Global
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
Sukuk index debut positive, but more work is needed for further globalisation
In Q4 2016 a select few sukuk will be listed on JP Morgan’s EMBI. The inclusion of Islamic bonds is positive for the growth of the industry, and conventional investors will likely buy into such instruments following their inclusion. However, for wider acceptance amongst the international investor community, analysts suggest further global standardisation of sukuk will be necessary.
24 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
As ETFs overtake traditional funds, distortions arise
Investors continued their hunt for yield this week as fund managers ploughed some US$13.2bn into emerging markets since late July, according to figures recently published by the IIF. However, investors are getting increasingly concerned about distortions caused by liquidity imbalances and the growing uptake of ETFs.
23 Aug 2016
Negative rates mean large EM selloff unlikely even if Fed hikes
The markets appear to believe that the US Fed will be slow in raising interest rates in the future. Although certain EMs will suffer when a hike does occur, investors may hold on to EM fixed-income due to the increasing number of low or negative yielding bonds present across DMs.
10 Aug 2016
Greening the Capital Markets
With climate change now firmly on the agenda of most global economies the opportunities emerging around green investment are increasing exponentially.
1 Aug 2016
EM credit rally strong despite negative rating actions
The EM rally has significantly benefited fixed income across developing economies. Although it will eventually slow, the participation of large institutional flows will yet carry it forward. Mainly negative ratings actions concerning EMs have not affected the rally, as such activity tend to come after the markets have moved forward.
29 Jul 2016
EM flows surge but downgrade risk persists
The week ending July 15 was the strongest week for portfolio inflows to emerging markets since the US Federal Reserve delayed quantitative easing tapering in September 2013, according to the IIF. EM investors believe we may yet continue to see strong flows as US growth continues trending higher, but EM downgrades could still throw a spanner in the works.
20 Jul 2016
EM quarterly growth highest in two years
The last three months have seen the largest increase in emerging market growth since 2014, while May saw the largest monthly advance in four years, according to data released by the IIF.
13 Jul 2016
Adopting to the new world reality
Prudence is the name of the game, which means trying to build safer portfolios that trade less, reduce duration risk and limit access to poor liquidity instruments and create additional diversification.
12 Jul 2016