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May 2, 2013

Analysis: Access to China’s onshore market could beckon ETFs

NEW YORK/HONG KONG (Reuters) – Where there’s an investing niche, there’s probably an exchange-traded fund that exploits it. Mainland China is an exception.

Chinese plans to increase foreign access to its $3 trillion onshore stock market may pave the way for ETFs that can own these shares and be sold to foreigners. But getting there is likely to be a long, difficult process, and investing in such securities will likely carry big risks.

May 2, 2013

Access to China’s onshore market could beckon ETFs

NEW YORK/HONG KONG, May 2 (Reuters) – Where there’s an
investing niche, there’s probably an exchange-traded fund that
exploits it. Mainland China is an exception.

Chinese plans to increase foreign access to its $3 trillion
onshore stock market may pave the way for ETFs that can own
these shares and be sold to foreigners. But getting there is
likely to be a long, difficult process, and investing in such
securities will likely carry big risks.

Apr 23, 2013

Analysis: False White House tweet exposes instant trading dangers

NEW YORK (Reuters) – The upheaval in financial markets caused by a false report of explosions at the White House was brief, but its effect on traders who have come to rely on Twitter may last quite a bit longer.

Volatile price moves ricocheted through markets for stocks, bonds, currencies and commodities around 1 p.m. EDT on Tuesday after a tweet purporting to be from the Associated Press said there had been two explosions at the White House and that President Barack Obama had been injured.

Apr 23, 2013

False White House tweet exposes instant trading dangers

NEW YORK, April 23 (Reuters) – The upheaval in financial
markets caused by a false report of explosions at the White
House was brief, but its effect on traders who have come to rely
on Twitter may last quite a bit longer.

Volatile price moves ricocheted through markets for stocks,
bonds, currencies and commodities around 1 p.m. EDT (1700 GMT)
on Tuesday after a tweet purporting to be from the Associated
Press said there had been two explosions at the White House and
that President Barack Obama had been injured.

Apr 23, 2013

Manufacturing data stokes fears of global spring swoon

NEW YORK/LONDON (Reuters) – Major economies in North America, Europe and Asia lost some momentum this month, a clutch of business surveys showed on Tuesday, raising concerns about the strength of the global recovery.

China and Germany, the world’s biggest exporters, both lost momentum in April. Growth in Chinese factories slowed to a crawl as export demand dwindled, while the euro zone’s largest economy saw business activity decline for the first time in five months.

Apr 23, 2013

Yen to gain in second-quarter as growth worries trump BoJ-FX Concepts’ Taylor

NEW YORK (Reuters) – Worries about the global economy will boost the yen against the dollar in the coming months despite Japan’s aggressive stimulus program, John Taylor, chairman of FX Concepts, one of the largest currency hedge funds, said on Monday.

“We’re forecasting that the yen is going to be strong between now and July,” Taylor said at the Reuters FX Summit. “I think in the next quarter, we’ll trade between 92 and 102, and I’d be more inclined to think 92.”

Apr 22, 2013

Yen to gain in Q2 as growth worries trump BoJ-FX Concepts’ Taylor

NEW YORK (Reuters) – Worries about the global economy will boost the yen against the dollar in the coming months despite Japan’s aggressive stimulus program, John Taylor, chairman of FX Concepts, one of the largest currency hedge funds, said on Monday.

“We’re forecasting that the yen is going to be strong between now and July,” Taylor said at the Reuters FX Summit. “I think in the next quarter, we’ll trade between 92 and 102, and I’d be more inclined to think 92.”

Apr 19, 2013

Japan shock therapy risks disturbing emerging markets

NEW YORK, April 19 (Reuters) – A steady flow of cash into
emerging markets could become a flood as the Bank of Japan’s
huge stimulus program may prompt the nation’s investors to chase
higher returns – but for some developing countries that could be
too much of a good thing.
The fear is that a big fresh influx of foreign money could
overheat those markets, triggering higher prices and pushing
currencies higher, which would make a country’s exports more
expensive while pulling in cheaper imports that could hit
domestic producers. The money may also disappear as fast as it
arrived if returns became better elsewhere.
Global investors were loading up on Mexican, Russian and
other bonds even before the Bank of Japan (BOJ) announced on
April 4 its attempt to end decades of stagnation by pumping $1.4
trillion into the economy. Global inflows into local currency
emerging market debt funds in the first quarter were the biggest
in two years, Thomson Reuters’ Lipper service data shows.
A 15 percent drop in the yen so far in 2013, and a 28
percent gain in Japanese stocks, has prompted Japanese investors
to bring some cash back home in recent months. But analysts
expect Japan’s appetite for foreign assets to increase again
given low yields on Japanese deposits and bonds.
“A lot of money is still likely to leave Japan,” said
Citigroup currency strategist Steven Englander. “Some of it has
to go into emerging markets.”
Bank of America Merrill Lynch estimates that Japanese retail
investors, collectively referred to as “Mrs. Watanabe,” the
mythical manager of household savings, hold some $16.8 trillion
in assets, with a bit more than half in deposits and cash.
Emerging markets, with their strong growth rates and high
interest rates, “may attract a significant portion of these
savings,” strategists at Bank of America told clients in a
recent note.
Concerns that money created by central banks, such as the
U.S. Federal Reserve and the BOJ, will pour into developing
markets was high on the agenda of the finance leaders of the G20
group of advanced and emerging economies this week in
Washington.
In a communique after the meeting, G20 leaders said they
would be “mindful” of side effects of extended monetary
stimulus.
“Monetary policy should be directed toward domestic price
stability and continuing to support economic recovery, according
to the respective mandates of central banks,” the statement
said.

HUNTING FOR YIELD
In the past five years, emerging economies have accounted
for almost three-quarters of global growth, the IMF says.
That’s fueled a big move into local currency funds, which
pulled in more than $16.7 billion in the first quarter of 2013,
the best this relatively young sector has seen in more than two
years, according to Lipper. Hard currency funds attracted cash
in the first three months of the year, albeit at half the pace
seen in the fourth quarter.
The inflows come despite disappointing returns so far in
2013. Local currency debt funds lost 1.05 percent while hard
currency debt funds dropped 2.2 percent in the first quarter.

Apr 19, 2013

Analysis: Japan shock therapy risks disturbing emerging markets

NEW YORK (Reuters) – A steady flow of cash into emerging markets could become a flood as the Bank of Japan’s huge stimulus program may prompt the nation’s investors to chase higher returns – but for some developing countries that could be too much of a good thing.

The fear is that a big fresh influx of foreign money could overheat those markets, triggering higher prices and pushing currencies higher, which would make a country’s exports more expensive while pulling in cheaper imports that could hit domestic producers. The money may also disappear as fast as it arrived if returns became better elsewhere.

Apr 17, 2013

Euro down on ECB rate cut talk; yen dips before G20

NEW YORK (Reuters) – The euro headed on Wednesday for its biggest daily decline against the dollar in nearly a year, weakened by talk of a euro zone interest rate cut, while signs of economic malaise in Britain and Canada added to the U.S. currency’s appeal.

The yen also slipped against the dollar, with officials at a weekend Group of 20 meeting not expected to scold Japan for a monetary policy that has led to a sharp slide in the currency.