Saturday 2nd August 2014
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FRIDAY TICKER: AUGUST 1ST: Collaborative Data Network CMDportal statistics show that the international money market increased outstandings by approximately $31bn during the month of July, both in USD and in EUR, with three of the four major asset classes posting growth. Financial Institutions Groups (FIGs) outstandings increased by 3.44%, seeing the greatest absolute growth. Sovereigns, Supranationals and Agencies (SSAs) posted a 2.9% increase. Oustandings by Corporate borrowers grew by 7%. The only major sector that posted a contraction was Asset-Backed securities, which finished down by approximately $1.4bn (3.2%). USD denominated markets grew by USD13.2bn and Euro denominated markets grew by $12.5bn equivalent. Total International Money Market settlements in July reached $307.8bn - Moody's Interfax Rating Agency has today affirmed the Baa3.ru national scale rating (NSR) of Maritime Bank. The affirmation of the NSR reflects Maritime Bank's currently acceptable capital adequacy and asset quality balanced with weak profitability; and modest liquidity cushion against the bank's high depositor concentration and the challenging operating environment in Russia. NSRs carry no specific outlooks. The rating action is primarily based on the bank's unaudited financial statements for January 2013-July 2014 - The Macau government published the casino industry’s gross gaming revenue today. In July, Macau collected 28.4 gross gaming revenue, or an equivalent of 917 million daily table wins, down 3.6% from a year ago. Macau’s July numbers were clouded by the World Cup, say the government. Chinese are avid soccer fans. Macau names fell off in trading after the announcement, with Galaxy Entertainment losing 2.4%, while Wynn Resorts fell 1.8%. All eyes are now on August’s figures - A new point-of-sale malware known as Backoff has been linked to numerous remote-access attacks, putting small merchants at greatest risk, according to an alert from federal authorities. The alert from the Department of Homeland Security, the Secret Service and the Financial Services Information Sharing and Analysis Center notes that Backoff is a recently discovered family of POS malware that has now been identified in at least three separate forensic investigations – Italy’s biggest retail bank Intesa Sanpaolo has beaten forecasts reporting a Q2 net profit of €217m, as the bank moves along a new business path which highlights asset management. The bank said its operating result and pre-tax profit for the period was the best in the last nine quarters, with higher revenues from asset management offsetting the impact of one-off charges such as write-downs.

Commodity ETPs in demand as China outlook Improves

Wednesday, 09 July 2014
Commodity ETPs in demand as China outlook Improves Global Commodity ETPs saw a second consecutive quarter of inflows in Q2 2014, as increasing confidence in China’s economic outlook and global economic recovery boosted commodity prices and investor demand for commodity exposure. Inflows totalled $275m, up from $271m of inflows in Q1 2014. The combination of inflows and higher prices pushed assets under management (AUM) in commodity ETPs at the end of Q2 2014 to $123.3bn from $122.4bn at the end of Q1 2014. http://www.ftseglobalmarkets.com/

Global Commodity ETPs saw a second consecutive quarter of inflows in Q2 2014, as increasing confidence in China’s economic outlook and global economic recovery boosted commodity prices and investor demand for commodity exposure. Inflows totalled $275m, up from $271m of inflows in Q1 2014. The combination of inflows and higher prices pushed assets under management (AUM) in commodity ETPs at the end of Q2 2014 to $123.3bn from $122.4bn at the end of Q1 2014.

]  “All key commodity sectors saw inflows during the quarter except for agriculture and livestock.  Precious metals saw the strongest investor demand with $430m of inflows, followed by diversified broad commodity ETPs with $172m, energy with $135m and industrial metals with a more modest $15m.  Agriculture and livestock saw $477m of outflows. Increasing confidence in the US recovery, a positive turn in China growth after three years of slowdown, and expected further easing measures by China’s policy-makers has boosted prices and investor sentiment towards commodities,” says Nicholas Brooks, head of research and investment strategy at ETF Securities.

Commodity ETPs with the strongest demand in Q2 were platinum and palladium, with $400m and $410m of inflows respectively. Rising global auto demand (autocatalysts are a key source of demand for both metals) together with rising supply concerns due to mine strikes in South Africa and potential Russia export restrictions has exacerbated fears that already large supply deficits will worsen and has pushed prices higher for both metals.  We anticipate these trends will continue in H2.

Gold ETPs saw mixed flows, with US listed gold ETPs seeing $586m of outflows while Europe and other country listed gold ETPs saw $483m of inflows, leading to net quarterly outflows of $103m. Most of the divergence in the gold ETP flow trends took place in April.  The most likely explanation for the divergence is that during that period European investors were focusing on the close-to-home potential risks of a Russian invasion of the Ukraine, while US investors mostly maintained their bullish view on risk assets as US equities continued to hit new highs. With geopolitical risks still high and many risky asset classes trading at stretched valuations, we believe gold ETP demand will continue to improve in H2 2014 as investors look for hedges against possible risk market corrections.

Diversified broad commodity ETPs saw the largest inflows after platinum and palladium, with total inflows of $172m in Q2. The inflows reflect improving sentiment towards commodities as an asset class as China growth has shown signs of picking up and China policy-makers have made clear they are moving into stimulus mode after three years of tightening. It is interesting to note that the largest inflows were into diversified broad commodity ETPs that exclude agriculture, with $89m of new flows into these ETPs versus $75m into those that include agriculture, highlighting generally negative investor views towards agriculture. 

Agriculture ETPs as a group saw $468m of outflows, with broad diversified seeing the largest outflows followed by sugar, corn, cocoa and coffee. The outflows are likely a combination of profit-taking and expectations of improved growing conditions for a number of key agriculture commodities. If an El Nino weather event occurs later this year (current NOAA forecasts put the probability at 70%), speculative flows may return.

Energy ETPs saw $175m of inflows in Q2, with most of the flows ($169m) going into oil ETPs. Increasing violence in Iraq has raised concerns about supply disruptions, pushed oil prices higher and driven oil ETP demand higher. Natural gas ETPs saw $21m of outflows as investors took profits on the natural gas price surge earlier in the year. Industrial metals saw a modest $15m of inflows, with nickel seeing the strongest inflows ($38m) as Indonesia’s ban on ore exports drove prices higher.

 

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