Friday, November 1, 2013
The Institute explains and insisting the most unfortunate side of this situation. Since that the United States now paved the way for the implementation of the pipeline project through a softening of sanctions against Iran, the new report says the gas supply agreement should be renegotiated, including on tariff part, otherwise deal a fatal blow to the country's economy. According to calculations made by the authors of the report, in the present state of things, the Iran- Pakistan pipeline should not be allowed to resolve energy problems of Pakistan and rather equivalent to a bailout. The reporters urged Islamabad to renegotiate the import of natural gas earlier price.
As a reminder, Pakistan has a production capacity of 24 000 MW combined electricity, but cannot currently reach this level because of natural gas supply problem. The country is indeed currently facing a decline in natural gas production, a problem even more crucial that domestic demand has more than doubled. To address this shortage, service stations selling compressed natural gas (CNG), low-cost fuel used by taxis, buses, motorcycles and motorists of the middle class will be closing soon. The quantity thus saved should serve the demand for home heating during the winter.
The Iranian public television Irib said in March that the construction of 900 km of the Iranian part of the pipeline was completed; adding that 780 km through Pakistani territory remained to be built. At that time, Iran had agreed to pay $ 500 million to Islamabad, one third of the estimated cost of the Pakistani portion. But Pakistan is currently facing financial problems in order to continue the construction of the particular section.
The case could take a significant extent in the coming months; Islamabad may be required to pay compensation to Tehran if Pakistan fails to complete by December 2014 part of the pipeline where it belongs, Pakistan has to pay one million dollars per day of delay. Tending the boom in Tehran, the Pakistani minister however said in early October that the time could be met if Iran had a hand in the portfolio. However, suggesting that the precious goods subsidies should be promptly put on the table quickly in order to ensure the availability of technical equipment necessary to complete the pipeline.
At present, nearly 50 % of Pakistan's needs are met by natural gas; analysts also believe that the country should look forward to more innovative options, not just the use of energy sources non- conventional and alternative. The report regrets that the country has not taken any substantial degree to initiate the process to take advantage of the potential of shale gas.
Urging Pakistan to follow the example of India to maintain high economic growth. Regarding the issue of sanctions against Iran, it has recently been raised by the Pakistani Prime Minister Nawaz Sharif , during his meeting with President Obama , but the authorities do not confirm or refute a possible softening of the position United States on the issue . Recall that the project, which emerged in the 1990s, has long been delayed, mainly because of pressure from the United States on Pakistan and India, which was initially involved in the IPI project (Iran - Pakistan - India).
For a decade now, the United States has tried to link the file to the sanctions against the nuclear program of Iran, warning against the risks of the same order that could lead to a possible participation. Faced with these pressures, New Delhi withdrew from the project in 2009, arguing that the financial and security problems.
Thursday, October 31, 2013
Experts believe that it is too early to identify a trend in the bond market; the trend is expected to grow according to them. They expect indeed that, in order to diversify their sources of funding Chinese groups continue to try to issue in Euros, and especially the Chinese domestic market does not seem big enough to meet its needs. Encouraging data, the two programs have met with strong demand; some even consider it quite exceptional.
The issue of Sinopec will thus attract a total of 279 investors demand to € 3.3 billion. Another factor to consider: the U.S. fiscal crisis will have prompted investors to turn to the European markets, while Old Europe can regain its appeal as a safe haven. Since the end of 2010, Chinese companies have flooded the credit markets with a dramatic speed.
In the space of a few years or a few months, China has become the first issuer of bonds in foreign currency, surpassing Korea with an average of $ 25 billion. According to Yves Jacob; in 2010, China raised less than $ 5 billion per year, which is an insignificant amount across international markets. For 2013, expects that will up about $ 100 billion. The current context of liberalization of the Chinese economy to alleviate the exchange control system will also gradually open the door to Chinese companies for a program on international markets while now offering the ability to repatriate funds in China.
Sunday, October 6, 2013
The indices are mounted on the first day of the budget deadlock, when hundreds of thousands of American officials have been on leave without pay due to lack of agreement on the budget to Congress. They fell Wednesday and Thursday “while walking away the possibility of a resolution close to the crisis," before resuming the force Friday. "Investors do not want to commit, neither too bet down to not miss the relief rally that will surely come when an agreement will be reached , nor of course too early to bet on good news ," he says. "If the situation is the same at the end of next week , then the indices, which have already lost 4% since the highs of mid-September, could lose it again as " the expert predicted . " But if there is a sense that things are moving, we can regain these losses. "
But beyond the economic impact of the paralysis of government services, investors see approaching at high speed the maturity of the debt ceiling that is after October 17, the U.S. Treasury will not be able to honor its payments. "Until now investors keep their calm, saying that one side will end up making concessions , or that the Treasury still has some cards in reserve to avoid default," says Douglas Porter of BMO Capital Markets . Investors are not rushing to the options market to protect their positions.
Even if the volatility has increased the portfolio managers did not make sudden changes of direction. Market players leave in a principle that politicians, even the most intransigent, “know they cannot play with the debt ceiling, it's much too dangerous." But, he laments, " you can always have a party completely loses control." Hoping that doomsday scenario does not materialize, investors will begin to look at the quarterly accounts of companies.
Finally, even if monetary policy has been overshadowed in recent days against uncertainty over the country's budget, brokers pay particular attention to the dissemination Wednesday minutes of the last meeting of the U.S. central bank. The institution was then largely surprised investors by maintaining the status quo on its measures to support the economy.
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
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.