Saturday 20th December 2014
NEWS TICKER: FRIDAY DECEMBER 19TH 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.

FTSE Group’s March review of countering bribery criteria and FTSE4Good

Friday, 09 March 2012
FTSE Group’s March review of countering bribery criteria and FTSE4Good FTSE Group, the global index provider, has announced changes following its March FTSE4Good and ESG Ratings semi-annual review; including the roll-out of new countering bribery criteria to be applied to the assessments of over 1200 companies.  http://www.ftseglobalmarkets.com/

FTSE Group, the global index provider, has announced changes following its March FTSE4Good and ESG Ratings semi-annual review; including the roll-out of new countering bribery criteria to be applied to the assessments of over 1200 companies. 

The changes are expected to lead to improvements in the index; supported by new research from Edinburgh University that shows that the engagement FTSE carries out with companies regarding new FTSE4Good criteria has led to hundreds of companies globally improving their environmental, social and governance practices.

The FTSE4Good Index Series is designed to measure the performance of companies that meet globally recognised corporate responsibility standards, and to facilitate investment in those companies. The index series is now being complemented with the launch of the FTSE4Good ESG Ratings, to provide a broader range of ESG data and services.



The indices are governed by an independent ‘FTSE4Good Policy Committee’ which meets in March and September for index reviews.  This committee directs the evolution and development of the criteria for the index series, and approves additions and deletions to the index at reviews in line with the inclusion criteria and index ground rules. 

The FTSE4Good ESG Ratings can be used in a variety of ways, building a basis for active portfolio management, company engagement, customised indices, ESG risk analysis or research and analysis.

24 additions, 13 deletions to the FTSE4Good Index Series

The March semi-annual review has seen 24 new additions to the FTSE4Good Index Series from ten countries. This includes Siemens, a company which has faced up to the very costly and damaging bribery scandals of its past, through making considerable changes throughout its business to embed new governance and compliance systems.  Another company that has made significant changes and is added is EDF.

As a result of stringent criteria for nuclear safety and waste disposal being introduced in 2010, companies involved in nuclear power generation are no longer excluded from the index series. EDF has become only the fifth company globally to meet the detailed industry-specific criteria. The largest number of additions at this review are from the USA, contributing seven of the companies. Representation of South Korea has also seen a significant increase with four companies joining the existing eleven. At the same time, 13 companies are being deleted from the index for no longer meeting the FTSE4Good criteria. More details on additions and deletions are available on FTSE’s website (see notes section for more details). The changes to the index will be effective after the close of markets on 16 March 2012.

Details of the new criteria can be found at the following link upon free registration http://www.ftse.com/analytics/ftse4good-esgratings/

Countering Bribery Criteria Roll-Out

The practice of bribery is a risk to long term investors.  Although it can allow companies to secure lucrative contracts in the short term it can have disastrous consequences when these acts are uncovered, through litigation and impacts on intangible value such as brand and reputation.  As new bribery regulations, such as the 2011 UK Bribery Act, are introduced around the world, and with increased global communication, the risks associated with bribery are increasing.  FTSE is responding by providing investors with more detailed corporate bribery data through the FTSE ESG (Environmental Social and Governance) Ratings service and will also be incorporating this within the criteria assessments for the FTSE4Good Index Series.

Previously only those companies deemed to be facing the very greatest potential risk of bribery were being assessed, now the criteria will be rolled out to cover an additional 1200 companies that are defined as “medium risk” based on their industrial sector, countries of operation and public sector contracts.  Of these, approximately 550 are in the FTSE4Good Index Series, and 130 companies will need to make improvements in order to maintain inclusion in the index.  The criteria, set out in full on FTSE’s website, consider how well companies are reducing the likelihood of bribery and draws on Transparency International’s Business Principles for Countering Bribery Details of the new criteria can be found at the following link upon free registration http://www.ftse.com/analytics/ftse4good-esgratings/.

Edinburgh University research on the impact of FTSE4Good on corporate practices

Established over a decade ago now in partnership with EIRIS, the FTSE4Good Index has a track record of regularly strengthening the eligibility criteria. These enhancements provide investors with a more detailed analysis of ESG investment risk but also act to stimulate change in corporate practices.  FTSE’s Responsible Investment Unit undertakes a direct engagement programme with companies facing potential deletion from the index series. Research from Edinburgh University has identified that this form of engagement has been highly effective at stimulating improvements in corporate practices.  From an analysis of the responses of over a 1000 companies they found that the rate of improvement on ESG practices doubles when the company is in direct engagement with FTSE regarding FTSE4Good criteria. See Mackenzie et al (Nov 2011) at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1966474 It is expected that FTSE’s engagement with companies on the countering bribery criteria will also have this impact.

 

2 See Mackenzie et al (Nov 2011) at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1966474

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