Readings: Exchange Traded Funds, Short-selling, $1T in bad debt
Assets under management (AUM) of exchange traded funds (ETFs) rose by over nine times to Rs 8,100 crore at the end of October 2007, as compared to Rs 869 crore in March 2006.
A bulk of this rise is accounted for Benchmark Bank BeEs Fund, whose AUM has zoomed to Rs 7,005 crore. Bank BeES tracks the CNX Bank Index. Experts say a large chunk of this rise is due to the money pumped in by foreign institutional investors (FIIs) as they are using this route to buy into banking stocks in which they cannot invest directly due to the 20% ceiling on FII investments.
Actually, ETF volumes are pathetic. The daily trading volume in the Benchmark Nifty BeES ETF, which tracks the Nifty-50 index, is of the order of thousands.
. . . with Sebi banning P-notes with underlying as derivatives, the only window through which foreign investors (read hedge funds) took negative calls has been shut out completely.
Banks are barred from shorting the market and mutual funds hardly ever short.
Ay, time for us retail guys to pitch in on the short side of things. 
- The Independent: Markets fear banks have $1 trillion in toxic debt
“There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults”.
Making credit tougher has exacerbated the problems of struggling mortgage holders in America; default rates then rise and make the banks even more exposed to losses as credit agencies downgrade their assets. This seems to be what happened at Citigroup. The admission that it was unable to assure investors that a potential $11bn write-down for sub-prime mortgages would not grow has led to this fresh fit of extreme nervousness. Huge write-downs by Merrill Lynch ($7.9bn) and UBS ($3.4bn) have not helped.
$100B down, $900B to go?
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