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.

Prime money market funds credit profiles weaken says Moody's

Thursday, 09 May 2013
Prime money market funds credit profiles weaken says Moody's The credit profiles of euro-denominated, US prime, and sterling prime money market funds (MMFs) worsened slightly in the first quarter of 2013, says Moody's Investors Service in its quarterly MMF reports published today. According to the ratings agency  continued constraints on supply of high-quality short-term assets, and the prolonged period of low interest rates leading MMF portfolios to migrate to lower rated assets are behind the deterioration. Moody's quarterly MMF reports evaluate market trends and the evolution of MMFs' risk factors, including credit, liquidity and market risks, based on the aggregated data of Moody's rated MMFs. http://www.ftseglobalmarkets.com/

The credit profiles of euro-denominated, US prime, and sterling prime money market funds (MMFs) worsened slightly in the first quarter of 2013, says Moody's Investors Service in its quarterly MMF reports published today. According to the ratings agency  continued constraints on supply of high-quality short-term assets, and the prolonged period of low interest rates leading MMF portfolios to migrate to lower rated assets are behind the deterioration. Moody's quarterly MMF reports evaluate market trends and the evolution of MMFs' risk factors, including credit, liquidity and market risks, based on the aggregated data of Moody's rated MMFs.

Prime euro-denominated MMFs experienced further credit deterioration and maturity extensions in Q1, largely driven by the prolonged low rate environment and constraints on supply of high-quality assets. Their credit profiles saw a modest deterioration in Q1 2013, reflected by the decrease in investments in securities rated Aaa, Aa1 and Aa2, claims Moody's. Overnight liquidity decreased significantly to 30.5% of assets under management (AUM), after it peaked at 37.4% at end-2012, due to the continued pressures on funds' yields, and the resulting need for funds to invest their cash in higher- yielding instruments, it adds.

The low interest-rate environment and low yields across the sector prompted a decrease in euro MMFs AUM to 74.8bn. The increased exposure to relatively long-dated securities—combined with the modest credit profile deterioration—increased funds' sensitivity to market risk. As the credit pressures on European banks continue, funds' aggregate exposure to European financial institutions decreased 20% to €29bn at the end of March from €36bn at the beginning of the quarter. Exposure to UK financial institutions decreased significantly by 51%, followed by German (-27%) and French financial institutions (-10%).

Meanwhile, there has been  a modest credit deterioration, as 2.2% of investments in US domiciled funds and 3.8% in offshore domiciled funds moved from Aaa and Aa-rated securities to A-rated securities. Approximately 23% of investments in all Moody's-rated MMFs were rated Aaa, says Moody's. Overnight liquidity remained high, at around 39% of US domiciled fund assets and 34% in offshore domiciled funds on average.

In addition, the funds' sensitivity to market risk increased modestly in this quarter due to the increased exposure to slightly longer-dated securities combined with the modest deterioration in funds' credit profiles.

Combined AUM of U.S. domiciled funds declined 3.5% to $662bn, while the combined AUM of European and offshore domiciled funds increased 3% to $242bn.

Moody's says that prime sterling-denominated MMFs experienced further credit deterioration and maturity extensions in Q1, largely driven by the prolonged low rate environment. Funds' credit profiles saw a modest decline in credit quality, due to the credit degradation of the UK, as reflected by Moody's downgrade of UK government's bond rating in February by one notch to Aa1. Sterling MMFs' liquidity trend has been negative throughout Q1, due to fund managers' increased investment of cash and cash-like securities in their search for higher yield. This also led to increase the funds' WAM by 3.8 days throughout the quarter. Given the increased exposure to relatively long-dated securities, combined with the modest deterioration in the credit profile, funds' sensitivity to market risk increased.

Combined AUM increased by 2.5% to GBP114.8 billion during the quarter, despite the low interest-rate environment and low yields across the sector. While exposure to European financial institutions remained stable during the quarter at 49% or GBP56 billion, there have been significant country shifts. Exposure to Dutch and French financial institutions decreased by 5% and 4%, respectively, and exposures to UK and Swedish financial institutions increased by 19% and 6%, respectively.


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