insto - Australian financial markets

The latest performance update of the alternative indexes from the EDHEC-Risk Institute’s asset management analysts shows that hedge funds continue to do well, as the world economy picks up.

Last month, the stock market was back on the rise with a comfortable gain (+6.00 per cent). This was “in a context of decreasing implied volatility (24.51 per cent), which is now at its lowest level since September 2008,” noted EDHEC’s report for November. Since its low point in February 2009, the S&P 500 index has now recovered half its losses from its high of September 2007.

The Federal treasurer Wayne Swan has directed the AOFM to invest up to a further $8 billion in Australian RMBS with no plans for a liquidity facility at this stage.

Securities purchased by the AOFM will be rated AAA or equivalent by one of the major credit rating agencies, and subject to other strict eligibility criteria to be specified by the Treasury Secretary.

The German development bank KfW has mandated RBC Capital Markets and TD Securities for a new December 2019 Kangaroo bond. The transaction is expected to price in the near future, subject to market conditions.

The debate on accounting treatment of financial instruments is still far from resolved, with international standard setters working furiously to develop a raft of new rules, writes Bernard Kellerman.

A focus on a company’s intangible features such as corporate governance, environmental and social responsibility is vital to uncovering its long term asset value. An over emphasis on short term factors that are able to be measured, rather than on longer term qualitative risk issues, contributed to the asset price bubble that preceded the global financial crisis. This according to a corporate governance report prepared by AMP Capital Investors presented at this year’s International Corporate Governance Network conference.

One of the more puzzling monopolies in Australia, the ASX's power to effectively regulate competition out of sight, was dismantled with a sweep of a ministerial pen, reports Bernard Kellerman.

Although global stock markets slipped in the second half of October as mixed macro readings pointed to the fragility of the economic recovery, hedge funds overall advanced, with all hedge fund strategies except managed futures (-1.02 per cent) and long bias (-0.38 per cent) recording positive returns.

Stock markets tumbled across the board, declining 1.76 per cent for October as measured by the MSCI World TR Index. US stocks declined for the first time in eight months, finishing the month at minus 1.86 per cent according to the S&P 500 TR Index reading, with growth and value stocks both dropping. The other two major US equity indices showed flat to negative returns, with the Dow Jones Industrials and NASDAQ indices ending the month at zero and minus 3.64 per cent, respectively.

If there was any doubt that 2009 was the year that the domestic bond market had got its groove back, it was well and truly erased in the third quarter, reports Jonathan Shapiro.

Conditions continued to improve, increasing the confidence of both issuers and investors.

From July to September, over A$30 billion of non-government bonds were printed, making it the busiest period of the year, exceeding Q2 total issuance by A$10 million and more than double the amount issued in the third quarter of 2008.

This will necessarily be a truncated note, as I have to open the Insto Foreign Exchange conference. Here are some of the highlights of overnight trading, with Wall Street still an hour off its close.

Shifts in the debt landscape and attitudes of lenders should ensure the debt capital markets get a long run on the catwalk. Jonathan Shapiro casts his eye over the passing parade.
 

With a fair chunk of 2009 still to run, the booming global markets for corporate bonds have categorically smashed all records.