In constitution and performance, indexes are in large part designed to act as a mirror to the markets they reflect, with investors largely vying for ways to exploit information deficiencies and fleeting hunches to beat them. But in emerging markets, there is a huge discrepancy between the assets that compose these indexes and the actual asset class, raising fundamental questions about the purpose these tools serve.
Soft US data and delays to fiscal stimulus plans from the Trump administration has led to a rethink of Fed tightening expectations, while lover commodity prices continued to drive down EM currencies through much of the second quarter. Here is BBH’s’ quarterly update on foreign exchange dynamics in emerging markets.
The 2008 subprime mortgage crisis in the US, and the aftershocks sent through global markets for years on, exposed weakness in the banking sector, the capital markets, and the financial system as a whole. Credit rating agencies were not the prime target for blame at the time, but gradually, their role in the crisis has emerged. Ten years on, Bonds & Loans explores some of the failures in the lead-up to the crash and the lessons that have (or have not) been taken from it.
Total non-resident inflows into emerging market debt and equities are forecast to swell 35% over 2016 volumes, touching US$970bn in 2017, and could pass the US$1bn mark by 2018 – the highest level since 2014, according to the IIF.
Emerging market corporate bonds have become a hit with investors in recent years as improving fundamental and good governance practices have sent default rates plunging to record lows. Despite fears around an EM debt bubble emerging, fund managers seem resolutely upbeat about the asset class.
31 May 2017
The hard-fought agreement seems to have made little impact on the market, as oil prices showed negative dynamics in the aftermath of cartel’s announcement.
What Brexit will mean for the City of London remains somewhat of a mystery; as European bureaucrats debate the UK’s future in the single market, banks are already preparing their contingency plans. EM debt traders, however, seem unfazed by these developments.
With political tension rising in the developed world and geopolitical events dominating international headlines, investors are fleeing to “safe havens” in an attempt to reduce their exposure to the volatility of the market.
- Rising Commodity Prices Give Emerging Markets Much Needed Boost
- Making Cents Out of Dollar Strength: The Effect on Emerging Markets
- Putting Green Bonds on a Sustainable Path in Emerging Markets
- Eurozone Bond Sell-off Presents New Opportunity for EM Debt
- Dovish Fed Pushing Investors Towards Longer EM Maturities
28 Jun 2017
26 Jun 2017