Tuesday 22nd July 2014
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TUESDAY TICKER: JULY 22nd 2014 - The Zimbabwe Stock Exchange (ZSE) has been transformed into a company from a mutual society, opening the way for a public listing on the bourse it operates. The ZSE has been owned and run by stock brokers since 1946, but after demutualisation the brokers now hold 68% while the government owns the remaining shares. The Dubai Financial Services Authority (DFSA) alerts the financial services community and members of the public to misuse of the DFSA's name. It has come to the DFSA's attention that a fraudulent email purporting to be from the DFSA has been sent to a number of firms both inside and outside the Dubai International Financial Centre (DIFC). The false email: purports to be about a "DFSA Anti-Money Laundering Violation"; appears to come from "Amina Alshehi" from "Audit & Compliance"; attaches a "non-compliance notice"; and uses legitimate DFSA contact details. The email is fake, warns the DFSA. - Surecomp, the provider of trade finance solutions for banks and corporations, says Nordea has gone live in Frankfurt and London with the stand-alone version of allNETT, Surecomp's Web-based trade finance front-end solution – Saudi’s Kingdom Holding Company announced a net income for the second quarter this year of SAR211.7m up 16.8% on the previous quarter. The gross operating profit was SAR420.3m up 26.2% on the same quarter in 2013. Mohammed Fahmy CFO, says: “The second payment of dividends has been deposited in shareholders’ accounts. The outlook for the company’s profitability remains strong.” - Northern Trust has reported a 20 percent rise in assets under custody and a 15% rise in assets under management for Q2 2014 compared to Q2 2013.The Corporate and Institutional Services (C&IS) and wealth management businesses also report a 9% rise in custody and fund administration services, investment management and securities lending. Frederick Waddell, the bank’s chief executive officer, says, “Our business continued to expand in the second quarter as trust, investment and other servicing fees, which represent 65% of revenue, increased 8% compared to last year and assets under custody and under management increased 20% and 15%, respectively.” - In the latest Investment Quarterly for Q3 2014, Renee Chen, Macro and Investment Strategist at HSBC Global Asset Management, looks at the investment prospects throughout the Asia region. Chen identifies macro trends that are likely to shape investment themes in Asian markets, such as economic policy reforms, economic rebalancing and regional cooperation and integration that will provide a wide diversity of investment opportunities in relevant sectors. Financial deepening, in terms of financial system reform and deregulation and capital market developments, is another macro theme. HSBC continues to see opportunities in various sectors that could potentially benefit from structural reforms in several Asian countries. In particular, effective implementation of reforms could lead to a sustainable improvement in economic fundamentals and the growth prospects of China and India, prompting a reform-led re-rating of Chinese and Indian stocks. The continued search for yield resulted in decent H1 performance in Asian credit markets and there has been continued investor appetite for emerging Asian bonds, but Chen cautions that valuations could become a constraint, with limited room for further spread compression in some sectors and markets. However, the still-low default rates and overall healthy level of leverage among Asian companies on the back of overall sound Asian economic fundamentals provide a solid base for Asian credit market in the medium-to-long term.
Mark Wiedman, global head of BlackRock’s iShares brand. Mark Wiedman, global head of BlackRock’s iShares brand. Photograph kindly supplied by iShares, November 2011.

20-20: Turning BlackRock's ETF fortunes

Thursday, 15 December 2011
20-20: Turning BlackRock's ETF fortunes Mark Wiedman’s appointment as global head of BlackRock’s iShares brand is a concerted effort to sharpen the focus of the consortium of exchange-traded funds launched by BGI in May 2000 that combines index fund-style diversification with the liquidity of stock trading. To date, iShares accounts for roughly half of the estimated $1.1trn in US-based ETF assets. While AUM continues to grow at a steady clip, competitors have gradually whittled away at the company’s domestic market share (currently around 43%). Can Wiedman buck the trend? David Simons reports. http://www.ftseglobalmarkets.com/media/k2/items/cache/bd3eebf32e04c907d6d9fc42f4213df5_XL.jpg

Mark Wiedman’s appointment as global head of BlackRock’s iShares brand is a concerted effort to sharpen the focus of the consortium of exchange-traded funds launched by BGI in May 2000 that combines index fund-style diversification with the liquidity of stock trading. To date, iShares accounts for roughly half of the estimated $1.1trn in US-based ETF assets. While AUM continues to grow at a steady clip, competitors have gradually whittled away at the company’s domestic market share (currently around 43%). Can Wiedman buck the trend? David Simons reports.

During a recent earnings conference call, Laurence Fink, BlackRock’s chairman and chief executive, likened the recent run-up in ETF product innovation to the pre-crisis market for mortgage-backed instruments. BlackRock, said Fink, “needs to be very assertive as a firm” in order to prevent “a lack of disclosure on these products”.

To help address issues such as transparency—while also enhancing its ETF product line—BlackRock in September 2011 announced it had tapped Mark Wiedman, managing director in charge of corporate strategy, to serve as the new global head of  iShares, the ETF provider acquired by BlackRock as part of the 2009 buyout of Barclays Global Investors (BGI). Wiedman succeeds Mike Latham, who will continue as iShares chairman. Having served as an adviser to global financial institutions on balance-sheet issues at the height of the crisis, as well as heading up corporate strategy for BlackRock, Wiedman got a “crash course” in understanding clients’ problems and mobilising BlackRock’s capabilities in order to solve them. “I worked closely with iShares throughout the BGI integration and on iShares strategy work, so I stepped into the role with some familiarity with the businesses and the terrific leadership team,” says Wiedman.

ETFs appear to be still in their infancy, and have benefited from factors that include greater use of fixed-income and commodity-based products, increased uptake among fee-based advisers, as well as new product launches within the major exchanges. These conditions will likely pave the way for larger ETF fund allocations over the near term. Wiedman claims: “ETFs are one of the top two or three socially productive financial innovations of the past 40 years, with a value proposition that speaks to a galaxy of clients, from sovereign wealth funds to retail investors. ETFs deliver efficient exposure to global markets using the most democratic, transparent, and liquid vehicle yet devised.”

From the perspective of iShares, key growth drivers over the near term include fixed-income ETFs (which currently represent only a fractional amount of total outstanding bonds within the US), as well as equity income. Meanwhile, the potential for across-the-board ETF uptake exists in nearly every market around the world, says Wiedman.

Unifying US and foreign ETF platforms was a priority for BlackRock following the acquisition of iShares, and the ability to offer both US and European product lines to investors around the globe has been one of iShares’ greatest strengths to date.  “Some 15% of the assets in domestic ETFs are currently held outside the US and in Europe in 2011, we’ve seen over 15% organic growth, in part driven by buyers from Asia. As we look forward, our UCITS-compliant European product line could possibly become the de facto global standard,” says Wiedman.

The rise in ETF fund flows has coincided with a marked increase in product complexity, and, in some instances, has sparked concerns over opacity. For its part, the SEC continues to take a dim view of derivatives-based ETF products, compelling many providers to back away from such offerings.  

Wiedman notes: “We would call products that trade on an exchange ‘exchange-traded products’ or ‘ETPs’ while reserving the label ‘ETF’ for a sub-category that meets certain agreed standards of simplicity and transparency, including backing by underlying securities, rather than derivatives. We understand that regulators around the world will have different views. However, we believe that a standardised classification system could help regulators develop appropriate rules in each jurisdiction.”

The proliferation of so-called “cheap beta” ETF products—or, in some instances, ETFs that are totally commission-free—has had a dramatic impact on the business as a whole. Rather than attempt to compete on price, however, iShares has instead turned its attention toward product development, including active ETFs, which mimic the performance of hedge funds at a fraction of the cost. In August 2011, the company sought the SEC’s permission to launch a set of actively-managed equity ETFs, each based on proprietary BlackRock benchmarks.

“If there is a one thing I learned from my past experience at BlackRock, it’s that iShares will succeed by doing what we do best—not by playing on others’ terms,” offers Wiedman. “We are the sole global player competing against regional players in every market. No one can match our global presence, scale, or brand. Capitalising on that unique position is where our future lies.”

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