Monday 22nd December 2014
NEWS TICKER: MONDAY DECEMBER 22TH 2014: Scotiabank’s Commodity Price Index dropped -4.8% m/m in November (-6.1% yr/yr) and will end 2014 in a ‘deflationary’ mode, says economist Patricia Mohr. "Significant capacity expansion and the defence of market share by major oil and iron ore producers— against a backdrop of lacklustre world economic growth — account for the softness at the end of the year," she says. Mohr adds that the decision by Saudi Arabia not to reduce output to shore up international oil prices, but instead to allow prices to drop to levels curbing US shale development appears to be having a negative impact on confidence in a wide variety of other commodity as well as equity markets. She predicts prices will fall further this month, but will start to rebound in mid 201 - Jonathan Hill, the EU's financial-services commissioner, says he plans to pursue rules that separate a bank's proprietary trading from retail operations. "The sensible thing to do is to seek to make progress quickly" on the issue, Hill said. "There are still areas of risk in some of the biggest and most complicated banks,” reports Bloomberg- CME Group, said yesterday that it will change daily price limits in its CME Feeder Cattle futures effective today, pursuant to its emergency action authority. The current daily price limit for CME Feeder Cattle futures is $3.00 per hundredweight and will change to $4.50 per hundredweight effective on trade date December 18th Additionally, effective December 19th (tomorrow) these limits will have the ability to expand by 150% to $6.75 per hundredweight on any business day in the event that one of the first two contract months settles at limit on the previous trading day. CME Feeder Cattle futures have been locked limit for five consecutive days as a result of various factors. The change to daily price limits is necessary to ensure continued price discovery and risk transfer, says the CME. Daily price limits for CME Live Cattle futures will remain unchanged at $3.00 per hundredweight. Effective Friday, December 19th, these limits will have the ability to expand by 150 percent to $4.50 per hundredweight in the event that one of the first two contract months settles at limit on the previous trading day - The Straits Times Index (STI) ended +16.42 points higher or +0.51% to 3243.65, taking the year-to-date performance to +2.49%. The FTSE ST Mid Cap Index gained +0.29% while the FTSE ST Small Cap Index gained +0.71%. The top active stocks were Keppel Corp (+2.68%), SingTel (-1.02%), DBS (+2.36%), Global Logistic (-3.21%) and UOB (+0.30%). The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+3.13%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (+6.38%) and Geo Energy Resources (unchanged). The underperforming sector was the FTSE ST Telecommunications Index, which declined -0.98% with SingTel’s share price declining -1.02% and StarHub’s share price declining-0.73%. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+2.56%), DBXT CSI300 ETF (+0.42%), STI ETF (+0.61%). The three most active Real Estate Investment Trusts (REITs) by value were Ascendas REIT (-0.42%), Keppel DC REIT (unchanged), Suntec REIT (+0.26%). The most active index warrants by value today were HSI23400MBeCW150129 (+7.32%), HSI22600MBePW150129 (unchanged), HSI24000MBeCW150129 (+12.50%). The most active stock warrants by value today were KepCorp MBeCW150602 (+21.95%), DBS MB eCW150420 (+29.29%), DBS MB ePW150402 (-18.03%) - Spain’s Director of Public Prosecutions, Eduardo Torres Dulce, has resigned from the post for “personal reasons”, Spanish daily El Mundo reported this morning. A spokesman for the Public Prosecutor’s office confirmed the news by telephone to The Spain Report, saying that Mr. Torres Dulce had informed Justice Minister Rafael Catalá of his decision: “but that it perhaps would not come into effect until they find a replacement”. That decision is taken at cabinet level. The next cabinet meeting for Rajoy’s government is tomorrow morning - Hedge funds including Marshall Wace, Odey Asset Management and Lansdowne Partners are shorting OTP Bank Plc, a Hungarian lender with a Russian subsidiary whose shares have fallen almost 6% this month reports Albourne Village. All three London-based funds took or increased their position this month in OTP, Hungary’s largest lender, according to data compiled by Bloomberg. The ruble rose today in Moscow after plunging as much as 19%against the dollar yesterday, when Russia’s central bank increased interest rates to 17% percent from 10.5 percent in an attempt to stem the decline. The ruble is down 52% this year and has taken a disproportionate beating in the wake of sanctions and falling oil prices. The country still has the third largest currency reserves in the world and so is unlikely to default. According to Eric Chaney, Manolis Davradakis and Greg Venizelos from AXA IM’s Research and Investment Strategy team Russia will likely resort to fiscal stimulus to contain the risk of social and political unrest. Capital controls, political unrest and even default on private hard currency debts are possible outcomes they say. They credit default swaps market is pricing a one-third probability of sovereign default within five years - Indonesia is ramping up financing for its $439bn development program, planning an almost fivefold increase in sales of project sukuk. The government is seeking to raise IDR7.14trn rupiah (around $568m) from notes that will fund particular construction ventures next year, compared with IDR1.5trn this year, which say local press reports, will help finance its estimated spending of about IDR5,519trn from 2015 to 2019 to build roads, railways and power plants.

Latest News

  • Friday, 19 December 2014 Chile traza un plan para potenciar las exportaciones de la PYMEs
    Ministro de Economía dijo que el foco está en apoyar a las empresas de menor tamaño que quieren exportar, sobretodo en este escenario de tipo de cambio más elevado, pero no lo logran por falta de financiamiento, instrumentos financieros y medidas de fomento Read more...
  • Friday, 19 December 2014 El BCRA crea una oficina de Derechos Humanos
    El Banco Central de la República Argentina (BCRA) creará un área sobre Derechos Humanos en su estructura organizativa, que tendrá amplias funciones para contribuir a afianzar la defensa de los derechos humanos en el sistema financiero y también para investigar el papel del BCRA durante la última dictadura militar. Read more...
  • Friday, 19 December 2014 Estadísticas de fondos de inversión de la zona del euro octubre 2014
    Publicadas hoy por el Banco Central Europeo (BCE), las estadísticas muestran que en octubre de 2014, el saldo vivo de las participaciones emitidas por los fondos de inversión de la zona del euro distintos de los fondos del mercado monetario se situó 54 mm de euros por encima del nivel registrado en septiembre de 2014. Este aumento se debió principalmente a las emisiones netas de participaciones. Read more...
  • Friday, 19 December 2014 El gobernador del BDE es elegido miembro del JERS
    El Consejo de la Junta Europea de Riesgo Sistémico (JERS), reunido el pasado día 18, ha elegido a D. Luis M. Linde, gobernador del Banco de España, como miembro de su Comité Director. Read more...
  • Friday, 19 December 2014 Norway finance ministry says cyclical buffer unchanged
    The Norwegian Ministry of Finance has today decided to keep the level of the countercyclical capital buffer requirement for banks unchanged at 1% from June 30th 2015, in line with advice from Norges Bank. The Financial Supervisory Authority has stated that it believes the requirement should be set at 1.5% from the end of December next year. Read more...
  • Friday, 19 December 2014 Moody's affirms MFB Hungarian Development Bank's ratings
    Moody's has affirmed MFB Hungarian Development Bank Limited's (MFB) Ba1 foreign-currency senior unsecured debt rating and Ba2/Not-Prime foreign-currency deposit ratings. The outlook on the bank's long-term ratings was changed to stable from negative. Read more...
  • Friday, 19 December 2014 ESMA publishes tech advice and consults on MiFID II implementation
    The European Securities and Markets Authority (ESMA) has published today its final technical advice (TA) and launches a consultation on its draft regulatory technical and implementing standards (RTS/ ITS) regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). Read more...
  • Friday, 19 December 2014 ESMA consults on European Electronic Access Point (EEAP)
    The European Securities and Markets Authority (ESMA) has published today a consultation paper on the draft Regulatory Technical Standards (RTS) on European Electronic Access Point (EEAP). The consultation sets out ESMA’s proposals for technical requirements regarding the access to regulated information at Union level. Read more...
  • Thursday, 18 December 2014 Paraguay, perspectivas de desarrollo favorables
    El desarrollo económico externo, la situación actual de la economía paraguaya, así como las perspectivas de corto y mediano plazo para el país y la región, fueron algunos de los temas analizados durante la conferencia “Paraguay: Balance 2014 y Proyecciones 2015”, evento organizado conjuntamente por el Fondo Monetario Internacional (FMI), el Ministerio de Hacienda y el Banco Central del Paraguay. Read more...
  • Thursday, 18 December 2014 Consecuencias económicas en los productores de trigo argentinos
    Del informe elaborado por los Centros de Corredores de Cereales de Rosario, Bahía Blanca, Santa Fe y Entre Ríos, se desprende que en el mes de diciembre los productores dejaron de percibir en promedio $610 por tonelada, tomando como parámetro las diferencias entre la capacidad teórica de pago (FAS teórico) y el precio que efectivamente se paga por el trigo en el mercado. En otras palabras, por cada camión que se comercializa (30 toneladas), el productor deja de percibir $18.000. Estos resultados ratifican, según el informe, que las distorsiones que existen en el mercado de trigo continúan generando graves consecuencias económicas a los productores. Read more...
  • Thursday, 18 December 2014 El Banco Central del Paraguay mantiene la tasa de interés en 6,75%
    En su reunión de ayer, el Comité Ejecutivo de Operaciones de Mercado Abierto (CEOMA) del Banco Central del Paraguay (BCP), decidió por unanimidad mantener la tasa de interés de política monetaria en 6,75%. Read more...
  • Thursday, 18 December 2014 Informe: cambio estructural para el desarrollo económico salvadoreño
    La Red de Investigadores del Banco Central de Reserva de El Salvador (REDIBACEN), presentó a sus miembros la investigación “Cambio Estructural: Recomendaciones de políticas públicas para el crecimiento económico inclusivo en El Salvador”. Los resultados de la investigación fueron expuestos por sus autores, Pablo Amaya y César Alvarado, ambos del Departamento de Investigación Económica y Financiera del Banco Central. Read more...
  • Thursday, 18 December 2014 FDIC hones in on interest rate risk
    The Winter 2014 issue of Supervisory Insights, which was released today by the US FDIC, looks at key aspects of interest rate risk (IRR) management, including the implementation of effective governance processes, the development of key assumptions for analyzing IRR, the development of an in-house independent review of IRR management systems, and what to expect during an IRR review. Read more...
  • Thursday, 18 December 2014 ESMA launches consultations on implementation of CSD Regulation
    The European Securities and Markets Authority (ESMA) has launched three consultations on proposed technical standards, technical advice and guidelines implementing the Central Securities Depositories Regulation (CSDR). Read more...
  • Thursday, 18 December 2014 UK pensions: IPB charges/benefits in legacy schemes report released
    The Independent Project Board (IPB) responsible for overseeing the audit of charges and benefits in legacy defined contribution (DC) workplace pension schemes issued its final report yesterday. Read more...
  • Thursday, 18 December 2014 NZ-FMA warns of misleading UK pension scheme transfers
    The Financial Markets Authority (FMA) is warning people to be cautious of potentially misleading and deceptive advertising about transferring United Kingdom pension scheme entitlements to New Zealand. Read more...

MORE NEWS...
Key Stories from FTSE Global Markets

A new study from the International Capital Market Association (ICMA) identifies the main causes of the potential crisis facing liquidity in the corporate secondary bond markets in Europe and calls for coordinated action from all market stakeholders.

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Government bond yields remain near all-time lows, the Bank of Japan is monetising the country’s massive deficit, the European Central Bank is buying bank debt and China, the world’s growth engine for much of the last decade, has just cut interest rates.The most important theme for bond investors right now looks to be grappling with the implications of diverging central bank policy. Investors remain faced with the challenge of seeking returns within an ultra-low yield environment, without exposing themselves to undue levels of risk.  In this environment, which investment strategies have the requisite flexibility to seek out the best total return opportunities from the $100trn global bond market?

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Why are convertible bonds a fundamentally attractive asset class? The low issuance level of convertibles (relative to more traditional bonds) has until recently kept them in the purview of professional money managers. Frankly, convertibles have tended to be overlooked yet they share many of same characteristics of fixed income securities (a maturity date, principal repayment at maturity, fixed coupons and a credit rating). They also include an option to convert into the common stock of the underlying company. The bond-like characteristics of convertibles provide downside price support, while the embedded equity option provides upside potential. Convertibles looked to be priced reasonably right now, though this is not an allocation without risk. However the very nature of a convertible bond, with its asymmetric payoff profile, makes it interesting. Paul Latronica, portfolio manager, Advent Capital Management in New York, outlines some of the pros and cons.

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Now that some of the dust has settled following the implementation of several regulatory initiatives, such as Dodd-Frank, MiFID II/MiFIR, and European Market Infrastructure Regulation (EMIR), many financial institutions are grappling with how to deal with the impact these initiatives have had on their derivatives business. In this article, Phil Matricardi, who manages the Clearing Connectivity Standard for the communication of cleared OTC derivatives data on behalf of ISDA and Adam Kott, a senior associate business consultant based in New York, discuss why firms are adopting the new ISDA Clearing Connectivity Standard (CCS), introduced two years ago, for derivatives reporting and communication and why an industry utility for data transformation is a necessary next step.

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The Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) has issued a consultative document on criteria for identifying transparent and comparable securitisations. 

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