..."There's no hope for export demand to recover any time soon," said Wang Qian, a Hong Kong-based economist at JPMorgan Chase & Co. "How fast imports recover depends on how soon the government's stimulus package kicks in and creates real demand in major industries."

Regarding imports, Willem Thorbecke has pointed out to me that the deviations from trend have been most pronounced for imports for processing, and processed exports. Ordinary imports and exports have been less affected -- at least through 2008.

This supports the view that the overall decline in worldwide demand for Chinese exports has thus far driven the declines in Chinese imports, rather than declining domestic Chinese demand. I suspect, however, that over time ordinary imports will decline as well.

• Australia - guarantee of all bank deposits for three years and will guarantee all wholesale funding to Australian banks for five years
• Brazil - reduction in reserve requirements for smaller banks, injection of R$160 billion into the banking sector, and aiding bigger banks to buy loan books of smaller banks
• France - EUR360 billion, including EUR320 billion bank lending guarantee for bank paper issued before December 31, 2009 and lasting up to five years and EUR40 billion to buy bank shares
• Germany - EUR500, including EUR80 billion for recapitalizations and EUR400 billion for bank guarantees that will run until December 31, 2009
• Hong Kong - blanket guarantee for customer deposit accounts in all HK financial institutions until year-end 2010
• India - reduction in banks' capital reserve ratio, providing Rs250 billion to lending institutions as part of a farm-loan waiver plan, and easing of rules for some foreign borrowings
• Ireland - EUR400 billion guarantee of existing and new debt and deposits over the next two years and a EUR5.5 billion bank recapitalzation plan
• Japan - ¥2 trillion for recapitalizations and to broaden repo operations
• South Korea - US$130 billion in debt guarantees and capital injections into banks
• Spain - EUR30 billion fund to buy assets from Spanish banks to help stabilize the lending industry and unfreeze credit, guarantee issues of new bank debt until December 2009, and bank deposit guarantees up to EUR100,000
• Switzerland - SFr60 billion financial aid, primarily to UBS, for share purchases and loans, and bank deposit guarantees up to SFr100,00 until yearend 2010
• United Kingdom - £400 billion, including £37 billion to buy bank shares and £250 billion in debt guarantees for short- and medium-term borrowing by banks, and an additional £500 billion for its Asset Protection Scheme (APS), under which the government insures the bank against losses on its most toxic assets (e.g., mortgage-backed securities and property loans) in return for a small fee and an obligation by the bank to increase lending to consumers and businesses. The bank absorbs the first 10% of losses, with the government assuming responsibility for the remaining 90%.

Going forward, we expect stock prices to continue to be volatile and susceptible to headline risk. Moreover, depreciation of many foreign currencies relative to the US$ is depressing US$ stock prices. Additionally, a number of companies have cut dividends to conserve capital, and this will likely continue in the future. Combined with the grim economic outlook for many economies ranging from outright recession in developed economies to slowing growth in emerging market economies, we expect share price performance to continue to weaken.

OPPORTUNITIES

WEAKNESSES

In addition, other banks have been forced to strengthen capital through rights offerings or other forms of capital increase, such as Barclays PLC (BCS), HSBC Holdings plc (HBC) and Banco Santander Central Hispano, S.A. (STD), significantly diluting existing shareholder interests, also a negative for share prices.

Current Sells include Banco Bilbao Vizcaya Argentaria, S.A. (BBV) and Banco Santander Central Hispano, S.A. (STD).Zacks Investment Research

As in the US, non-US bank stocks continue on a downward trend this year due to the financial problems that began in the US subprime mortgage market and spread globally to engulf many major financial institutions in most countries. The median year-to-date stock price decline for non-US banks in the Zacks universe is 27.1%, compared to a loss of 21.1% for the S&P 500. This includes median price declines for non-US banks in the Zacks universe of 47.6% in Europe, 29.7% in Asia, and 14.6% in Latin America.

In response to the global financial crisis, governments have taken dramatic action to forestall the possibility of global meltdown. These rescue efforts include:

• Australia - guarantee of all bank deposits for three years and will guarantee all wholesale funding to Australian banks for five years
• Brazil - reduction in reserve requirements for smaller banks, injection of R$160 billion into the banking sector, and aiding bigger banks to buy loan books of smaller banks
• France - EUR360 billion, including EUR320 billion bank lending guarantee for bank paper issued before December 31, 2009 and lasting up to five years and EUR40 billion to buy bank shares
• Germany - EUR500, including EUR80 billion for recapitalizations and EUR400 billion for bank guarantees that will run until December 31, 2009
• Hong Kong - blanket guarantee for customer deposit accounts in all HK financial institutions until year-end 2010
• India - reduction in banks' capital reserve ratio, providing Rs250 billion to lending institutions as part of a farm-loan waiver plan, and easing of rules for some foreign borrowings
• Ireland - EUR400 billion guarantee of existing and new debt and deposits over the next two years and a EUR5.5 billion bank recapitalzation plan
• Japan - ¥2 trillion for recapitalizations and to broaden repo operations
• South Korea - US$130 billion in debt guarantees and capital injections into banks
• Spain - EUR30 billion fund to buy assets from Spanish banks to help stabilize the lending industry and unfreeze credit, guarantee issues of new bank debt until December 2009, and bank deposit guarantees up to EUR100,000
• Switzerland - SFr60 billion financial aid, primarily to UBS, for share purchases and loans, and bank deposit guarantees up to SFr100,00 until yearend 2010
• United Kingdom - £400 billion, including £37 billion to buy bank shares and £250 billion in debt guarantees for short- and medium-term borrowing by banks, and an additional £500 billion for its Asset Protection Scheme (APS), under which the government insures the bank against losses on its most toxic assets (e.g., mortgage-backed securities and property loans) in return for a small fee and an obligation by the bank to increase lending to consumers and businesses. The bank absorbs the first 10% of losses, with the government assuming responsibility for the remaining 90%.

Going forward, we expect stock prices to continue to be volatile and susceptible to headline risk. Moreover, depreciation of many foreign currencies relative to the US$ is depressing US$ stock prices. Additionally, a number of companies have cut dividends to conserve capital, and this will likely continue in the future. Combined with the grim economic outlook for many economies ranging from outright recession in developed economies to slowing growth in emerging market economies, we expect share price performance to continue to weaken.

OPPORTUNITIES

At this time, we see no near-term opportunities in this space.

WEAKNESSES

Stocks that could prove especially problematical include banks that participate in government recapitalization programs, such as The Royal Bank of Scotland plc (RBS) or Lloyds TSB Group plc (LYG). In return for the government capital, these banks must submit to other government intervention, including limits on dividend payouts and nomination of board members. This will limit their financial flexibility for a while, which could hurt stock performance.

In addition, other banks have been forced to strengthen capital through rights offerings or other forms of capital increase, such as Barclays PLC (BCS), HSBC Holdings, plc (HBC) and Banco Santander Central Hispano, S.A. (STD), significantly diluting existing shareholder interests, also a negative for share prices.

Current Sells include Banco Bilbao Vizcaya Argentaria, S.A. (BBV) and Banco Santander Central Hispano, S.A. (STD).

Hutchison Telecommunications International Ltd. (HTX) rose more than 10% today on reports that the company was planning to raise about $256 million from spinning off its Hong Kong telephone business in an initial public offering later this year.

Although the company did not provide much detail on the sale, it is being widely speculated that its Hong Kong and Macau businesses could fetch up to $1.54 billion. The spin-off will also help offset some of the losses made by Hutchison's operations in Thailand, Indonesia, Vietnam and Sri Lanka. The company generates most of its revenue from Hong Kong, Macau and Israel.

The Hong Kong-based company's shares were up 35 cents to $3.79 at noon on the New York Stock Exchange.

Since that idea caught my fancy, some concepts for that Master Plan have begun to circulate, and we've been hard at work looking at different structures and possibilities - first with PowerShares, who as far as I can tell, had the original idea - and then further afield, talking to fixed-income, real estate and ETF experts from around the world.

First, let's look at a very simple plan to save the world using ETFs: Simply have the government buy up billions of dollars worth of ETFs to prop up the stock market. The Japanese government is discussing just that.  It wouldn't be the first time this has been done. The Hong Kong TRAKRs (which at one point were I believe the world's largest ETF) were actually the way that the Hong Kong government packaged up and sold back to its public the $5 billion in equities that it had bought at one point to prop up the market there. You can't get more straightforward that that.

But a broad-based equity investment is not what's needed here. The U.S. plan to have ETFs save the world is bit more complicated. It involves government and banks putting together toxic assets & being issued ETF shares in return, and then selling those shares for cash on the secondary market. The idea is to build liquidity and transparency in the market for the illiquid, sub-prime securities that are clogging up the world's financial system, and to do it in a way that brings in the U.S. investing public and puts public and private investment dollars working together, side-by-side.  It's a Save the World effort that could play not only on patriotism (like the TRAKRs did in Hong Kong), but potentially also on the allure of 30% yields. But it is very, very messy.

Here's an initial televised debate on the plan. We wondered where Bob Holderith had gotten too! (We'll make sure it's Matt Hougan doing the TV spot on this next time, so keep your eyes open).

There's some real possibility here. With a little luck and some creative thinking, maybe ETFs can indeed...save the world.

Four ETF Strategies For 2009

This new Investopedia article examines and explains almost every type of investment tack available to exchange-traded funds investors facing a declining market.

It broadly classifies strategies into: more active selling techniques, asset allocation, sector rotation and employing hedges. It doesn't advocate any of these methods, but has tons of links explaining everything from basic terms to more advanced theories in each category. 

You can read the article here.

Hong Kong, Shanghai Exchanges Notch ETF Deal

In a severely under-reported move that could help jump exchange-traded fund creations in Asia, Hong Kong and Shanghai exchange officials have agreed to jointly work on developing new ETFs and joint-list them across their respective exchanges.

You can read the Reuters wire story here.

Slew Of New ETFs Scrutinized

Analysts at TheStreet.com have initiated coverage on 15 ETFs "that accrued a sufficient track record of risk and performance data by the end of December 2008."

The story goes on: "Only one of the newly rated ETFs with inception dates during December 2007 received our top rating level of excellent." 

Needless to say, only one ETF with performance records since December 2007 got a top rating of "excellent." Not to give it away, but it was ... a BOND fund! You can read the tale here.

Convertibles Instead Of Leveraged ETFs?

Bill Feingold has a new column at Minyanville  proposing a new investment theme for 2009. Namely, it calls for dumping leveraged ETFs and shifting into covertible bonds. 

You can read his reasoning behind the concept here.

• Australia - guarantee of all bank deposits for three years and will guarantee all wholesale funding to Australian banks for five years
• Brazil - reduction in reserve requirements for smaller banks, injection of R$160 billion into the banking sector, and aiding bigger banks to buy loan books of smaller banks
• France - EUR360 billion, including EUR320 billion bank lending guarantee for bank paper issued before December 31, 2009 and lasting up to five years and EUR40 billion to buy bank shares
• Germany - EUR500, including EUR80 billion for recapitalizations and EUR400 billion for bank guarantees that will run until December 31, 2009
• Hong Kong - blanket guarantee for customer deposit accounts in all HK financial institutions until year-end 2010
• India - reduction in banks' capital reserve ratio, providing Rs250 billion to lending institutions as part of a farm-loan waiver plan, and easing of rules for some foreign borrowings
• Ireland - EUR400 billion guarantee of existing and new debt and deposits over the next two years and a EUR5.5 billion bank recapitalzation plan
• Japan - ¥2 trillion for recapitalizations and to broaden repo operations
• South Korea - US$130 billion in debt guarantees and capital injections into banks
• Spain - EUR30 billion fund to buy assets from Spanish banks to help stabilize the lending industry and unfreeze credit, guarantee issues of new bank debt until December 2009, and bank deposit guarantees up to EUR100,000
• Switzerland - SFr60 billion financial aid, primarily to UBS, for share purchases and loans, and bank deposit guarantees up to SFr100,00 until yearend 2010
• United Kingdom - £400 billion, including £37 billion to buy bank shares and £250 billion in debt guarantees for short- and medium-term borrowing by banks.

Going forward, we expect stock prices to continue to be volatile and susceptible to headline risk. Moreover, depreciation of many foreign currencies relative to the US$ is depressing US$ stock prices. Additionally, a number of companies have cut dividends to conserve capital, and this will likely continue in the future. Combined with the grim economic outlook for many economies ranging from outright recession in developed economies to slowing growth in emerging market economies, we expect share price performance to continue to weaken.

OPPORTUNITIES

WEAKNESSES

In addition, other banks have been forced to strengthen capital through rights offerings or other forms of capital increase, such as Barclays PLC (BCS) and Banco Santander Central Hispano, S.A. (STD), significantly diluting existing shareholder interests, also a negative for share prices.

Current Sells include Banco Bilbao Vizcaya Argentaria, S.A. (BBV) and Banco Santander Central Hispano, S.A. (STD).
"RBS" Free Stock Analysis: Buy? Sell? Hold?
"BCS" Free Stock Analysis: Buy? Sell? Hold?
"STD" Free Stock Analysis: Buy? Sell? Hold?
"LYG" Free Stock Analysis: Buy? Sell? Hold?
"BBV" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

As in the US, non-US bank stocks continue on a downward trend this year due to the financial problems that began in the US subprime mortgage market and spread globally to engulf many major financial institutions in most countries. The median year-to-date stock price decline for non-US bank in the Zacks universe is 2.4%, compared to a loss of 3.5% for the S&P 500. This includes median price declines for non-US banks in the Zacks universe of 6.1% in Europe, 3.9% in Asia, and 0.4% in Latin America.

In response to the global financial crisis, governments have taken dramatic action to forestall the possibility of global meltdown. These rescue efforts include:

• Australia - guarantee of all bank deposits for three years and will guarantee all wholesale funding to Australian banks for five years
• Brazil - reduction in reserve requirements for smaller banks, injection of R$160 billion into the banking sector, and aiding bigger banks to buy loan books of smaller banks
• France - EUR360 billion, including EUR320 billion bank lending guarantee for bank paper issued before December 31, 2009 and lasting up to five years and EUR40 billion to buy bank shares
• Germany - EUR500, including EUR80 billion for recapitalizations and EUR400 billion for bank guarantees that will run until December 31, 2009
• Hong Kong - blanket guarantee for customer deposit accounts in all HK financial institutions until year-end 2010
• India - reduction in banks' capital reserve ratio, providing Rs250 billion to lending institutions as part of a farm-loan waiver plan, and easing of rules for some foreign borrowings
• Ireland - EUR400 billion guarantee of existing and new debt and deposits over the next two years and a EUR5.5 billion bank recapitalzation plan
• Japan - ¥2 trillion for recapitalizations and to broaden repo operations
• South Korea - US$130 billion in debt guarantees and capital injections into banks
• Spain - EUR30 billion fund to buy assets from Spanish banks to help stabilize the lending industry and unfreeze credit, guarantee issues of new bank debt until December 2009, and bank deposit guarantees up to EUR100,000
• Switzerland - SFr60 billion financial aid, primarily to UBS, for share purchases and loans, and bank deposit guarantees up to SFr100,00 until yearend 2010
• United Kingdom - £400 billion, including £37 billion to buy bank shares and £250 billion in debt guarantees for short- and medium-term borrowing by banks.

Going forward, we expect stock prices to continue to be volatile and susceptible to headline risk. Moreover, depreciation of many foreign currencies relative to the US$ is depressing US$ stock prices. Additionally, a number of companies have cut dividends to conserve capital, and this will likely continue in the future. Combined with the grim economic outlook for many economies ranging from outright recession in developed economies to slowing growth in emerging market economies, we expect share price performance to continue to weaken.

OPPORTUNITIES

At this time, we see no near-term opportunities in this space.

WEAKNESSES

Stocks that could prove especially problematical include banks that participate in government recapitalization programs, such as The Royal Bank of Scotland plc (RBS) or Lloyds TSB Group plc (LYG). In return for the government capital, these banks must submit to other government intervention, including limits on dividend payouts and nomination of board members. This will limit their financial flexibility for a while, which could hurt stock performance.

In addition, other banks have been forced to strengthen capital through rights offerings or other forms of capital increase, such as Barclays PLC (BCS) and Banco Santander Central Hispano, S.A. (STD), significantly diluting existing shareholder interests, also a negative for share prices.

Current Sells include Banco Bilbao Vizcaya Argentaria, S.A. (BBV) and Banco Santander Central Hispano, S.A. (STD).