As populist politicians and leaders rise to prominence in the developed world, anti-globalist attitudes and protectionism are also entering the economic frame. With Trump casting doubts over the future of NAFTA and Brexit putting a strain on EU's economic integration, Richard Segal, Senior Analyst at Manulife Asset Management, considers some of the practical effects these policies may bring in the coming years.
Emerging market countries have suffered chronic outflows of wealth due to tax evasion, perhaps more than countries in the developed world. That might be why many EM governments have set their sights on the enormous amount of wealth currently outside their borders.
Last week the world’s economic and political elites descended to the Swiss city of Davos for the annual World Economic Forum (WEF). This year's conference was unlike any other before – fitting given how unconventional 2016 really was – and left economic leaders with more questions than answers.
Negative or flat interest rates have been a key driver behind the strong performance of emerging market assets across the board as yield hungry investors continue their search for higher returns. But are price distortions in developed markets and an indiscriminate influx of liquidity in emerging market credit really sustainable?
17 Jan 2017
Italy’s Monte dei Paschi di Siena on course for government bail-out – Petrobras sells US$2.2bn worth of assets to Total SA - Taiwan held its benchmark interest rate steady at 1.5% - Saudi Arabia to compensate for loss of subsidies with cash pay-outs – Ukraine bonds rise as parliament passes budget ahead of IMF loan – Russia to pay Bosnia-Herzegovina US$125mn of Soviet debt
Few terms are as divisive in the finance industry as “Fintech.” It instils fear in leaders of traditional FIs, makes bankers weary, confuses the general public and excites tech whizzes and young entrepreneurs. But it could also hold the key for emerging markets.
Since the U.S Presidential Election nearly a month ago, Emerging Market Bonds have reacted negatively, selling off 2.2% before stabilizing and even recouping a modest portion of the loss in the last 4-5 trading sessions. As the table below shows the overall decline has been led by Mexico, which declined 4.6% in November.
Emerging market outflows have hit record highs and EM bond spreads have widened by over 17bp since business magnate Donald Trump won the US election, a result that continues to influence markets nearly three weeks after the President-elect declared victory. As a picture of what a Trump presidency means for global markets begins to form, EM investors are starting to emerge from the sidelines in search of relative value.
Contrary to popular perception, Quantitative Easing (QE) policies were bad news for Emerging Market (EM) countries. It had the effect of a giant magnet, sucking capital out of Emerging Markets as investors sought instead to allocate to the QE-subsidised markets in Europe and the US.
Markets in 2016 kicked off much like they appear to be winding down: with many unknowns ahead. Nevertheless, that uncertainty has bookended a record year for debt capital markets globally, as low interest rates and quantitative easing sent money into new regions (particularly emerging markets) and asset classes (such as European high yield), enabling borrowers to capitalise on reduced costs of funding. We speak with Demetrio Salorio, Global Head of Debt Capital Markets, Societe Generale Corporate & Investment Banking, who reflects on these and other key trends impacting the bank, and discusses his outlook for DCM in 2017.
- Emerging Market vs. US High Yield: What Is Going On?
- EM Green Bond issuance to be Unaffected by Trump
- EM Assets Beat US Treasuries Despite Rate Hike Expectations
- October inflows negative, but EM fixed income resilient
- Q4 Emerging Markets Outlook: Are Markets at an Inflection Point?
23 Mar 2017
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20 Mar 2017