Showing posts with label share market. Show all posts
Showing posts with label share market. Show all posts

Wednesday, August 3, 2016

5 Technologies That Can Change Stock Markets Forever


1
Improved Insight on Risk Undertaken

Disturbance in digital system has been making the financial markets more apparent, reachable and efficient. Besides this it also tends to help the regulators in getting an improved insight on the risks which the applicants may seem to undertake. The following technologies could transform the financial markets in the forthcoming days:

Artificial intelligence and natural language processing 

Several of the financial companies are adopting algorithms in doing the tasks which humans have been performing for years. Mechanism learning systems have been enhanced considerably and with expanding processor potentials at lower cost, these systems are made available for larger usage. The techniques for artificial intelligence enable the system to learn from user connections as well as patterns without the need of being openly programmed for the same.

Machine learning together with other artificial intelligence technologies, in the past few years, has provided us with self-driving cars, real-world speech recognition, chess champions as well as more related as well as realistic web-searches. With regards to financial markets, we have software analysing voice patterns of recorded calls at investment banks, brokerages and on the client side too which could instantly distinguish irregularities and frauds, It can also look at keywords, decode conversational encryption of information and achieve difficult searches on the recordings.

Robo Advisers 

From the present situation, there could be probabilities that we would be seeing the last few Wolves of Wall Street and Dalal Street and moving ahead we may have only robots of Wall Street and Dalal Street. Though the systems hasprogressed in grasping the monetary goals, risk profiles together with the other complex details of investment to come up with personalised investment portfolio, it could alter funds, book profits or square off position depending on self-learning processes. The platform could be either for web-based and/or smartphone based, thus enabling easy access or adapt.This is said to be self-operated without the need of the user talking to a live person. Compared to a human advisor who tends to charge a portfolio management fee, the services here are rendered at no recurring expense.

Quantum `sealed envelope’

Outrages centred on information theft have often been a nightmare for performers in financial markets. Till now, hackers have somehow achieved to stay ahead of security programs as well as passwords though it could change very soon. A team of researchers inGeneva, Singapore, Cambridge and Waterloo and Ontario had utilised the breakthroughspeculative work co-authored by Dr Adrian Kent from University of Cambridge’s Department of Applied Mathematics and Theoretical Physics in providing `unconditionally guaranteed’ security as well as purity of message transferred from any two points on earth. Earlier trials using these digital `sealed envelopes’ is said to be successful and if all goes well, the monetary markets would be entirelysecured against any threat of statistics invasion.

Bitcoin and Blockchain technologies 

The distributed ledger, Blockchain technology after the virtual currency Bitcoin, tends to record the financial transaction of any digital interaction in secured, transparent, traceable and in an efficient manner. So it is appropriate in providing a universal virtual currency as well as for digital accounting and auditing financial transaction of any kind. The possibility of Blockchain technology is understood from the fact that 30 of the largest banks in the world had recently formed a global consortium to research, design and build Blockchain solutions further. Besides this, the Reserve Bank of India – RBI that had issued a cautionary note in 2013, against Bitcoin had changed its stance. The Indian central bank is now of the belief that the Blockchain technology could be helpful in the prevention of counterfeiting currency as well as financial transactions.

Big data and analytics 

Financial markets tend to generate enormous amount of data each second. Storing and analysing these details on real time basis could be critical. With a combination of private as well as public cloud tends to resolve the issue of storage as well as real-time access to this multitude of data at reasonable charges. Big data analytics tend to make it likely to highlight correlations which seem incredible for humans to locate. For instance, envisage a situation where 90% of orders that are positioned on NSE and BSE through high-frequency algorithmic dealing platforms tend to abruptly get cancelled within a span of less than 30 seconds.

 A human may never have known such trends with so much accuracy; RBI had highlighted this trend last year and alerted the market regarding it. Such kind of analysis could never be done without leveraging technology for big data scrutiny. There could also be software which could analyse thousands of social media feeds regarding the sentiments and news of a company and could try to forecast future as well as probable sentiments regarding the company. These visions could change the way institutional as well as retail investor trade in the market. Though some of these technologies could be in its initial stage of development and may need substantial enhancement together with market interest, the base has been set for digital alteration.

Monday, February 15, 2016

Buybacks Could Be the Stock Market Savior This Year

stock_market

Dividend Issuance/Share Buybacks – Post-Financial Crisis


Companies may have to fend for themselves considering the gradually bleak in stock market returns. In 2016, retail investors have been bailing on stocks and pulling money from the domestic equity funds each week due to which the S&P 500 was down by 8% year till date before the market plunge on Monday.

This was a bad indication for a market that historically takes its full year hint from how it transpired earlier and companies seemed to be willing to step into the emptiness. Dividend issuance together with share buybacks were the major tailwind for the post-financial crisis bull market that would turn 7 years old in a month had it had managed to hang on through the present volatility.

Short historical valuations accompanied with cheap money had given rise to pushing companies to return trillions to the investors. Due to the blackout period over for buyback declarations, Wall Street is hoping for big things. Chief U.S. equity strategist at Goldman Sach, David Kostin, had mentioned in a note his team had sent to client recently, that early indication are that 2016 buybacks are `on pace to be one of the fastest starts on record’.

Companies Expressed Continued Commitment to Buybacks


So far the total announcement was $63 billion scarcely a month into the year, with Kostin considering that it is just the beginning. He comments that companies have usually expressed a continued commitment to buybacks, aware that the market weakness could be a reason for increase instead of narrowing their purchases.

 In 2015, buybacks had amounted to $724 billion, a year which had ranked second only to 2007 in total volume as per market data research firm TrimTabs. The year set a second record for several corporate money, utilised for buybacks as well cash takeovers at $1.41 trillion.A comparison with 2007 would not essentially promise well for the market taking into consideration that was the year wherein the house-led bull market started to crash.

However, the conditions of the market were different, where optimism was running high and equity allocations almost at 70% in 2007. Investors were cautious of the stock market with Goldman’s indicator putting sentiment at 2 on a scale of 1 to 100. Kostin had informed that it indicates a likely market rise of 4% in the following month depending on corporate buyers filling the void left by retail investors.

Management Optimism Important to Market


He further added that management optimism was important to the market since corporates tend to represent the main source of demand for U.S. equities beyond the present environment and the increase in buyback activity after 4Q earning season usually matches with the out performance of large stocks of buyback.

Classifying single companies, he said tend to poise for significant buybacks comprising of Gilead Sciences that specified $12 billion and 3M with $10 billion. Besides this, GE is composed for a hugs cash deployment for an unspecified mix of buybacks as well as dividends.

On the other hand Apple, Microsoft and Qualcomm too have substantial cash on hand to give on buybacks. Though the flow in buybacks has matched the sharp run-up in stock prices, investing money especially towards companies which tend to use their cash in that way has faced mixed success.

Wednesday, January 13, 2016

China Stocks Recover, Asian Markets Breathe Sigh of Relief

China

Shares Recover in Asia- Chines Yuan Stable for 3rd Day


Trading seemed to remain uneven on the mainland stock market though shares recovered in Asia recently as the Chinese Yuan become stable for the third straight day. The Shanghai Composite Index SHCOMP, +0.17% increased 0.4% to 3028.04 though traded up and down as around 1% from its earlier close.

The main stock market of China dropped 5.3% last week amidst fear that the authorities of China seemed to be unable to stem the latest chaos in the financial markets as well as s slowdown in the larger economy. In another place, the Australian S&P/ASX 200 XJO, -O.14% dropped 0.1%, South Korea’s Kospi SEU, -0.21% was flat while Hong Kong’s Hang Seng Index HSI, -0.84% rose 0.2%.

Where the markets seemed to be closed for national holiday on Monday in Japan, the Nikkei Stock Average NIK, -2.71% tracked Monday’s regional losses dropping 2%. The Chinese Yuan sustained to steady on Tuesday but the central bank directed the slightly weaker currency. Previously, the Chinese authorities had fixed the Yuan at 6.5628 per U.S. dollar when compared with 6.5626,on Monday.

Offshore Currency Hits Strongest Level


China’s onshore Yuan that could trade 2% below or above the fix, had traded last at 6.5733 per dollar, weaker than 6.5695 at Monday’s close and the currency had reached a five year low of 6.5956 last week. Offshore currency had hit its strongest level from the beginning of the year on Tuesday and had trade last at 6.5705.

The offshore Yuan, which tends to trade freely, on late Monday, strengthened by around 1.5% to 6.5827 to one U.S. dollar when compared to the earlier close, which helps to contract the gap between the onshore and offshore Yuan to its tightest in two months. Traders are of the opinion that the offshore Yuan is strengthening since state-owned Chinese banks tend to buy the currency, which is an intervention by central bank of China.

This had limited the supply of the offshore Yuan, thereby tightening the liquidity and sending the rate at which the Hong Kong banks tend to lend Yuan to each other overnight, to a record high of 66.815%, on Tuesday. The rate soared to 13.4% on Monday from 4% on Friday.

According to Tommy Ong, head of Wealth Management Solutions at DBS in Hong Kong commented that `a lot of channels bringing money from onshore to offshore market has been blocked which also tends to contribute to the shortage of Yuan in Hong Kong.

Beijing Continues to Affect Global Market Mood


The regions’ stock gains Tuesday, tends to offer some absolution after the chaos of the earlier week caused by a faster than anticipated depreciation of the Yuan, when the currency had fallen 1.5%. The stock regulators also seemed to come in last week in order to calm the trading stating that they would do away with a circuit breaker which tends to aggravate selling and extend a ban on big shareholders from selling the shares.

However, China shares are presently roughly just 3% above their summer low on August 27 after a 3 month retreat wiped trillions of U.S. dollars from the marketplace, sparking a global selloff. Traders as well as analysts state that they are uneasy since Chinese authorities oppose with the prospect of increasing the capital outflows from the world’s second largest economy.

Market analyst at Brokerage IG, Bernard Aw,in a morning note had written that `for now, it may seem like the tweaks that Beijing makes will continue to affect global market mood.

Tuesday, April 21, 2015

Impact of New Money Market Rules

Money
Securities & Exchange Commission – Passed New Rules 

When money became a product, the money market became an element for the financial market for possessions for the purpose of lending, in short term borrowing, buying and selling with original maturities for a year or less and trading in money market could be done over the counter.

Securities and Exchange Commission – SEC had passed some new rules which governed money market fund in mid-2014 and these rules were designed to contest the probable problems on liquidity if the economy would envisage a financial meltdown like the 2008-2009. Usually the money market fund is where several investors tend to invest their funds and the shares of the funds have a constant $1 per share value and there was instant liquidity.

 According to the new rules there is some change to these attributes for some money market funds. Some money market funds will be having floating net asset value – NAV when the new rules are applicable and these funds will not be priced at the prevailing $1 per share. This is turn will have an impact on the institutional municipal money market funds as well as institutional prime/general purpose money funds only while retail money market funds will not be affected by this rule.

Two Kinds of Liquidity Fee

The new rule is for two kinds of liquidity fee which could levy rigid fees on redemptions especially those conventionally low return vehicles and if the weekly liquid assets of money market funds tend to fall below 30% of the total fund’s assets, the board of directors connected with the funds could impose a 2% fee on redemption of funds.

Should the money market fund’s weekly liquid resources tend to fall below 10% of the total assets of the fund, then the redemptions could be subject to a 1% redemption fee if the board of directors vote otherwise. This new rule is then applicable to both the institutional as well as retail municipal and prime/general purpose money market funds.

If the money market fund’s liquid assets fall below 30% on the whole assets, the funds’ board of directors are permitted to vote on whether to restrict all fund redemption for 10 days and agreed that money market funds could be used for their low investment risk and liquidity, the burden of redemption could be difficult for several investors.

Vanguard’s Ultra Short Term Bond Fund 

After the announcement of the new rules, some new short term bond mutual funds have come up which include Vanguard’s Ultra Short-Term Bond Fund – VUBFX, but according to Vanguard, the launch was not connected to new money market fund rules. Higher yield than money market funds are offered in short term bond funds though they also have additional market risk depending on their underlying holdings.

The average ultra-short term bond funds, according to Morningstar Inc. – MORN, lost 7.89% in 2008 and financial advisors could be wise in reminding clients intending to seek more yields on the potential risks of presuming that these funds could be a substitute for money market funds. In an effort in preventing a collapse of financial system in case of another economic meltdown, as the financial crisis which occurred in 2008-2009, the SEC have approved several changes in the rules that govern money market funds.

While some will have redemption fees levied on shareholders in some cases and others will see their NAV enabled to fluctuate from the traditional stable $1 per share, these changes will compel investors as well as financial advisors to reconsider how to use the money market funds while at the same time look for other alternatives.

Friday, February 6, 2015

NIIT Tech Nets Dip By 9.2% in Third Quarter


NIIT
NIIT Technologies is one of the mid-tier IT services firm which had recently reported 9.2% decline in its net profit which now stands at Rs. 48.2 crores at the completion its third quarter. Comparing it with the third quarter of the last year, its revenue shows a minimal increase of just 1.4% with at Rs. 595.3 crore while it posted net profit of 53.1 crore last year for same quarter. The third quarter of each year is seen as a least productive and rather weak quarter by financial analysts.

Company Grows By Just 1% on Sequential Basis

On the sequential basis NIIT net profits had registered a growth by 20.02% which a result of improvement in the operating margins, higher incomes and lower depreciation rates during the months of July-September 2014. NIIT Technologies CEO and Joint MD, Arvind Thakur, had stated that NIIT had seen its operating margins improve by 15 basis points sequentially to 14.5% as a result of productivity initiatives in the third quarter. In the constant currency NIIT grew by one percent sequentially during the last quarter.

The company’s had even seen a dent in its operating margins because of the specific engagement in the beginning of the year which even explains the decline in net profit at the year-end. Regarding the overall demand of the NIIT IT services, Thakur had opined that the company had seen a robust growth in the United States but it weakness factor continues in the Euro Zone while excitement factor remains high in India.

NIIT Expand Its Revenue Generation

NIIT has seen healthy growth and expansion of revenues in Asia Pacific (APAC) and India. Most the revenue being generated this quarter is being pointed towards the execution of large orders which were secured by the company earlier this year. Now company’s revenue share had increased to 21 percent in this particular region. Whereas the Americans had contributed by 44% to the revenue while the Europe, Middle East and Africa counted for the 35 of the company’s revenue.

During this quarter NIIT had secured $109 million worth of new orders. Around 55% of new business was secured in the US. NIIT Technologies had even added five new customers during the third quarter out of which two are in US and one each coming from India, APAC and EMEA.

NIIT Supposed To Have Strong and Stable Last Quarter

The decline in the oil prices globally is helping to the cause of the NIIT as travel constitutes the largest chunk of the company’s revenue. The higher other income is accounted by the revaluation of assets and liabilities. NIIT is holding up strong regardless of the current volatility in the currency as due to gains from the dollars but incurring losses from the Euro and GBP.

However NIIT had frozen its hiring procedures and suffered a decline of 229 people in the workforce which is being attributed to the natural attrition rate of 15%. NIIT would begin hiring again from the current quarter in order to boost its workforce.

Saturday, December 20, 2014

Gold Prices Ends Fluctuations As The Market Consolidates


Gold

Gold prices finally find a steady ground after the Friday US trading. The continued safe-haven demand and a lower U.S. Dollar index are limiting the selling pressure in gold which is a good sign. February Comex gold was last up by $1 at $122.20 an ounce while Spot gold was last down by $1.40 at $1226.50. March Silver last traded up by $0.048 at $17.155 an ounce. Both gold and silver near term technical had shown a considerable improvement this week.

Falling Price of Crude Oil

Market is still focused on the falling price of crude oil. January Nymex crude had hit another five year low $58.80 a barrel. International Energy Agency has released a report which predicted that the world demand for the crude would reduce in 2015. The consumers are cheering the falling of the gasoline prices at the pump while the traders and investors are greeting the decline with anxiety. World Stock markets are also not faring well either and they are under selling while the U.S. stock indexes are also seems to be lower in the pre-market trading on early Friday. The sell off trend in the world equities has benefitted safe assets mainly gold and U.S. Treasuries this week.

Other Markets Also Reels Under Pressure

The Bank Of Russia has once again intervened in the currency market to strengthen its ruble which had hit another record low against the U.S. dollar. The ruble is astonishingly down by 44% against the U.S. dollar this year. European Union also shows below the market expectation figures which are a cause of worry. EU industrial production rose by just 0.1% in October and was up by meagre 0.7% on year-on-year basis.
Among the Asian market China showed a stronger than expected bank loan activity in the month of November. On other hand Japanese Yen is suffering from selling pressure and volatile trading this week. Japan is soon to go through important elections from this Sunday.

Traders and investors are eagerly looking ahead for the next week when Federal Reserve’s Open Market Committee (FOMC) will meet to discuss about U.S. monetary policy.

Gold Seems To Settle After Huge Fluctuations

February gold futures are showing sideways consolidation after large gains in Tuesday trading which is not unusual. The gold bulls are almost reaching out for price breakout objective to register a growth against the solid technical resistance and they had successfully ended the week at high of $1239.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at $1,200.00. First resistance is seen at the overnight high of $1,228.90 and then at Thursday’s high of $1,233.40. First support is seen at the overnight low of $1,218.00 and then at $1,210.00.
This Wednesday the March silver futures hit its six week high. The Silver bulls’ next upside breakout objective is closing the prices above the solid technical resistance at the high of $17.825 an ounce while silvers ended their week low at $16.165. The First resistance was seen at the week high of $17.355 and next at $17.50. The next support could be seen at Thursday’s low of $16.945 and at 16.81.

Saturday, March 15, 2014

Wall Street Shaken By The Ukrainian Crisis Ends Down

Wall Street
Wall Street finished in the red on Friday as investors fearing an escalation of tensions around the Ukrainian crisis since the absence of diplomatic agreement between Russia and the West hence the Dow Jones dropped 0.27 % and the NASDAQ 0.35%. According to final results, the Dow Jones Industrial Average lost 43.22 points and the NASDAQ, dominated by technology lost 15.02 points. Indices fell late in the session after reaching equilibrium stay around for much of the day. Peter Cardillo of Rockwell Global Capital told that obviously the United States failed to prevent the holding of a referendum in the Crimea Sunday and we could end up with a complicated situation on Monday.

The inhabitants of the Ukrainian peninsula must decide if they want to separate from Kiev to attach to Moscow. In the days before the election, the U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov in London have failed to find a amicable solution after two weeks of intense diplomatic activities. Indices were also weakened in early trading by two indicators on lackluster U.S. economy, namely a slight decline in producer prices in the U.S. in February and surprise morale of U.S. household’s fall in March.

The impact of these figures, however, remained limited because their weakness is attributed to bad weather mentioned by Christopher Low of FTN Financial. On the values front, Yahoo! closed up 0.99% at $ 37.6, benefiting from news reports on the arrival of the Chinese Wall Street giant Alibaba e -commerce, which he is a minority shareholder. The General Mills, which has published quarterly forecasts lower expectations, lost 2.43% to 49.77 dollars. The automaker GM remained unchanged at $ 34.09. A consumer protection agency said Thursday that some of the recently recalled by the automaker models had a problem with airbag involved in 303 deaths. Liberty Media, one of the holdings of U.S. billionaire John Malone, jumped 7.22% to 135.25 dollars.

The group said Thursday that he would take full control of U.S. satellite radio Sirius XM (2.08 % to 3.44 dollars), which is already the majority shareholder. Banking stocks were in the red. The U.S. agency guarantees bank deposits has launched legal action against several of them for manipulation of Libor interbank rate, including JPMorgan (-1.08 % to 56.80 dollars), Citigroup (-0 95% at $ 46.88) or Bank of America (-2.10 % to 16.80 dollars). The bond market, considered safer than stocks and popular with investors in times of uncertainty, closed slightly higher. The yield on 10-year Treasury fell to 2.645 % against 2.653 % Thursday evening and the 30-year 3.587 % against 3.601 % on Friday.

Sunday, October 6, 2013

Exchange Traded Funds and Securities Lending



What about the liquidity of these investment vehicles? In normal operation, market makers are constantly present to disseminate buyer and seller and act as counterparty investors. Their presence ensures the liquidity of the ETF, even if it is built on the underlying assets or not illiquid. This is where we must bear in mind another practice widespread market: securities lending. Securities lending are at two levels in the world of ETFs. First, the fund issuer may be required to pay the securities in the portfolio to improve profitability. This additional income can be used to reduce the tracking error, or simply return the funds. In this case it should be distributed to the investor again. Second, ETFs are exchange-traded, investors can sell short.


This possibility is heavily used by hedge funds because ETFs can speculate down on an entire index, avoiding the hassle of selling each individual underlying security. The speculator must borrow the security sold short during the holding period of the short position. On the stock market, the stock of available titles is limited, hence a strong demand in the bond market makes way more expensive to borrow, which discourages speculators. It is not the same on the ETF market and they can be created on demand, which allows borrowing amount and so building significant short positions.

This leads to a rather unlikely situation first, where some of the ETF amount of short positions is several times the number of shares actually outstanding! Many holders of ETF therefore hold shares actually "ghosts”, which were sold to them by a short seller, the latter saying that the shares can be created anyway when the time comes. If sellers orders flock to the ETF arbitrage trading seen above, which we have seen, are fully automated trigger.

Specialized intermediaries massive demand the return of the underlying securities of the issuer. But the issuer may either not hold at all, or have lent. He will not be able to deliver immediately, or not being able to deliver at all. However, there are provisions limiting the daily volume of refunds on the money, especially if short positions identified above a certain threshold.

In addition, an “Authorized Participant" must prove , when requesting a refund on the one hand , that it is "real" and not the result of a securities loan at any level of the chain. If such clauses may allow the fund to survive individually in a debacle, they are unlikely to calm the markets. Indeed, if investors are denied the ability to obtain repayment of the shares that they were sold as completely safe and liquid , it is more likely that the panic spreads to all ETF , then why not the underlying assets.

Tuesday, October 1, 2013

Exchange Traded Funds may be the next bubble! -1



Exchange Traded Funds currently experiencing rapid development in the United States, where they constitute more than half of the daily trading volume in the equity markets. The expansion of these instruments is less visible for the moment in Europe, because in U.S. where half of the market is held by individual investors where as in Atlantic the investors are mainly institutional investors are present in this class asset. Just may be feared that the development of the ETF market is currently powering the next financial meltdown? Recall that the ETF are the basis of funds, that is to say, collective investment vehicles such as UCITS, whose purpose is to replicate the performance of a market index, upward or downward, and whose shares are traded on the stock exchange just like stocks. They offer investors the opportunity to take a position, with management costs and tax costs reduced on a market index, including inaccessible or illiquid markets such as emerging markets, small caps, etc.

There are ETFs on all sectors of the market, and if a little unlikely sector is not yet covered today and in tomorrow it will emerge as new ETF. This is happening almost daily. We will soon invest in the segment of companies specializing in the balloon or tie pins, or companies based in anywhere. If there is no index representing the performance of the sector concerned, no problem, it creates the index and the ETF in stride. The phenomenon went beyond the stock market and extends to all asset classes, bonds (ETN Exchange Traded Notes), commodities (ETC Exchange Traded Commodities), futures, currencies (ETV Exchange Traded Vehicle) etc. The set is grouped under the term FTE, Exchange Traded Products. In short it is a beautiful alphabet soup simmering and is reminiscent of a previous recipe, the securitization (remember the ABS, MBS, RMBS, CMBS, CDO, etc), which had overflowed with some damage collateral for the past 5 years from now.

On the road there is nothing simpler than ETF investor buys an index, and as follows, upward or downward, the performance of the index being tracked. But precisely how this replication is obtained? There are two main methods: physical replication and synthetic replication. With physical replication, the issuer of the ETF actually holds the portfolio securities of the index being tracked. It calculates and communicates information two times: first, the net asset value equal to the valuation at market prices of assets held , divided by the number of shares issued and secondly the market price of the share , which comes from the comparison of buying and selling interests in exchange just like a stock. Both figures; net asset value and share price must be the same to a small margin near.

What will happen in case of divergence? These are specialized intermediaries (“authorized participants "), mandated by the fund issuer, which come into action. If the market value of the share exceeds the net asset value then the ETF is moving faster than the rise in the index, they will buy a basket of stocks in the index. This then delivers their new units; they can sell on the market, realizing a capital gain. Conversely, if the market price is below the net asset value of the fund, they will buy ETFs on the market and present it to again, which reimburses them by delivering the underlying assets. They can then sell these securities on the market and making a profit. These so-called arbitrage transactions are fully automated and have the effect of “realign " asset prices that were uncorrelated. It is the development of algorithmic trading has led to the development of ETFs.

 In case of synthetic replication, the issuer does not directly hold securities of the index, but other assets. It will then go to a specialized intermediary , typically a bank, to negotiate with him a "total return swap " the bank pays the issuer of the ETF 's performance index, while it reverse the performance of assets held in the portfolio. Physical replication is mainly practiced in the United States, where regulation severely limits the use of derivatives by collective investment funds. In Europe, ETFs are equally divided between the two modes of replication. We are mainly interested here in the physical replication, in which today we have a little more perspective. All this cooking takes place behind the scenes between specialized players (asset managers, hedge funds, brokers and banks financing and investment), thus preserving the image of simplicity and transparency between the final investor.

This should not, however, be fooled: many intermediaries are involved in constantly, and we must be aware that they do not by pure philanthropy, but because they have an interest. There was a second there the resemblance securitization market: the first beneficiaries of financial innovation are not the ultimate investors, but those who create and distribute these innovative instruments. That said, proponents point out that these ETF products are primarily funds, and so most of them are within the regulatory framework for the funds. These regulations, both in Europe in the United States, are very demanding especially in terms of transparency to investors . It is up to them to read the prospectus in which he will find, in principle, all the necessary information.

Monday, April 15, 2013

The Euro fell against the Dollar!



The Euro lost ground against the dollar on Monday as investors flee to the safe and is that the flat after the release of Chinese and U.S. indicators bode well for global economic growth.. The European single currency fell against the Japanese currency to 126.05 yen against 128.91 yen Friday. The dollar also fell against the Japanese currency to 96.72 yen against 98.35 yen on Friday. The currency market "is marked by a combination of lower than expected indicators in China and the United States that suggest that the global economic recovery is losing some of its momentum," noted Kathy Lien BK Asset Management . China has indeed made from a slowdown in growth to 7.7% annual rate in the first quarter, reviving concerns about the fragility of the analysts of the second world economy. Along with the United States in March, the growth in manufacturing activity in the New York area slowed more than expected and homebuilder confidence fell. "The fact that the world's two largest economies are showing signs of weakness at the same time" gives rise to "feelings of anxiety" among traders, said the expert. These concerns weighed on investor sentiment that favored currencies deemed safer, as the dollar and the Yen, at the expense of risk currencies like the Euro. The decline of the single currency, however, remained limited during most of the session with "a stronger than expected figures on foreign trade," noted Ms. But the announcement in late NY session, several explosions in Boston has strengthened the curve. For its part, the yen continued to gain momentum, traders reaping profits after the fall of the yen due to the decision of the Bank of Japan (BOJ) a new wave of monetary easing. Around 2100 GMT, the British pound advanced slightly against the euro at 85.29 pence per euro but fell to 1.5283 dollar. The Swiss currency advanced against the euro at 1.2140 Swiss francs to the euro but fell at 0.9312 Swiss francs to the dollar. The ounce of gold finished at $ 1,395 at auction tonight against USD 1,535.50 Friday, before falling to $ 1,335.30, its lowest level since February 2011. The Chinese currency finished at 6.1869 Yuan to the dollar, the highest closing level of the Yuan since 1994, when China has pegged its currency to the dollar, against 6.1921 Yuan on Friday.