At least 80 percent of investors in each of the alternative asset classes would maintain or enhance their allocations during 2013, according to Preqin’s report.

The 2013 Preqin Investor Network Global Alternatives Report helps investors to navigate the complex alternative assets markets.  The leading data source provider for the alternative asset industry, Preqin in today’s report indicated that over 50 percent of investors surveyed in April 2013 have a proactive approach in place for sourcing their alternative investment opportunities.

In the report Preqin finds that investors showed increased optimism by remaining committed to their allocations to private equity, real estate, hedge funds and infrastructure.

Bob Jenkins in today’s post in FTAdvisor also echoed a similar view, while he focused on alternatives covering retail oriented mutual funds and ETFs. According to Bob Jenkins’ report, assets in alternatives galloped from $199 billion by posting a compound annual growth rate of nearly 28 percent over the past four years. This year alone saw an inflow of about $45 billion into alternatives.

64% Of Investors Have A Strong Internal Investment Team: Preqin Report

According to Preqin’s report, 64 percent of investors have a strong internal investment team that proactively sources and examines alternative investment funds, while over 67 percent have two or more investment-focused employees dedicated to alternative assets.

As regards investment in hedge funds is concerned, according to Preqin’s report, a third of investors in hedge funds plan to increase their exposure to the asset class, while a fifth has plans to reduce their allocation throughout 2013.

In real estate investments, 93 percent of real estate investors plan to either maintain or increase their exposure to the asset class during 2013.

In the infrastructure space, 58 percent of investors with a dedicated allocation to infrastructure are looking to increase their allocation over the same time period, while 4 percent plan to reduce their exposure during the course of 2013.

Coming to larger institutional players, according to Preqin’s report, of the institutional investors that invest in private equity, a significant 59 percent will be maintaining their level of exposure throughout 2013, with an additional 27 percent increasing their allocation to the asset class.

Preqin notes that many investors are becoming more sophisticated in their proactive sourcing of new investment opportunities. However, one of the main challenges faced by investors is in identifying the most appropriate funds, before committing their funds.

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China’s manufacturing activity contracted in May for the first time since October 2012, raising concerns that growth in Asia’s largest economy is slowing. A preliminary survey by HSBC Holdings plc (NYSE:HBC) (LON:HSBA) showed that new orders declined this month, and China’s flash Purchasing Manager’s Index (PMI) skidded to 49.6 in May. A reading below 50 is a sign of contraction in manufacturing activity.

China’s actual PMI in April was 50.6, which had already declined from 50.9 in March. The consistently declining factory activity indicates that it will become increasingly tough for China to reach its 7.5 percent GDP growth target this year. The world’s second largest economy grew at 7.8 percent last year, the slowest pace since 2000. Even if China achieves its 7.5 percent growth target, it will be the lowest growth rate since 1990.

Analysts Cut Their Forecasts

A number of analysts have cut their growth forecast for China. Earlier this week, UBS AG (NYSE:UBS) lowered its full year growth estimate from 8 percent to 7.7 percent. Bank of America Merrill Lynch has already lowered its forecast to 7.6 percent from 8 percent. Citi Research said in its latest report that the official PMI reading could be even lower than the flash PMI report. Citi expects the official PMI, which will be released on June 1, to come at 49.1, much lower than last month’s 50.6.

Citi analyst Shuang Ding said that weak domestic and international demand weighs on manufacturing activity. The new orders index fell to 49.5, its lowest level since September 2012. Gloomy employment sentiment is another big problem for the country.

Japanese Shares Tank

The heavy decline in the Japanese stock market was primarily triggered by poor China flash PMI data, along with Federal Reserve chairman Ben Bernanke’s comments that the central bank may scale back its stimulus program over the next few months. China is Japan’s second largest export market after the United States. A contraction in Chinese fueled concerns that demand for good and commodities in China will weaken, prompting a heavy decline in Japanese equity markets.

Nikkei 225 fell from 7.3 percent from its 5 1/2 year highs, while Topix Index skidded 6.9 percent to 1,188.34.  It’s the biggest decline in Japanese stock market since March 2011 when the tsunami and nuclear disaster wreaked havoc in the country. Both the indexes have risen about 40 percent though today this year as Bank of Japan vowed to beat deflation.

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Days before gold and silver underwent massive declines, Hedge Funds ‘Tiger cub’ Robert Citrone’s Discovery Capital disclosed a 0.8 percent short in Anglo American plc (LON:AAL) (OTCMKTS:AAUKY). Anglo American has major exposure in mining of base metals like iron and copper, additionally the company is also involved in the exploration of platinum group metals.

Sell all European Short positions here

Anglo American plc (LON:AAL) (OTCMKTS:AAUKY)’s exposure in the gold is limited, but being a China dependent operation, it is likely that its bad days will soon come. Iron ore’s prices fell in the bearish zone in this week and judging by the over -5 percent decline in Anglo’s shares today, the miner was hit hard by the disappointing PMI data from China that showed the first decline in manufacturing activity in the past seven months.

Anglo American Amounted To $262 Million

Speaking of Discovery’s short in Anglo American plc (LON:AAL) (OTCMKTS:AAUKY), which amounted to $262 million at the time when it was disclosed, its shares are now down close to 6 percent. This gives Discovery a decent $15 million profit on its short which by the looks of it will increase in the near term.

To see all hedge fund short positions in UK, visit European Stock Short Positions.

Hedge Funds Racing To Cash In The Mining Slowdown

In other disclosures from UK the rise in mining shorts is clearly visible, a number of large hedge funds disclosed negative positions in some favorite mining shorts and some new names in the sector. Adage Capital disclosed a short in Vedanta Resources plc (LON:VED), another metals and mining company. The shares of Vedanta are up 10 percent since  Adage Capital revealed the short position, however they are down 3.8 percent today on weak Chinese manufacturing data. As we have discussed before, Vedanta Resources plc (LON:VED) has been a short of Highbridge Capital and AQR Capital.

AQR Capital disclosed a short in Eurasian Natural Resources Corporation (LON:ENRC) on May 16, which has exposure in iron ore, aluminum, copper and cobalt. The shares are down 6 percent YTD. AQR also took a short position in BowLeven PLC (LON:BLVN) on the same day, the company is an oil & gas explorer. At the same time TT International covered its short in the company on May 13, netting a decent profit here, as shares declined 12 percent in TT’s period of holding.

Ennismore Fund Management disclosed a short in Iofina plc (LON:IOF), a natural gas and associated iodine explorer. Man Group Plc (LON:EMG)’s GLG Partners disclosed a short in New World Resources PLC (LON:NWR), which is coke and coal producer for steel sector.

Further reading Iron Ore Falls, Einhorn And Chanos Profit From Shorts

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Japan’s Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) has offered to appoint a security director if it is successful in its $20 billion bid to buy a majority stake in U.S. based Sprint Nextel Corporation (NYSE:S).

The government-approved director will monitor national security issues relating to SoftBank’s takeover of Sprint Nextel, according to a Bloomberg report.

Softbank Corp (OTCMKTS:SFTBF) (TYO:9984)’s offer comes amid rival DISH Network Corp (NASDAQ:DISH) hoping to derail SoftBank’s bid with a major PR blitz against its Japanese opponent.

According to Sprint’s stock market filing, the U.S. government would also get a veto power as to who is nominated to the position. It also indicated that it would let the U.S. government choose one of the 10 directors to its board.

However DISH Network Corp (NASDAQ:DISH) is playing the national security scare card in its fight for Sprint Nextel. DISH fired off a statement this morning saying it is concerned about a serious national security threat if Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) gets to take over the number three communications operator in the U.S.

The security concern has been raised repeatedly during SoftBank’s attempts to buy Sprint. In March, the two companies promised not to use Chinese networking equipment and even agreed to replace existing Huawei equipment already in use by Sprint acquisition target Clearwire Corporation (NASDAQ:CLWR), after a 2012 Congressional report labeled the gear a national security.

Sprint owns more than 50 percent of Clearwire Corporation (NASDAQ:CLWR), which uses Huawei gear, and is in the process of trying to acquire the rest of the business. After the takeover, Sprint Nextel Corporation (NYSE:S) would absorb Clearwire’s assets and have to address the Huawei issue.

Softbank Corp Deal is Being Reviewed by FCC:

Japan’s Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) deal is being reviewed by the Federal Communications Commission, the U.S. Justice Department and the inter-agency Committee on Foreign Investment, which check for security implications in foreign purchases of U.S. companies.

Yesterday, Clearwire Corporation (NASDAQ:CLWR)’s board announced that Sprint Nextel Corporation (NYSE:S)’s revised and enhanced bid is the right deal for the company. Yesterday, the number three operator in the U.S., Sprint Nextel, upped the takeover ante in the wake of a competing bid by Dish Network. Sprint Nextel Corporation (NYSE:S) enhanced its offer price from $2.97 per share to $3.40, which is 10 percent higher than the $3.30 per share unsolicited offer made by Dish.

The security concern has emboldened DISH Network Corp (NASDAQ:DISH), as being a U.S. company, it won’t face the same review from the Committee on Foreign Investment in the U.S.

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A gold mine is a hole in the ground with a liar on top–Mark Twain

The above chart illustrates how historically cheap gold mining equities are to gold. Not since the Great Depression and Pearl Harbor have equities been so cheap on market cap to production, reserves and cash costs. See the XAU (Index of gold and silver miners) below as a percentage of the gold price–currently below the Great Recession lows of 2008:

For about six years, equities have under-performed due to poor management, rising input costs, dilution, and growth for growth’s sake. That’s the bad news. The good news is that many managements have been replaced and now the focus in on return ON capital. Dividend yields on the senior miners are above 20-year bond rates. The market is forcing managements to focus on returns and that bodes well for the future. And some input prices are falling.  However, many weak companies will go bust leaving less competition for the survivors. Therefore, you must diversify into a basket of WELL-FINANCED Companies operating with good properties in safe jurisdictions for mining and, of course, with proven management. Mining is extremely risky. However, the historic cheapness of mining equities give you a margin of error, but choose wisely.

Pessimism is rampant:

Note below that for a risk-free asset, gold which has no counter-party risk, there is a closed end fund holding silver and gold bullion that trades at a 2% to 5% discount (A great way to buy bullion). People want out!

Monetary Mayhem is being overlooked (Many believe central banks have solved our debt problems and can eventually “exit” when the economy reaches “escape velocity.”)  Ha! Ha!

The last two charts illustrate growing debt that as the chart below will show below is being monetized–coupled with negative real interest rates–the current environment is conducive to higher gold prices. While Western speculators flee from ETFs, Chinese Grandmas rush to buy gold for their savings.

Real Interest Rates are supportive for gold

If the US government practiced fiscal discipline and interest rates were allowed to rise to their natural level, the bull market in gold would probably be finished. When your cab driver suggests that you buy gold for safety that will also be a read flag. Gold and precious metal miners and commodities, in general, are hated, shorted and/or ignored.

Meanwhile, investors have been flocking (some by selling their insurance like gold) to buy stocks, but risks are rising in the stock market due to higher valuations. Margin debt is near all-time highs, insiders have been selling, and a Barron’s poll recently had 75% of all money managers bullish. Of course, the majority expect gold prices to decline. Note the chart below indicates the stock market relative to its Q Ratio or replacement cost of asset, a proxy for value.

And sentiment is upbeat:

Going contrary to massive market sentiment is painful, but going where the bargains are greatest will lead to better returns and safety in the long run (2 to 5 years). Depressed prices alleviate a lot of your investment risk while elevated prices (MMM, CLX, and junk bonds) raise your risks.

But risks overall have never been so high due to central bank intervention into the credit markets. Be careful and have a great weekend. I will be back next week.

By: csinvesting

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The International Monetary Fund managing director and former finance minister of France, Christine Lagarde is being grilled by French judges in a special court over her role in approving a €400 million ($520 million) to a colorful and highly controversial businessman when she was finance minister of the country.

The questioning by court threatens to affect the reputation of France as well as Ms Lagarde. Entrepreneur Bernard Tapie had received that payment after a private arbitration process to resolve a dispute between him, Credit Lyonnais bank and the government related to the botched sale of adidas AG (ETR:ADS) (FRA:ADS). Mr Tapie had claimed that the credit Lyonnais defrauded him in the Adidas deal, a sports equipment maker he owned in the 1990′s.

Adidas Deal

Christine Lagarde is considered a trailblazer and her negotiation skills were highly admired through the Eurozone debt crisis. But her decision to take the Adidas dispute out of the courts to a private arbitration fueled speculations. The case going into a private arbitration was against the logic because it involved a state-owned bank.

Leading Socialist lawmakers, including the prime minister Jean-Marc Ayrault asked the court of justice of the republic (CJR) to investigate in 2011. Tapie was close to Lagarde’s previous boss Nicholas Sarkozy, and he had backed Sarkozy’s election campaign. So, the Socialists suspected that taking the arbitration out of courts was Sarkozy government’s trick to reward Mr. Tapie at the expense of public money. CJR deals specifically with ministerial issues.

Christine Lagarde Has The Backing of IMF

The questioning may last up to two days and Lagarde will be told after questioning if there is any formal investigation. If it results into a trial and if she is convicted, Lagarde may face up to 10 years in prison. The International Monetary Fund was aware of the probe when she replaced Dominique Strauss-Kahn as its managing director in 2011.

IMF said it is confident that Lagarde would be proven innocent. Christine Lagarde has already denied any wrongdoing.

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Wall Street firms are apparently working on trade agreements that may help them dodge some of the changes that are occurring under the latest updates to the Dodd-Frank Act. Such agreements have the capacity to go over the head of current legislation.

Ongoing Trade Negotiations

The act was meant to prevent a financial crisis like the one that happened in 2008 from happening again. The Wall Street Journal’s Carter Dougherty reports that there are three main negotiations going on among U.S. firms which aim to cut down barriers that remain to international commerce.

One of the three negotiations is with the European Union, and it focuses on the majority of trade and investment types. A similar one is underway with the Asia Pacific region, and a third one which covers just services is reportedly being discussed with the World Trade Organization.

The Coalition of Service Industries, of which companies like JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C) and American International Group Inc (NYSE:AIG) are listed as members, said earlier this month that the agreement with the EU should include “more compatible regulations for services.”

Putting Limits On Regulators

The coalition has said in recent letters that it believes the negotiators of the three pending trade agreements should put into action some rules that would limit what regulators would be able to do. It cites the protection of financial stability as the reason for this.

The coalition also said that the agreements should limit any rules that could go beyond the borders of the U.S., like the rules about financial derivatives that are being discussed. It stops just short of asking for changes to the Dodd-Frank Act, although the coalition does use the trade agreement negotiations to address some of the concerns the financial industry has brought up in the past.

Marcus Stanley, who’s the policy director for Americans for Financial Reform, even said the trade agreement negotiations could become “a Trojan Horse.”

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Goldman Sachs Group, Inc. (NYSE:GS) CEO Lloyd Blankfein sat down with Bloomberg TV anchor Erik Schatzker at the company’s annual meeting in Salt Lake City. Lloyd Blankfein said that the firm is committed to growing in China even after it ended a seven-year investment in The Industrial and Commercial Bank of China (I.C.B.C.) (SHA:601398) (HKG:1398): “ICBC is not the key to our interest in China, or the big reflection of it. We’re investing in China because China — I was going to say it’s the future, but it’s a big part of the present as well.”

Lloyd Blankfein said he is surprised by the lack of mergers and acquisitions this year:  “In the big transaction and M&A set, it’s still a very quiet, surprisingly quiet market…For a market in which interest rates are fairly low, rising equity prices, and as much liquidity as we know exists, deal flow is unusually low for the part of the cycle that we’re in.”

Video of Lloyd Blankfein and excerpts below:

Lloyd Blankfein on China and why Goldman Sachs Group, Inc. (NYSE:GS) ended its investment in ICBC:

“Well, first of all, catch the wave when it comes– I don’t know if you’ve been watching but there has been a wave and it’s been going on for quite some time.  It may be interrupted. The Industrial and Commercial Bank of China (I.C.B.C.) (SHA:601398) (HKG:1398), again, is not the key to our interest in China or the big reflection of it.  The Industrial and Commercial Bank of China (I.C.B.C.) (SHA:601398) (HKG:1398) was an investment we made at a time when China was taking its banking system public and was looking for partners– really, kind of quasi-strategic partner– to help– not only provide investment capital but also expertise. And so they wanted firms like ourselves.  And there were other financial institutions that partnered with other banks.  And so we ended up holding that investment for a while.  But through that investment we became very close with important people in the banking system.  And we maintain that relationship today.  We’re investing in China because China– I was going to say it’s the future– but it’s a big part of the present as well.”

Lloyd Blankfein on whether Goldman Sachs Group, Inc. (NYSE:GS) would ever make an investment of that size again:

“Oh, sure, we would.  You know, again, we’re an investment bank, so we help businesses grow.  We provide capital.  We provide debt capital, but we also provide equity capital and partner with companies– and which– by the way, serves as a validation for other investing clients of ours to want to put money into certain places.  So, if we get to invest along with clients and key businesses, and we feel that’s a business worth supporting and valuable– we’ll invest in it and we’ll invite other clients to invest along with us.”

Lloyd Blankfein on where we are in the cycle of ups and downs in the financial industry:

“That’s an interesting question.  And that’s always the big question.  And everybody debates that.  I think in the opportunity set for our business, on the financing side, because of the liquidity and low levels of interest rate and the start of, certainly in this country, the world is becoming growthier. I think the financing business is going very well. And that might be a first-tier opportunity set.  And I’d say in the big transaction, the MNA set, it’s still a very, very quiet, surprisingly quiet market.  For a market in which interest rates are fairly low, a rising equity price– prices around, and as much as liquidity as we know exists, the deal flow is unusually low for the part of the cycle that we’re in.”

Lloyd Blankfein on how to turn GSAM into a business that ranks among the firms with trillions of dollars under management, like PIMCO, BlackRock and others:

“Well, you may have named them all.  There aren’t that many firms of trillions of dollars.  In fact, I can only think of one with trillions of dollars of assets.  We are a very substantial asset management firm already, one of the biggest in the world.  But it’s not lost on us that there are companies that are multiples of our size in asset management.  So, that’s actually an attractive thing for us.  There aren’t a lot of businesses that we’re in that we’re not either the biggest or one of a couple of biggest in. So, for example, in investment banking, we’re not going double the size of our investment banking franchise.  We’ll grow it a bit in terms of market share, but we’re largely a function of how big the market is or what stage of the growth cycle we are.  Asset management is one business we can actually grow market share, and so that’s why we’re committed to it.”

Lloyd Blankfein on what Goldman Sachs Group, Inc. (NYSE:GS)’s approach is to working around regulation:

You know– again, regulation– we’ve also been in a regulated business.  Regulation has always been important.  And like anything else, you learn and you learn from the context and from situations.  The world just went through a big trauma of credit crisis kind where not everything functioned well. And so immediately, you go back to the drawing board and we try to– you know, you try to fix things and you try to make them better.  And not all the fixes work.  And sometimes the fixes need fixes.  Our job here is to cooperate with regulators, use our expertise and contribute to the process of crafting sustainable regulation and then cooperating with regulators and executing.

Lloyd Blankfein on why low-cost centers like Salt Lake City weren’t a big part of Goldman Sachs Group, Inc. (NYSE:GS)’s strategy before the crisis:

“Well, actually, we’ve been in Salt Lake City since 2000.  So, we’ve been here about 13 years.  There are aspects of our business that are low-cost, but the real and frankly, we use the label ‘high-value’ because we really value the people here. This is really a center for talent.  There are a couple of very big universities– BYU, University of Utah– that graduate a lot of terrific people.  And for reasons that must be obvious to you since you’ve been here for a while, they like staying in Salt Lake City.”

Lloyd Blankfein on how much of the firm will be employed in high-value locations like Salt Lake City in five years:

“You know, the world has flattened.  So, there are opportunities to do a lot of activities from a lot of different places.  Not everything we do is client-facing.  And even those who have client-facing activities fly around the country and fly around the world.  And so, a little bit, we’ve been able to accommodate people’s lifestyles. People want to live in different places.  We’ve needed to diversify our activities just so– you know, just for risk management.  Another thing we have to do is we’re a global business, and so our activities have to follow the sun.  So, when people are asleep in New York, it suits us to have people who are working on closing those activities, operating them and fixing our technology– during the daytime while people in New York are sleeping at night.  And so it just suited us to have a lot of different places around the world.  So, right now, these places collectively have about a quarter of our people in– you know, something– it might get a little bit higher, 30% or more, but it’s hard to tell.”

Lloyd Blankfein on how much the locations have saved the firm:

“Well, again, it started out where we talked about what the savings were.  And the concept– remember, there was– you know, the theme was offshoring for a while, where people were talking and–Salt Lake City is hardly offshore with respect to the United States–but people were talking about the savings advantage. This really morphed into– part of– you know, really, “Where can you get talent?”  If you look at, though, we have almost every division of the firm represented here.  We have lawyers who are here doing contracts.  We have research people who are covering companies in Salt Lake City.  We have several of our global businesses are operated globally from Salt Lake City.  Same thing is true in India and Dallas.”

Lloyd Blankfein on whether there would ever be a trading floor in the Utah desert:

“Could I see a trading floor?  I’d say it’s possible.  But you’d have to– you know, again, a trading floor is something– you don’t want many trading floors in the same time zone, just because with a trading floor comes legal and comes compliance and operations and technology, so you tend to aggregate your trading businesses in a single place in a time zone.  So, it could be here.  But guess what?  We have a very big commitment to the New York area and we’re already invested there and we already own the space.”

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Ralph Lauren Corp (NYSE:RL) said Thursday its fiscal fourth quarter profit rose 35 percent while its revenue missed Street expectations and the retailer offered a weak guidance for the year and current quarter.

The apparel maker announced that its fiscal fourth quarter profit rose to $127.2 million, or $1.37 a share, from $94.4 million, or 99 cents, a year earlier. However it could barely enhance its revenue in the quarter ended March 30 as its revenue could rise only 1 percent to $1.6 billion. Ralph Lauren earlier predicted mid-single-digit percentage revenue growth.

Ralph Laruen’s latest period profit included about $6 million in pre-tax impairment and restructuring charges linked with the company’s winding down of its Rugby operations.Excluding charges, the company said it would have earned $1.41 a share.

In its guidance for the year, the company forecast revenue growth of 4 percent to 7 percent, below the 9 percent recently expected by analysts polled by Thomson Reuters.

Similarly for the current quarter, it forecasts a revenue growth in a low-single-digit percentage.  However analysts recently expected a 9 percent growth.

Ralph Lauren Stock

Ralph Lauren Corp (NYSE:RL) stock has risen 33 percent in the past 12 months, while its competitor Michael Kors Holdings Ltd (NYSE:KORS) posted a 66 percent rise during the same period. Lauren’s shares also trailed PVH Corp (NYSE:PVH) which saw its stock returning over 60 percent increase.

Ralph Lauren brands include upscale brands such as Polo and Club Monaco. Post-recession, the company has seen enhanced sales for several quarters with consumers in the luxury sector proved to be more resilient.

For the quarter ended March 30, the apparel maker improved its retail sales by 7 percent, while its wholesale sales declined by 3.9 percent. Its licensing revenues were flat compared with the fourth quarter of 2012.

The New York-based company’s gross margin rose 2.2 percent to 59.3 percent.

Ralph Lauren’s President and COO indicated that the company was able to post enhanced profit despite facing sustained macroeconomic challenges.

The apparel maker’s share declined more than 3 percent in pre-market trading, reflecting the management’s weaker guidance. It was trading at $181 this morning.

Ralph Lauren Corp (NYSE:RL) stock trades in the 52-week range of $134.29 to $192.03.

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A gear-shift by U.S. Federal Reserve and the resultant dollar surge could force BRICS countries to apply a ‘sudden stop’.

Ambrose Evans-Pritchard in his comments posted in ‘The Telegraph’ feels the flow of over $8 trillion capital in to emerging markets since the Lehman crisis has largely sputtered out in some of the BRICS countries including Brazil, Russia and South Africa.

Federal Reserve Chairman Ben S. Bernanke defended Wednesday the central bank’s record stimulus program indicating that ending it prematurely would endanger a recovery hampered by high unemployment and government spending cuts.

Once funding for emerging markets dries up, a ‘sudden stop’ can be anticipated forcing investors to exit, feels the former IMF official Stephen Jen.

According to the former IMF official, before 2007 the money was ‘pulled in’ because of a strong growth story, while recently money has been ‘pushed out’ of the Western markets through QE announcements in the U.S. and Britain.

The cumulative inflow of capital into several developing countries is quite significant. For instance, the cumulative inflow of capital has been 60pc of GDP in Lebanon, 58pc in Bulgaria, 56pc in Hungary, 50pc in Ukraine, 48pc in Poland, 42pc in Chile, 39pc in Romania, 32pc in Malaysia, 28pc in Thailand and 26pc in Turkey. But IMF feels the flows are ample though not alarming. However IMF warned that global market sentiment could change in the event of unforeseen circumstances.

For those taking contrarian view, all the above might not sound pessimistic. With 12 pc fall in the MSCI Index of emerging markets since early 2011, this could be the right time for bargain-hunters. Alluding to this view, Bank of America indicated that the sector normally beats the S&P 500 and Eurostoxx whenever bearish sentiment prevails.

Many of the BRICS countries have already started experiencing pressure. South Africa’s current account deficit is high at 6 pc of GDP, while Brazil’s manufacturing output is presently lower than what it was in 2008. India too is facing challenges in reining in its current account deficit, which stands at 6.7 percent of its GDP now.

Russia continues to face challenges to maintain its leadership position in global energy supply.

China has a dominant share among the BRICS countries:

China, which has a dominant share among the BRICS countries, has run into diminishing returns, after increasing its credit from $9 trillion to $23 trillion in just four years. Thus China is constrained to settle for a pedestrian growth, that too at the mercy of FED.

China’s challenge comes at a time when its trade surplus starts dwindling while the U.S. firms bringing back plant to the U.S. soil for cheaper power and enhanced labor productivity.

Despite Chinese stock market posting negative returns in real terms since 2008, foreign players have shoveled $8 trillion into BRICS countries.

Ambrose Evans-Pritchard concludes that the emerging market exuberance has been seen in the 19^th and 20^th Centuries and one shouldn’t be shocked if history is repeated.

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ProShares is coming up with yet another Exchange-traded funds (ETF). This time it is a high-yield corporate debt ETF. The new ETF will hedge by taking short positions in U.S. Treasury’s.

ProShares Will Be Traded Under The Symbol ‘HYHG’

The High Yield-Interest Rate Hedged ETF from ProShares will be traded under the symbol ‘HYHG’ and will initially list on BATS exchange.

In one of the recent filings concerning the new ETF, Bethesda, Md.-based ProShares said “By taking these short positions, the Index seeks to mitigate the potential negative impact of rising Treasury interest rates (“interest rates”) on the performance of high yield bonds (conversely limiting the potential positive impact of falling interest rates).”

To get an edge over rivals, ProShares is pricing the new ETF with a 50-basis-point fee waiver. ProShares is the largest purveyor of leveraged and inverse ETF’s globally.

Details of the other two funds

The ETF from ProShares is only the third entrant in the expanding field of yield-seeking junk bond funds with hedges. The other two are from Van Eck and First Trust. Among the three ETF, the latest one is the least expensive. The ProShares ETF will carry an annual expense ratio of 0.50 percent, or $50 for each $10,000 invested

The First Trust High Yield Long/Short ETF (NasdaqGM: HYLS), launched in February this year and holding just over $23 million in assets, has a total expense ratio of 1.19 percent annually. The break-up of the cost is 0.95 percent management fees, 0.23 percent leverage costs and 0.01 percent in acquired funds fees.

The Market Vectors Treasury-Hedged High Yield Bond ETF (NYSEArca: THHY) was launched in March and has $10.2 million in assets. It has an expense ratio of 1.45 percent annually after a fee waiver. This includes 45 basis points in management fees, 95 basis points in interest on securities sold short and cost to borrow, and 11 basis points in “other expenses.”

All the three high-yield corporate bond funds will design their own strategy to short Treasury’s in order to compensate for their positions in high-yield corporate debt.

Other recent offerings

Talking about junk bonds, recently a junk bond offering in India by Rolta India Limited (NSE:ROLTA) got many US takers. The offerings got good response across regions with 47 percent contributed by Asia and 43 percent by the U.S.

Earlier, Cambria Shareholder Yield ETF (NYSEARCA:SYLD) was introduced to the market on May 14. The fund invests in the equity of 100 publicly traded companies with a market cap of $200 million or more. The fund is unique in a way that it is neither a classic dividend fund, nor a classic income fund.

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JPMorgan Chase & Co. (NYSE:JPM) is redeploying hundreds of employees to help the nation’s largest bank resolve mounting regulatory problems, people familiar with the developments told Dan Fitzpatrick and Julie Steinberg of the Wall Street Journal. The company plans to double the number of staff working on regulatory issues by the end of this year. JPMorgan expects that there could be more regulatory enforcement actions attacking the loopholes in its consumer operations.

With over  256,000 employees worldwide, the Jamie Dimon-led bank continues to record solid growth, and its shares closed yesterday to six-year highs. But the bank’s senior executives realize that it would take several years to resolve the regulatory problems and regain regulators’ trust.

JPMorgan Already Has Four Enforcement Actions

On Tuesday, JPMorgan Chase & Co. (NYSE:JPM) shareholders voted in favor of Jamie Dimon’s dual role as the bank’s chairman & CEO. Many of the bank shareholders were demanding that the roles of chairman and chief executive officer be split. After his victory at the annual shareholders meeting on Tuesday, Dimon’s next challenge is to overcome regulatory problems. According to the research firm SNL Financial, JPMorgan already has four enforcement actions. Two of the enforcement actions are about risk management weaknesses that the regulators identified after huge losses in London Whale trade last year. The other two want JPMorgan to improve its anti-money-laundering systems.

The company is responding to regulatory actions by forming a team dedicated to address only regulatory problems. The Oversight & Control Group will look after more than 20 internal measures taken to improve the company’s controls. Every business division of JPMorgan Chase & Co. (NYSE:JPM) will have a control officer reporting to the head of that business unit as well as Oversight & Control Group.

JPMorgan Halts Other Projects

However, it is still unclear how much money JPMorgan Chase & Co. (NYSE:JPM) will have to spend to resolve these issues. Sources said that the bank has halted several new projects so that it can focus completely on regulatory issues. The two important projects that have been halted are the development of instant-issue credit cards for people who lost their cards and advertising campaign for its private-wealth- management division in California.

JPMorgan Chase & Co. (NYSE:JPM) shares were down 1.03% to $53.08 at 9:36 AM EDT.

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