Subject: With Dollar Diving, Morgan Stanley Debuts New India and China Currency ETNs
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With Dollar Diving, Morgan Stanley Debuts New India and China Currency ETNs
By Mike Caggeso, Money Morning • March 21, 2008
By Mike Caggeso
Last week, Morgan Stanley (MS) began issuing two new exchange-traded notes (ETNs) that give exposure to the Indian Rupee and the Chinese Renminbi.
The Market Vectors-Chinese Renminbi/USD ETN (CNY) and Market Vectors-Indian Rupee/USD ETN (INR) will trade on the New York Stock Exchange. Van Eck Global will market the ETNs and Standard & Poor's will calculate and maintain the underlying currency indices.
Specifically, the Renminbi ETN seeks to track the performance of the S&P Chinese Renminbi Total Return Index. And the Rupee ETN seeks to track the performance of the S&P Indian Rupee Total Return Index.
Jeffrey Barany, Managing Director Structured Product Origination at Morgan Stanley, said the new ETNs represent "an exciting and groundbreaking opportunity for investors" seeking exposure to the Indian and Chinese currencies.
"Morgan Stanley's considerable global reach and structured products expertise well positions us to deliver innovative products from a single multiple asset-class ETN platform," Barany said in a statement.
ETNs are senior, unsecured debt securities that deliver exposure to the exchange rate of a specific foreign currency. Investors may trade ETNs on an exchange at market price or receive a cash payment from the issuer based on the applicable index performance, less investor fees.
Previously, the main path for investors who wanted currency exposure was through Rydex's line of CurrencyShares, ETF Trends reported.
Money Morning Investment Director Keith Fitz-Gerald said another "brand" issuer is similar to people's preference for Coca-Cola or Pepsi.
"Both are simply offering variations of the same theme," Fitz-Gerald said. "As for which will have the better year, tough to say. Both markets could have a knee jerk reaction to the United States, but I wouldn't bet against either right now"
Given the dollar's doldrums and Asia's rising economies, it wouldn't be surprising if more financial firms rolled out similar currency ETNs.
Exchange-traded funds (ETFs) – a cousin of ETNs that tracks indices or a block of specific stocks – emerged in similar fashion. In 1993, Standard & Poor's launched the first ETF, called S&P's Depository Receipts (SPDRs).
Morgan Stanley (MS) soon entered the fray with its own ETFs, as did Barclays PLC (BCS) and The Vanguard Group Inc.
As of January, there were 1,173 ETFs listed on exchanges in the United States, Latin America, Europe, Asia, Australia and South Africa. A Middle East ETF is expected to launch later this year.
News and Related Story Links:
ETF Trends:
New ETNs Track Chinese and Indian Currency
Money Morning:
There are 1,173 ETFs Available; But These Nine are the Best
Middle East ETFs Will be Available "This Year"
Tags: Mike Caggeso, Morgan Stanley