routing networks to bring order flow into the Asean markets.”

Source, Finextra, 08.02.2010

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

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

ASEAN markets cross trading links in demand – TABB Group

In new equity markets research published today, TABB Group says US and European demand for electronic linkage to Association of Southeast Asian Nations (ASEAN) exchanges is strong and primed to expand, as seamless access will attract brokers already trading in other parts of Asia. However, there is a wide range of needs across the different market segment, including direct market access (DMA), low-cost versus real-time market data, advanced order types, and reliable trading platforms.

TABB’s senior analyst Kevin McPartland, who authored the ASEAN Equity Markets Pinpoint report, an industry update on equity trading in the ASEAN region covering the Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore exchanges, says the global financial crisis had little impact on growing buy-side demand for trading in ASEAN markets.

“More seamless access will drive brokers already operating in other parts of Asia to begin trading in the ASEAN markets,” he says, with the sell side set to benefit most from that seamless access. Explaining that the availability of real-time market data is crucial for all trading in the ASEAN markets, and that real time data is a requirement for the sell side even when trade volumes are low or non-existent, he adds, “High costs and time zones do tend to limit buy-side market data usage outside of the region.”

Addressing the relationship between the buy side and sell side, McPartland says that although no single broker currently dominates across all Asian markets, over 90% of buy-side firms are unwilling to give brokers full discretion over their orders. However, while the buy side does look to their brokers for market access, they agree that more seamless access would lower costs for execution and market data. There is also significant support for the idea of central ASEAN execution venue, McPartland adds.

The report’s in-depth coverage includes 24 charts:

  • Support for a central ASEAN venue
  • Improving ASEAN trading
  • Sell-side interest in ASEAN linkage
  • % of bulge-bracket participants trading in each market
  • Impact of the financial crisis on ASEAN interest
  • Roadblocks to sell-side trading in ASEAN markets
  • Buy-side broker usage – all Asia ·
  • Buy-side broker usage – ASEAN markets
  • Top brokers by country (by # of mentions)
  • Bulge-bracket participants trading in each market
  • Mid-tier participants trading in each market
  • Buy-side interest in a seamless ASEAN linkage
  • Roadblocks to buy-side access of ASEAN markets
  • Average number of buy-side orders per week
  • Average blended commission rates (bps)
  • % for which counterparty risk is an issue
  • Importance of each component when trading in ASEAN markets
  • Markets providing real-time market data to sell side
  • Market data sources for sell side
  • Markets providing real-time market data to buy side
  • Reasons for buy side’s lack of market data
  • How the buy side trades ASEAN markets
  • % of buy side using multiple data providers ·
  • Sell-side and buy-side market data providers

TABB Group collected data through interviews with heads of electronic trading from 12 top global broker-dealers, 9 hedge funds and 14 institutional asset managers. On the buy side, participants had combined global assets under management (AuM) of approximately $6 trillion and are currently trading in Asia from slightly under $10 million to over $5 billion monthly.

Source: MondoVisione, 23.10.2009

Filed under: Asia, Data Management, Exchanges, Indonesia, Malaysia, Market Data, News, Singapore, Thailand, Trading Technology, Vietnam, , , , , , , , , , , , , , , , , , , , , ,

Patsystems Selected As Technology Provider For Indonesia Commodity And Derivatives Exchange

Patsystems is pleased to announce that it has been selected as the preferred technology supplier for the newly established Indonesia Commodity and Derivatives Exchange (ICDX). Patsystems will provide ICDX with the complete exchange solution which includes the trade matching engine, clearing and settlement platform, pre-trade risk management and the front-end execution platform.

Using Patsystems’ robust and scalable exchange platform, ICDX will run on advanced, low-latency technology. The flexible, internet deployable front-end trading platform will be easy-to-use and suitable for all types of traders. ICDX will benefit from Patsystems’ global network of customers, which will automatically bring thousands of traders to the ICDX market.

Operating from a country renowned for being amongst the world’s largest producers of agricultural commodities and industrial raw materials, the ICDX is poised to serve as a major venue for price discovery, benchmark pricing and risk management. The Patsystems’ exchange solution will facilitate the integration of electronic trading among this multitude of domestic producers and traders, and provide access to international customers who want to participate in this deep marketplace.

Megain Widjaja, Managing Director of ICDX, said: “Patsystems empowers ICDX to provide open connectivity, which enables global market access to ICDX and the ability to collaborate with other exchanges around the world. Together, we are confident that we can create a successful marketplace.”

Barry White, Regional Director of Asia Pacific, said: “Being selected as the key technology provider for ICDX fully illustrates the breadth of Patsystems capabilities with the provision of exchange, clearing, trading, and risk management technology. Our systems are flexible enough to be used independently, or in this case, integrated into one comprehensive front to back turnkey solution.”

Source: Patsystems, 08.09.2009

Filed under: Asia, Exchanges, Indonesia, News, Risk Management, Trading Technology, , , , , , , , , ,

ConvergEx Rolls Out Five Additional DMA Connections to Emerging Markets

ConvergEx, a provider of investment technology solutions and global agency brokerage services, has added five new direct market access (DMA) connections: NASDAQ Dubai, the Indonesia Stock Exchange, the Taiwan Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

With these additional markets, ConvergEx now offers DMA connections in 65 destinations around the world, as well as over 110 global markets through its portfolio and sales trading businesses. Clients can access these electronic connections through any ConvergEx supported front-end trading system, including all major order management (OMS) and execution management (EMS) platforms, the company explained. “These new connections keep our clients at the forefront of rapidly growing and increasingly important emerging marketplaces,” said William Capuzzi, president of ConvergEx’s G-Trade Services.

“Our clients appreciate the unique investment opportunities these markets offer as well as the ease of access our connections provide. ConvergEx understands the importance of building and maintaining state-of-the-art technology and lightning fast connections so we always keep one step ahead of client demand.”

Source: Securities Industry News, 11.08.2009

Filed under: Asia, China, Indonesia, News, Trading Technology, , , , , , , , , , ,

Beware of rising Asian stock markets

Investors who were bold enough to stay invested in Asian equities from the latter part of last year onwards are reaping the rewards of their bravado. The closely watched MSCI Asia ex-Japan Index was, after all, up 41% in the three-month period ending May 15. The sharp gains in Asian shares have, not surprisingly, triggered a bandwagon effect of investors trying to get in on the action and hoping that they’re not too late to cash in later on.

The notion that Asian companies have strong balance sheets is great, if you’re a bondholder.

For investors who are looking for a quick buck, Asian equities — or equities in any market for that matter — isn’t the place to find it. Short-term, Asian stock markets remain volatile and the fact that they have risen by so much in such a short span of time make it even more dangerous ground. If anything, the markets look poised for a correction. It may come later rather than sooner, because the momentum chasers are keeping markets afloat for now, but it will come.

“The global economy has not yet recovered to a healthy state,” says Nick Scott, Hong Kong-based CIO for Asian equities at BlackRock. “The rally in March and April is based upon investor relief that things may not be as bad as was predicted, rather than concrete evidence that the worst is over and a recovery is imminent.”

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For investors who are in this for the long haul — with one year being the minimum investment horizon — then the scenario is vastly different. Asian stock markets are generally expected to outperform US and European markets over the long run. The reasons for this optimism is plentiful, including the region’s relatively strong domestic consumption, sound fiscal position, ability to counteract external shocks with central bank reserves and fiscal spending, less dependence on exports, stronger financial systems, and so on and so forth.

Halbis Capital Management, for one, has kept its bullish long-term view of Asian equities intact.

“Overall, we believe the market is showing signs of stabilisation that should allow bottom-up investors such as ourselves to focus once again on picking the right stocks,” says Ayaz Ebrahim, Hong Kong-based CEO of Halbis Capital Management. “In the last few months of turbulence, investors have focused more on shifting between defensive and cyclical sectors rather than assessing the fundamentals of the companies themselves.”

Still, even for long-term investors, fund managers and analysts are sounding out the alarm bells and warning against chasing the momentum. Waiting for that correction is seen as the best option.

“It is very hard to predict how equities will perform over the next 12 months, particularly following such a strong rally,” says Peter Elston, Singapore-based Asian strategist at Aberdeen Asset Management. “We are still in a period of economic turbulence, in which conditions in the short- to medium-term may either improve or deteriorate unpredictably.”

Alex Ingham, a London-based emerging markets fund manager at Aviva Investors, believes that a pause in the current rally is “almost certain”.

What investors should be mindful at the present are the changes in fundamentals of listed companies, risk tolerance of investors and company-specific outlook. These are the factors that will shape the investment landscape going forward.

“We are beginning to see some discrimination emerging in the markets, different sectors and businesses are starting to demonstrate their ability to either recover more quickly or improve their cost competitiveness,” says Colin Ng, the Hong Kong-based regional head for Asia-Pacific equities at MFC Global Investment Management, the asset management arm of Manulife Financial.

Structural return on equity and earnings growth potential remains higher in Asia than in the world’s developed markets, says BlackRock’s Scott, who like many fund managers is particularly optimistic on the long-term prospects of China and India.

“China of course is the focal point,” says Victor Lee, Hong Kong-based regional investment manager at JP Morgan Asset Management. “We may indeed see China outperforming global markets as the fiscal packages continue to gain traction. It has strong deposit base and fiscal power to keep its economy on track.”

Scott says the strengthening links between China and Taiwan may also throw up some interesting opportunities as mainland companies acquire stakes across the Strait. He believes that India’s economy has cooled as foreign funding has dried up, but that has created some insulation from the collapse in global demand.

Not everyone’s a fan of China.

Desmond Tjiang, Hong Kong-based CIO for Asia ex-Japan equities at Fortis Investments, is wary of the rally in Chinese shares and doubts it is sustainable.

“The consensus overweight in China is a risk because that market is overcrowded,” says Tjiang, who is bullish instead on Indonesia. He believes that the strong domestic consumption in Indonesia, citing that country’s urbanisation, infrastructure, and domestic consumption trends.

Rajiv Jain, managing director for international equities at Vontobel Asset Management in New York, says the notion that Chinese domestic demand is going to rescue the region in fiction.

“Chinese domestic consumption is less than that of the UK,” Jain notes. “An increase there isn’t going to move the needle.”

Worse, it’s in China where the greatest overcapacity exists in areas such as steel and cement. China’s infrastructure spending program is good at boosting GDP figures by adding capacity, but does nothing to help corporate profitability.

Moreover, Jain is sceptical about the ability of government stimulus programs to ultimately boost corporate earnings.

“We don’t trust any government. Why do investors have such confidence in Beijing? Chinese steel companies are being instructed to produce more and not lay off workers, at a time when capacity utilisation rate are at their lowest in 50 years.”

Too many investors are mesmerised by the Asian growth story, but Jain calculates that over the long term, Chinese corporate earnings growth rates have been about the same as America’s — but Chinese stocks are priced far more ambitious.

Jain says the past five years were a bubble and have clouded investors’ expectations about growth in China and other Asian markets. The argument that Asian corporate balance sheets are strong is fine for bondholders but doesn’t equate to earnings growth.

Source:AsianInvestor, 03.07.2009 by Rita Raagas De Ramos

This is an excerpt from a story that originally appeared in the June edition of AsianInvestor magazine. To learn more about the content in the magazine, please contact Stephen Tang at stephen.tang@asianinvestor.net

Filed under: Asia, China, Hong Kong, Indonesia, Korea, News, Risk Management, , , , , , , , , , ,

Emerging Markets in the global crisis and beyond- May 2009- DeutscheBank

download: Emerging Markets in the global crisis and beyond – May 2009-DB

Source: DB 05.05.2009

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Emerging Asia inflation tumbles, more rate cuts seen

Inflation rates slowed once again in emerging Asia, pointing to a fresh round of interest rate cuts in Thailand and Indonesia as the region battles to reinforce tentative signs that economies may be on the path to recovery. Indonesia said annual inflation stood at 7.3 percent in April, its lowest level since December 2007, while South Korea also reported a fall in April inflation to a 14-month low of 3.6 percent. However, Thailand saw a fourth straight month of falling prices or deflation with April consumer prices falling 0.9 percent from a year earlier.

Core consumer prices in Japan fell 0.1 percent in March from a year earlier, heralding what the Bank of Japan expects to be two-years of deflation although the central bank has dismissed the idea of an economically damaging spiral of falling prices.

Prices are tumbling across the world as buyers tighten their belts in the face of the global recession and because of the collapse in commodities prices from record high levels last year. Crude oil for example, has dropped to around $50 a barrel from its near $150 record set in July.

Central banks globally have slashed rates in the hope that cheaper credit will spark a revival in their economies. Government have spent hugely on fiscal stimulus package and some data suggests the worst of the crisis may be over.

In Asia, exports have collapsed as recession in major demand centres such as the United States and Europe hammered demand. But signs that the recession is easing has raised hopes that Asia’s export engine may see a return of some demand, albeit from low levels.

Indeed, major exporters South Korea and Japan have both seen a pick up in monthly exports even if they are still much lower than year-earlier levels. Annual falls in exports elsewhere have become less severe.

SOME WILL CUT, SOME WILL NOT

In Thailand, the fall in prices is seen as largely technical and reflective of the sharp falls in the past year in commodities prices rather than the result of falling demand.

The latter is feared by policy makers because it can add an extra weight on growth or push an economy deeper into recession.

“With very, very little risk of inflationary pressures, and with monetary conditions still fairly tight, there remains a scope to cut rates to support growth,” said Carl Rajoo, an economist at Forecast in Singapore said of the Bank of Thailand.

“The central bank is likely to make a measured cut in May, and then wait and see before additional loosening is started,” he said.

The Bank of Thailand is due to review policy next on May 20, when analysts expect a 25 basis-point cut in the policy rate to 1.00 percent, the lowest level since the central bank started targeting inflation in 2000.

The Bank of Thailand has already cut its policy rate by 250 basis points since December to support an economy widely seen as in recession and pressured not only by the global downturn but by political unrest.

In Indonesia, an easing in food price pressures and a 14 percent rise in the rupiah against the dollar since early March, making imports more expensive, has weighed on prices.

Inflation has come down steadily from above 12 percent just seven months ago giving the central bank room to keep cutting interest rates to support Southeast Asia’s largest economy, whose exports are falling at close to 30 percent.

“We expect Bank Indonesia to cut rates by 25 basis points in May and (in) June,” said Helmi Arman, an economist at Bank Danamon in Jakarta. The central bank next meets on Tuesday.

However, South Korea’s central bank is seen holding fire for now.

It has skipped rate cuts at its last two meetings and is expected by financial markets to leave rates unchanged at a record low of 2.0 percent at its next meeting on May 12.

Inflation has fallen steadily, but growing optimism the economy may be starting to turnaround suggests the central bank will save its monetary ammunition for now. Since the financial crisis blew up last year, it has cut rates by an unprecedented 325 basis points.

South Korea’s inflation rate fell to 3.6 percent in April, its lowest level in 14 months but with some signs in the trade-reliant country that exports are picking up, the central bank is unlikely to use inflation as a cue to cut rates again.

The Philippines is expected to report on Tuesday that its consumer prices inflation fell to a 16-month low of 4.7 percent in April, also paving the way for the central bank to cut its overnight borrowing rate, already a 17-year low of 4.5 percent, at its next meeting on May 28.

Source: Reuters, 04.05.2009

Filed under: Asia, Indonesia, Japan, Korea, News, Thailand, Vietnam, , , , , , , , ,

Asian electronic trading revenues to decline – TABB

Electronic trading revenues are anticipated to fall in the Asia-Pacific region, while the development of dark pools is expected to stall, according to new research from consultancy TABB Group.

In ‘Asian Equity Trading 2009’, TABB predicts that income from electronic trading will slip 16.9% to $815 million this year, from $981 million in 2008. This follows a similar decrease of 17.7% in institutional value traded in the previous 12 months, a drop that affected overall trading strategies in Asia, according to TABB.

“In the second half of 2008, there was a significant pullback leading into the first quarter of 2009,” said Matt Simon, TABB Group analyst and author of the report. “Traders saw liquidity sink.”

The study, which examines institutional trading across Japan, Hong Kong, Korea, Australia, Singapore and Taiwan, estimated that dark pool uptake in Asia-Pacific would take longer to develop than in the US and Europe. TABB predicted that by 2010 3.5% of value traded would be matched off-exchange in Japan and 1.5% in the five other market centres examined. Volatile market conditions have also marked a return to VWAP/TWAP algorithmic trading strategies from buy-side traders in the region, the report added.

Despite the decline in electronic trading revenues, global expansion in the region is expected to continue, driving connectivity to new markets such as Malaysia, Thailand and Indonesia.

Source: The New Trader, 23.04.2009

Filed under: Asia, Hong Kong, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Trading Technology, , , , , , , , , , , ,

Asian equity electronic trading revenues to sink in 2009 – Tabb

Equity electronic trading revenues in Asia Pacific are set to see a 17% fall this year, with liquidity sinking during the downturn, according to research from Tabb Group.

Tabb predicts revenues will drop to $815 million, down 16.9% from $981 million in 2008. This follows a 17.7% decrease in institutional value traded from 2007 to 2008, a year-over-year drop that has affected overall trading strategies across Asia.

Tabb says the global downturn hit just as electronic trading was taking hold in the region, forcing many hedge funds to curtail electronic strategies or simply shutter operations.

Matt Simon, Tabb analyst and report author, says: “In the second half of 2008 there was a significant pullback leading into the first quarter of 2009. Traders saw liquidity sink.”

The research also highlights the slow rate of dark pool trading adoption in the region. Dark pools are estimated to account for at least 10% of all equity trading in the US whilst the introduction of MiFID has spurred their growth in Europe.

They are far less popular in Asia although last month Goldman Sachs launched its Sigma-X dark pool equity trading system in Hong Kong, while CLSA, Instinet and Investment Technology Group also run platforms in the region.

Yet Tabb estimates that only 3.5% of value traded will be matched off-exchange in Japan by 2010, up from 1.2% in 2008. In Hong Kong, Korea, Australia, Singapore and Taiwan, there will be just 1.5% traded off-exchange, although this compares to a paltry 0.3% in 2008.

Other trends indentified by the report include continued global expansion, which is driving connectivity to new markets such as Malaysia, Thailand and Indonesia

In addition, buy-side firms have returned to volume-weighted average price (Vwap) and trade weighted average price (Twap) strategies amidst current volatile market conditions. Meanwhile demand for transaction cost analysis is increasing with 35% of buy-side firms using some type of independent TCA.

Source: Finextra, 23.04.2009

Filed under: Asia, Australia, Exchanges, FIX Connectivity, Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Thailand, Trading Technology, , , , , , , , , , , , , , , , ,

Challenges and opportunities for Islamic finance; BMB Islamic UK

Humayan Dar, chief executive officer of BMB Islamic UK, discusses new developments in Shar’iah-compliant finance.

BMB Islamic was founded in 2007 in London to provide Shar’iah advisory and structuring services. It enlists Shar’iah scholars and Islamic financial consultants to guide investors, lawyers and other investment professionals.

What new developments are taking place in Islamic finance?
There is little in the world of conventional finance that Islamic finance cannot replicate – whether in terms of financial instruments or funds. Sukuk — similar to bonds — are of course very well established now, and going forward it will be interesting to see which jurisdiction, whether Malaysia or the Middle East, will evolve as the dominant one for issuance and trading. But even sophisticated fund structures, such as private equity, hedge funds or specialist funds, are being set up so they are Shar’iah-compliant. We, at The BMB Group, have recently formed a private equity joint venture with Emerging Markets Partnership (EMP) to invest in emerging markets. BMB Islamic is also helping an investment bank to set up a Middle East infrastructure.

What about regional cooperation?
On February 18, The BMB Group formed a partnership with the International Zakat Organisation (IZO) to set up and manage a 2 billion Malaysian ringgit Global Zakat and Charity Fund, which will manage zakat (the act of giving alms to the poor) and other charitable funds to alleviate poverty in the 57 states which are members of the Organisation of the Islamic Conference. It is a long-awaited initiative. There has been inevitably a huge emphasis on Shar’iah-compliance in Islamic banking and finance, but the announcement of a Global Zakat and Charity Fund is the beginning of a new Islamic financial trend, which favours social responsibility and community development.

Will there be a resolution of what seems to be conflicting jurisdictions and centres for Shar’iah interpretation, and also competing centres for Islamic business?
In Malaysia there is strong inherent demand for Islamic products and the country has rapidly developed as a centre for Islamic finance. Perhaps most importantly, the government has provided institutional support, particularly through Bank Negara Malaysia (the central bank) but also through favourable legislation and tax treatment, for Islamic products. Middle Eastern financial houses have recognised this, and hence have entered the Malaysian market either directly or through partnerships and joint ventures. Malaysia is also correctly perceived as a gateway to other Asian markets.

Significantly too, Shar’iah-compliant financial products are now seen as competitive alternatives for non-Islamic people, who will happily buy them if they prefer the returns or their risk profiles compared with conventional products. Islamic finance is in the mainstream in Malaysia and is likely to become so elsewhere in the world — even Europe. Product standardisation will come through time, not by edict but through a wide acceptance of a particular norm.

What about Indonesia?
Indonesia, with its vast Muslim population obviously has tremendous potential. Once the institutional framework is in place — and already the government has issued its first sukuk — then the market should develop quickly. Perhaps the authorities need to be more like Malaysia and be more proactive and encouraging. Islamic finance will expand to countries and regions where there is a friendly regulatory environment, supported by a clear legal framework.

How will this year pan out, and what will be your main role?
This year will be tough, as it will be for all financial markets. However, pressure on government budgets, especially in the Middle East due to the lower oil price, means that some significant sukuk issuance is likely.

But, actually, the current conditions also offer the potential to take advantage of new opportunities and provide new products. With so much uncertainty, investors are seeking alternative havens for their capital, while depressed asset values of all kinds means there is a chance to build portfolios from a reasonable cost base. For instance, Islamic art funds are becoming popular.

An essential role for us is to monitor the Shar’iah-compliance of funds which are advertising and marketing themselves to Islamic customers. Integrity and credibility is all important.

Source: FinanceAsia.com, Rupert Walker , 26.02.2009

Filed under: Banking, Islamic Finance, News, , , , , , , , , ,