Currencies
South African politics to make downgrade inevitable
The present state of South African politics will contribute to the country losing its investment grade rating. Although the markets have already priced in a sovereign downgrade to sub-investment grade, recent political events surrounding the country’s Minister of Finance are still causing volatility in South African bonds and the rand.
14 Oct 2016
Turkish market resilient as inflation threat looms
Investment flows in Turkey’s local currency credit market defied expectations this year, powering through two ratings downgrades, an attempted coup and a drop in tourism revenues. Slowing consumption and the threat of inflation are forcing policymakers to remain vigilant.
12 Oct 2016
Impact of dollar shortage varies across Nigerian banks
Nigeria’s banking sector is facing significant pressures from a lack of dollar liquidity. Further devaluation in the naira would exacerbate NPL levels – which the country’s newest project, the Development Bank of Nigeria – would do little to alleviate. However, whilst some lenders are completely locked out of the international markets, others are in relatively good shape and are still able to…
12 Oct 2016
Investors wait on India’s market reforms
Inflation is likely to rise in India following the new governor of the RBI’s refusal to commit to previous calls to hold inflation at 4% by 2018. The news will have a larger impact on the local rather than international markets, but foreign investment in India is unlikely to pick up substantially until wider capital market reforms are implemented.
6 Oct 2016
Currency fluctuations could upset telco popularity
The capital intensive and competitive nature of the telecoms industry provides investors with plenty of choice – and the sector continues to attract the interest of the global investor community. However, local-currency cash flows and dollar-denominated technology means that such companies are exposed to a currency mismatch which could hurt investment on rate hikes or fluctuations.
3 Oct 2016
FX, not recession, swaying investors' hearts on Nigeria
The fact that Nigeria has officially entered a recession is not likely to dampen investor sentiment around the country despite its current economic situation. Sentiment will, however, be affected by the ability of the government to implement a new FX policy. Until this occurs, many fixed income investors will wait on the side lines.
5 Sept 2016
Investors weary of new GCC debt as Fed outlook remains uncertain
With a number of GCC issuer looking to wrap up their bond deals before the end of Q3 after what has already been a record year for credit volume in the region, there are signs fixed income investors are starting to grow weary as uncertainty around the Fed’s decision to raise rates persists. The region's credit could suffer as a result.
2 Sept 2016
What Lies Underneath? Portfolio Flows to Emerging Markets and Benchmark-Driven Investors
What drives cross-border portfolio flows to emerging markets? In our recent research, we focus on the role of benchmarks, which can trigger correlated portfolio flows, connecting countries that might otherwise be disconnected through country fundamentals. We attempt to quantify the size of benchmark-driven investors in EM local-currency bond markets, including its variation across time and…
1 Sept 2016
Russian local market liquid and hungry
Russia’s local bond market remains highly liquid as the country’s economy continues to improve. The depth and appetite of the domestic market means that although sanctioned companies are not allowed to borrow from international investors, surging demand for local currency debt is seeing their bonds price closely to those of non-sanctioned Russian entities.
25 Aug 2016
Emerging Markets in a Post-Brexit World: It’s The Politics, Stupid
Emerging Markets have been buffeted by a variety of negative factors this year, but have remained resilient. The overriding factor here is that the global liquidity backdrop remains supportive for risk. We expect this favourable outlook to continue into year-end. Why?
24 Aug 2016