David,
You maybe right about the dollar trading lower, but I don't believe it will be anything to worry about as it will co-inside with a global slow down?
Sure you aren't getting to much sun on those Aussi beachs.
Where exactly does the Australian dollar factor into the worlds economies? Is it closer to the Canadian and a Natural Resource global weighting, or the Asia countries.
I just read an article where Canada is in a big push to upgrade its' work force and reach into the information age arena like the USA. They understand that if they can't staff the growing businesses like Northern Telecom, these companies can't Grow and meet the demand.
Is Australia also moving in that direction?
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USA, UK seen beating Europe, Japan on MSCI rejig
Monday December 4, 10:42 am Eastern Time
By James Saft
LONDON, Dec 4 (Reuters) - British and U.S. shares will be the big winners as funds approaching $200 billion flow on the back of mooted changes by indexer Morgan Stanley Capital International, while European and Japanese shares suffer, analysts said on Monday.
The dollar and sterling will profit at the expense of the euro and Japanese yen, they said.
MSCI said it will announce its decision on free float adjustment to the constituents of its widely tracked investment indices on Sunday, December 10 at 1115 GMT.
The review, which will address the issue of how much of a stock issue that is only partly freely traded should be included in the indices, is thought likely to move closer to a free float and to change the way individual industry weightings are handled.
``Quite easily $200 billion could move on the changes,'' said Robert Parkes, quantitative analyst at HSBC Securities in London, who estimates that investment funds totalling $3 trillion track MSCI indices.
``You may get a knee-jerk reaction but they will probably give the market at least six months to digest the changes.''
When indices are changed, tracker funds, which seek to replicate an index's performance, are forced to buy and sell stocks to keep pace. Active fund managers are also likely to buy or sell on the back of an index change, though they are free to ignore it.
Toby Bayliss, derivatives analyst at Schroder SalomonSmith Barney in London, expects MSCI to adopt a banded free-float weighting system and increase industry representation from 60 percent to 80.
He also expects that the selection of index constituents will be based on their free-float adjusted weight rather than full market capitalisation.
In emerging markets, Asia with its high number of closely held shares could be a loser while Latin America, especially Mexico, could receive a boost, analysts and fund managers say.
USA, BRITAIN TO BE HELPED
Shares in Britain and the United States have free-floats that average more than 90 percent but a tradition of partial privatisation by governments in Europe and cross shareholding by banks and others in Japan leaves those regions vulnerable.
``The U.S. will gain the most and European ex UK and Japan will lose the most,'' said Bayliss.
Bayliss predicts a 9.25 percent increase in the weight of U.S. shares in the MSCI World Index, with Britain gaining 0.63 percent.
Germany's weighting in the World index will fall by 24.67 percent, Japan's by 17.67 percent and France by 16.32 percent, according to Schroder SSB.
HSBC calculates that euro zone equities will see $19 billion of outflows from the World index alone, with more coming from regional indices.
Japan should suffer outflows of $21 billion from funds following the World index and the United States will gain $32 billion, with both totals growing if other indices are taken into account.
But there are major doubts as to how the markets will trade the announcement.
``It all depends on how MSCI phase this in,'' said Bayliss.
"My guess is that they will either do it in three or four phases which is likely to increase turnover significantly but I know there are a couple of large index funds pushing towards them having tow indices running concurrently.
``That would allow the index managers to shift when there is liquidity.''
MSCI is due to make its announcement on December 10 at 1115 GMT on the company's www.msci.com site. |
