BIS reports decline in FX trading | RMBS issuance down, S&P says | IEA's Birol expects oil glut to fade
02 September 2016
CFA Institute: Financial NewsBrief
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IMF's Lagarde urges G-20 economic reform
IMF's Lagarde urges G-20 to support economic reforms
Lagarde (Peter Nicholls/Getty Images)
International Monetary Fund Managing Director Christine Lagarde has appealed to Group of 20 leaders preparing for a meeting in China to support forceful economic reform or risk a "low-growth trap" with falling productivity, weakening incentives for investment, faltering demand and high debt. "The political pendulum threatens to swing against economic openness, and without forceful policy actions, the world could suffer from disappointing growth for a long time," she said.
Deutsche Welle (Germany)/Agence France-Presse/Deutsche Press-Agentur (01 Sep.),  Reuters (01 Sep.) 
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BIS reports decline in FX trading
Foreign exchange trading worldwide totaled $5.1 trillion daily in April, down from $5.4 trillion in April 2013, while trading in the spot market dropped 29%, according to the Bank for International Settlements. "While there are some very notable players that have entered the market and become very active, I think some speculative players have dropped off," CLS Bank International CEO David Puth said.
Bloomberg (01 Sep.),  The Wall Street Journal (tiered subscription model) (01 Sep.),  Finance Magnates (01 Sep.) 
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RMBS issuance down, S&P says
Issuance of residential mortgage-backed securities is slowing, S&P Global Ratings reports. Structured-finance issuance dropped to $27 billion in August from $39 billion in July, with RMBS-related bonds accounting for only $3 billion.
HousingWire (01 Sep.) 
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IEA's Birol expects oil glut to fade
IEA's Birol: World's oil glut will fade away
Birol (Eric Piermont/AFP/Getty Images)
Supply and demand for petroleum will balance out in 2017 as a glut eases, says International Energy Agency Executive Director Fatih Birol. Production by non-OPEC countries, particularly the US, will fall as demand for oil grows "in a healthy way," he says.
Reuters (01 Sep.) 
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UK to pursue customized post-Brexit deal with EU
The UK will seek robust trading ties with Europe but insist on the ability to control immigration from the Continent in what the government describes as a unique post-Brexit arrangement with the EU. The proposals are expected to meet opposition from governments demanding that unfettered market access be accompanied by free movement of labor.
The Business Times (Singapore) (free content)/Agence France-Presse (01 Sep.) 
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HKEx seeks to draw startups, tech firms
Hong Kong Exchanges and Clearing is working to make the city more attractive for startups and technology companies to raise capital. The market might need rule changes to compete with New York and Singapore for initial public offerings, CEO Charles Li says.
South China Morning Post (Hong Kong) (02 Sep.) 
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Reader Survey
Do you think analyzing ESG factors can boost returns?
Somewhat -- they enter into any complete analysis  37%
Not on their own, but why ignore them?  24%
Depends -- data can be messy or priced in  16%
No way -- they're called nonfinancial for a reason  15%
Of course -- Google it; the evidence is overwhelming  8%

Visit the Enterprising Investor blog to learn whether there's an alpha opportunity to be had by looking at ESG data.

Poll results are as of 8 a.m. EDT on Wednesday, with 535 respondents.
Market Activity
Asian-Pacific market mixed ahead of US payroll data
Asian-Pacific markets were mixed Friday, with traders minimizing exposure to risk until they see data from the US nonfarm payrolls report. Japan's Nikkei 225 was flat; Hong Kong's Hang Seng Index was up 0.5%; Australia's S&P/ASX 200 dropped 0.8%; China's Shanghai Composite added 0.1%; South Korea's Kospi moved up 0.3%; and India's Sensex was up 0.4%.
CNBC (02 Sep.),  The Economic Times (India) (08 Sep.) 
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HP Enterprise narrows focus, reportedly might sell unit
Hewlett Packard Enterprise is in preliminary talks to sell its software division to buyout company Thoma Bravo for $8 billion to $10 billion, people familiar with the matter said. The deal is part of a strategic move to narrow HP Enterprise's focus to networking, data storage, data centers and related businesses.
Reuters (01 Sep.) 
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Rosneft might get $10B investment from Japan
The Japanese government is close to proposing a broad energy agreement with Russia that could include a nearly $10 billion investment in Russia's oil company, the newspaper Nikkei reported. The deal would give Japan a 10% equity stake in Rosneft, Nikkei said.
Reuters (02 Sep.),  Nikkei Asian Review (Japan) (tiered subscription model) (02 Sep.) 
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BIS: Yuan's share in global trading has surged
Over the three years that ended in April, the share of China's yuan in currency trading has doubled, according to the Bank for International Settlements.
Bloomberg (02 Sep.) 
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Britain's factories make strong comeback
With the shock of the Brexit vote wearing off, output and new orders at UK factories posted solid gains in August, according to the Markit/Chartered Institute of Procurement & Supply UK Manufacturing Purchasing Managers Index. The benchmark surged from July's 48.3 to 53.3, the highest reading in 10 months and the biggest monthly gain in the nearly 25 years of the survey.
The Guardian (London) (01 Sep.) 
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US initial unemployment claims edge higher
First-time claims for US unemployment benefits increased by 2,000 last week. Despite the uptick, claims remain 22,000 less than the level at the end of 2015.
Pensions & Investments (free access for SmartBrief readers) (01 Sep.) 
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Manufacturing drops in US
US manufacturing activity in August was hit with the sharpest slowdown in more than two years, according to a widely followed benchmark. The Institute for Supply Management's manufacturing index dropped 3.2 points, to 49.4, on a scale where 50 marks the line between expansion and contraction.
Bloomberg (01 Sep.),  Market News International (01 Sep.),  The Wall Street Journal (tiered subscription model) (01 Sep.) 
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ECB official: Low rates a product of economy
Low rates a product of economy, Nowotny says
Nowotny (Dieter Nagl/Getty Images)
Low growth and downward pressure on wages resulting from globalization, not central banks, are responsible for low interest rates, European Central Bank Governing Council member Ewald Nowotny says. While the ECB has avoided deflation, annual inflation is at 0.2%, according to August data. Jones Newswires (01 Sep.) 
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Banks oppose Basel's proposed rules
European, Japanese and Canadian banking associations are calling on the Basel Committee on Banking Supervision to revisit proposed rules that they fear would "significantly increase capital requirements."
Financial Times (tiered subscription model) (01 Sep.) 
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FSB banker-pay guidance to address misconduct
FSB banker pay guidance to address misconduct
Carney (Dylan Martinez/AFP/Getty Images)
The Financial Stability Board will release further guidance on banker compensation by the end of 2017 to prevent misconduct and excessive risk-taking from destabilizing the economy, Chairman Mark Carney says. The guidance includes recommendations for correlating compensation to conduct and for effectively clawing back bonuses in case of misconduct.
Reuters (01 Sep.) 
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Advisers' social media use to face SEC scrutiny
The Securities and Exchange Commission has strengthened disclosure requirements for financial advisers' social media activity. The SEC has added to Form ADV a place to list addresses of Facebook, LinkedIn, Twitter and other social media sites.
InvestmentNews (01 Sep.) 
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CFTC allows grace period for swaps-margin rules
CFTC delays swap-margin requirements to Oct. 3
Massad (Alex Wong/Getty Images)
The Commodity Futures Trading Commission said it won't pursue disciplinary action against swaps dealers who didn't meet Thursday's deadline for margin requirements on uncleared swaps, giving dealers until Oct. 3 to comply. Read Chairman Timothy Massad's statement.
Reuters (01 Sep.), (subscription required) (02 Sep.) 
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China aims to boost venture capital investment
China's State Council said it plans to increase support for venture capital investment in an effort to accelerate the growth of startups. The measures will include tax cuts for venture capital investors, approval for state-run companies to form venture capital funds and improvements to the system for over-the-counter stock trading, the council said. (China) (01 Sep.),  Bloomberg (01 Sep.) 
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Financial Products
Janus readies ETF focused on dividends
Janus Capital has filed with the Securities and Exchange Commission for an exchange-traded fund that invests in dividend-paying equities of global companies with strong balance sheets. The Janus SG Global Quality Income ETF would be linked to the Societe Generale SGI Global Quality Income Index.
ETF Trends (01 Sep.), (01 Sep.) 
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Editor's Note
Financial NewsBrief will not publish Monday
In observance of Labor Day in the US, Financial NewsBrief will not publish Monday. Publication will resume Tuesday.
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