Friday 28th November 2014
NEWS TICKER: FRIDAY, NOVEMBER 28TH 2014: The Straits Times Index (STI) ended -8.70 points lower or -0.26% to 3340.96, taking the year-to-date performance to +5.56%. The FTSE ST Mid Cap Index declined -0.11% while the FTSE ST Small Cap Index declined -0.43%. The top active stocks were SingTel (-0.26%), DBS (-0.25%), ThaiBev (-4.38%), Suntec REIT (+0.26%) and OCBC Bank (+0.10%). The outperforming sectors today were represented by the FTSE ST Health Care Index (+0.47%). The two biggest stocks of the FTSE ST Health Care Index are Raffles Medical Group (-0.52%) and Biosensors International Group (+2.75%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -2.14% with Midas Holdings ’ share price declining -5.09% and Geo Energy Resources’ share price gaining +2.33%. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+0.26%), United SSE 50 China ETF (-0.57%), STI ETF (+0.59%). The three most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (+0.26%), Ascendas REIT (-0.86%), CapitaCom Trust (-0.89%). The most active index warrants by value today were HSI24400MBeCW141230 (-15.73%), HSI23800MBePW150129 (+6.45%), HSI23600MBePW141230 (+11.11%). The most active stock warrants by value today were DBS MB eCW150602 (+3.33%), UOB MB eCW150415 (+5.23%), UOB MB eCW150102 (+2.38%) - Moody's has withdrawn the rating of Rossiyskiy Kredit Bank's Caa3 long-term local- and foreign-currency deposit ratings, the Not Prime short-term deposit ratings and the E standalone bank financial strength rating (BFSR), equivalent to a caa3 baseline credit assessment. The ratings agency says the rating has been withdrawn for its own business reasons At the time of the withdrawal, the outlook on the bank's long-term ratings was negative while the standalone E BFSR carried a stable outlook - Malaysian builder MMC Corp Bhd said earlier today that it will list its power unit Malakoff Bhd (IPO-MALB.KL) in a deal bankers expect to raise more than $1bn dollars. The IPO, for up to 30.4% of Malakoff's capital, was deferred earlier this year and approval from the Securities Commission lapsed as a result. MMC, controlled by reclusive Malaysian tycoon Syed Mokhtar Al-Bukhary, will resubmit the application within one month and expects the deal to be completed by second quarter of 2015, according to a local stock exchange filing – According to local press report the newly minted Somalia Stock Exchange expects seven companies in the telecoms, financial services and transport sectors to list when it is set up in 2015. Somalia's economy is slowly recovering from more than two decades of conflict, although the government is still battling an Islamist insurgency. Amid the chaos, some businesses have thrived, including money transfer and mobile phone firms. The Somalia Stock Exchange has opened administrative offices in Mogadishu and other Somali centres like Kismayu, as well as in Nairobi, to help recruitment and in other related issues - Moody's has upgraded to Baa1 from Baa2 the long-term deposit ratings of China CITIC Bank International Limited, and affirmed the bank's P-2 short-term deposit ratings. The bank's senior unsecured MTN program rating and deposit note/CD program ratings are also upgraded to (P)Baa1/Baa1 from (P)Baa2/Baa2, while the short-term deposit note/CD program ratings are affirmed at (P)P-2. The bank's baseline credit assessment (BCA) is unchanged at baa3. The outlook on all the ratings is stable. The rating action concludes Moody's review for upgrade for China CITIC Bank International, which was initiated on September 2nd this year, after the senior unsecured bond rating of its ultimate parents CITIC Group Corporation and CITIC Limited (formerly CITIC Pacific Limited) were upgraded to A3 from Baa2. CITIC Group Corporation, wholly owned by China's Ministry of Finance, owns 78% of CITIC Limited, which in turn owns 67% of China CITIC Bank.

IOSCO publishes a report on institutional investors in emerging markets

Thursday, 14 June 2012
IOSCO publishes a report on institutional investors in emerging markets The International Organisation of Securities Commissions (IOSCO) has published  a report on Development and Regulation of Institutional Investors in Emerging Markets, which focuses on a wide range of developmental issues and challenges faced by emerging markets seeking to develop their institutional investor base. Some of these challenges include limited capital market size and liquidity, competition to capital market investment from substitute services, regulatory restrictions, overly dominant distribution channels and constraints on cross-border activities. Additional discussions on related macro-economic and capital market conditions in the emerging markets and analysis of cross-border activities of institutional investors are also included in the report.     http://www.ftseglobalmarkets.com/

The International Organisation of Securities Commissions (IOSCO) has published  a report on Development and Regulation of Institutional Investors in Emerging Markets, which focuses on a wide range of developmental issues and challenges faced by emerging markets seeking to develop their institutional investor base. Some of these challenges include limited capital market size and liquidity, competition to capital market investment from substitute services, regulatory restrictions, overly dominant distribution channels and constraints on cross-border activities. Additional discussions on related macro-economic and capital market conditions in the emerging markets and analysis of cross-border activities of institutional investors are also included in the report.

 

 

The report offers a set of key recommendations for policy makers and regulators looking to attract and better regulate institutional investors in their jurisdictions.  It highlights the importance of the legal protection of property and ownership rights. It also emphasizes the need to ensure reasonable transaction costs, develop flexible trading and hedging mechanisms, remove undue administrative impediments on product authorization processes, build a multi-pillar pension system with tax incentives and provide a level playing field for foreign investors. Finally, the report recommends that regulators periodically review the regulatory framework and coverage, combine deregulation with enhanced supervision and enforcement, and improve coordination with other regulatory bodies to monitor, mitigate and manage systemic risk.

The IOSCO Emerging Markets Committee (EMC) established a Project Team to review the development and regulation of institutional investors in Emerging Markets (EMs), to identify and analyze the issues and challenges for the development and regulation of institutional investors, and to make recommendations that EM regulators may consider as they supervise their respective markets. The Project Team



According to the report institutional investors are playing an increasingly important role in the development of EMs. Markets with large numbers of institutional investors tend to be less volatile and allocate resources and capital more efficiently to companies requiring funding. Highly specialized and managing substantial capital, institutional investors are better positioned to put pressure on corporations and their management to improve corporate governance and transparency. By pooling assets, institutional investors can achieve economies of scale, employ high quality investment professionals, develop better investment strategies and build solid risk management systems, all of which result in higher and more stable returns for investors, says IOSCO.

The report emphasises that in light of the challenges ahead, the development of institutional investors in the EMs calls for concerted efforts by both regulators and the market. It requires a pragmatic and sequenced approach by regulators to ensure that such efforts do not destabilise the financial system, and that adequate safeguards are established at both market and regulatory levels.

The report also contains a number of recommendations to help EM regulators and policy makers develop and regulate institutional investors; most of which are obvious. However, it is acknowledged that some frontier markets lack the appropriate financial markets infrastructure to sustain the evolution of sustainable capital markets and investment. We reproduce the key recommendations below.

Capital Market Environment. The foundation of a well-functioning capital market is the protection of property and ownership rights. In addition to a sound legal system, regulators need to promote proper corporate governance standards and other investor protection measures. A capital market that is favorable to institutional investors should have reasonable transaction costs (both explicit and implicit), a broad range of potentially high-quality investment products and flexible trading and hedging mechanisms.

Product Offering and Innovation. The authorisation process for new product issuance should be simple, fast and free of administrative obstacles. It should also be accompanied by strict post-issuance supervision and prompt regulatory actions when risks and violations occur. A multi-tier issuance regime could be used to lower issuance costs and broaden the product offering. Insofar as risks are manageable, regulators should support innovations that improve market efficiency or broaden investor-friendly product offerings.

Multi-pillar Pension System. The aging population is a major concern in many jurisdictions because it burdens the national pension and social security system. This burden could be shared by private pensions and personal savings plans. The development of a multi-pillar pension system, however, requires an appropriate set of tax incentives. Given that the financial performance of pension plans affects future pensioners’ standards of living, institutional investors in this market should be subject to higher prudential and professional standards.

Distribution Channels and Practices. Regulators should broaden the product distribution channels by increasing the type and number of distributors institutional investors can use. Regulators should introduce detailed rules for distribution practices and encourage Self Regulatory Organizations (SROs) to establish best practice standards on suitability, disclosure, marketing and fees.

Market Openness. Regulators should ensure a level playing field for foreign and domestic investors. Policy makers should gradually loosen or remove restrictions on fund repatriation and capital controls. Regulators should also break down barriers that prevent domestic investors from investing abroad.

Human Capital and Professional Integrity. Regulators and SROs should seek to improve the quality and availability of human capital by training and developing local talent and attracting professionals from other industries or overseas. The incentive structure should align the interests of the professionals with those of the investors. Sound licensing, record keeping and supervision systems should be established for industry professionals.

Regulatory Framework and Financial Stability. In accordance with the IOSCO Principles, regulators should prevent market abuse by building sound surveillance capacity and periodically reviewing their regulatory framework and coverage. Regulators should work together domestically and across jurisdictions, to monitor, mitigate and manage systemic risk.

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