Friday 28th August 2015
NEWS: Friday, August 28TH: The Hong Kong Monetary Authority says it has granted a restricted banking licence to Goldman Sachs Asia Pacific Company Limited (GSAPCL) under the Banking Ordinance. GSAPCL, incorporated in Hong Kong, is a wholly-owned banking subsidiary of the Goldman Sachs Group, Inc. The number of restricted licence banks in Hong Kong is now 24 - Apple launched its first Australian dollar corporate bond issue, raising $1.2bn within two hours this morning. Strong demand for the US tech giant’s fixed and floating, four and seven year Kangaroo bonds saw the firm outstrip predictions it would raise between $500m and $1bn. Apple bonds are popular because the AA+ rated company is considered an ultra-safe investment, although yields are correspondingly low — about 3% on four-year bonds and about 3.8% on seven-year bonds - The European Securities and Markets Authority (ESMA) has published the responses received to the Joint Committee Discussion Paper on Key Information Document for PRIIPS. The responses can be downloaded from the regulator's website - Romania’s MV Petrom reportedly is planning a secondary listing on the London Stock Exchange. According to Romanian press reports, the local investment fund Fondul Proprietatea may sell a significant stake in the company via public offering on the Bucharest Stock Exchange and London Stock Exchange. OMV Petrom, with a current market capitalisation of €4.85bn has announced that it will ask its shareholders’ approval for a secondary listing in London. The general shareholders meeting is scheduled for September 22nd. Austrian group OMV, holds 51% of the company’s shares; other shareholders include the Romanian state, via the Energy Ministry, with a 20.6% stake, and investment fund Fondul Proprietatea, which holds 19%. The remaining 9.4% is free-float - Morgan Stanley (NYSE/MS) today announced the launch of a new fund, the IPM Systematic Macro UCITS Fund, under its FundLogic Alternatives plc umbrella. The fund provides exposure to IPM’s Systematic Macro strategy, which is based on IPM’s proprietary investment models that provide unique insights into how fundamental drivers interact with the dynamics of asset price returns. The FundLogic Alternatives Platform currently has more than $2.6bn in assets under management (as of 31 July 2015) and this latest addition expands Morgan Stanley’s offering of global macro strategies - Equities sold off hard this morning as continued pressure on Chinese stocks rippled throughout world markets. Chinese government intervention brought the Shanghai Composite back a positive close; but the question is now, has confidence eroded so much that the market will continue to depend on the government to prop it up? The other key element to consider today is the outcome of the debate in the German parliament on the Greek bailout. Last month, a record 65 lawmakers from the conservative camp broke ranks and refused to back negotiations on the bailout. The daily Bild estimated that up to 120 CDU and CSU members out of 311 might refuse to back the now-agreed deal. However, Chancellor Merkel is looking to secure support from the Social Democrats (SPD), Merkel's junior coalition partner, and the opposition Greens which will likely swing the final decision Greece’s way. However, a rebellion by a large number of her allies would be a blow to the highly popular Chancellor.

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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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