Entries for 'Capital Flows'

While rising geopolitical tensions create challenges for transition finance, risks are still in line with historical norms. However, continued stagnation in global trade and capital flows suggests de-globalization could stall a net zero future. Strategic trade wars—likely inevitable on the road to Net Zero—will bring the key role of export credit agencies to the fore.

We forecast solid – if unspectacular – global growth next year, … with above-consensus forecasts for the US, Latin America and China, … while the on...

Portfolio flows to EM stood at -$13.8 bn in September. Equity and debt flows were -$12.0 bn and -$1.8 bn. Chinese equities posted $4.4 bn in outflow...

Portfolio flows to EM stood at $22.1 bn in June. Equity and debt flows were $12.3 bn and $9.8 bn. Chinese equities posted $1.9 bn in inflows.

Elevated tensions between the US and China are raising lots of questions. Markets are focused on how much de-globalization and de-risking this is cau...

In the immediate aftermath of the SVB shock almost three months ago, … the critical question was if SVB was a genuinely new shock hitting the US, … ...

Portfolio flows to EM stood at $10.4 bn in May. Equity and debt flows were $6.9 bn and $3.5 bn. Chinese equities posted $0.1 bn in inflows.

Portfolio flows to EM stood at $9.8 bn in April. Equity and debt flows were $2.1 bn and $7.7 bn. Chinese equities posted $3.8 bn in inflows.

Portfolio flows to EM stood at $9.4 bn in March. Equity and debt flows were $6.8 bn and $2.6 bn. Chinese equities posted $7.2 bn in inflows.

Portfolio flows to EM stood at $22.9 bn in February. Equity and debt flows were $4.9 bn and $17.9 bn. Chinese equities posted $2.4 bn in inflows. ...

Portfolio flows to EM stood at $65.7 bn in January. Equity and debt flows were $23.5 bn and $42.2 bn. Chinese equities posted $17.6 bn in inflows. ...

Portfolio flows to EM stood at $1.7 bn in December. Equity and debt flows were $4.4 bn and -$2.6 bn. Chinese equities posted $6.3 bn in inflows.

Portfolio flows to EM stood at $37.4 bn in November. Equity and debt flows were $23.0 bn and $14.4 bn. Chinese equities posted $8.5 bn in inflows. ...

Portfolio flows to EM stood at $9.2 bn in October. Equity and debt flows were $1.7 bn and $7.6 bn. Chinese equities posted $7.6 bn in outflows.

Portfolio flows to EM stood at -$2.9 bn in September. Equity and debt flows were -$8.9 bn and $6.0 bn. Chinese equities posted $0.7 bn in outflows. ...

Portfolio flows to EM stood at -$9.8 bn in July. Equity and debt flows were -$1.0 bn and -$8.8 bn. Chinese equities posted $3.5 bn in outflows.

Non-resident portfolio flows to local markets have recovered Covid-related losses. Looking at country allocations, important shifts have taken place in recent years. Foreign holdings are significantly lower in Brazil, Mexico, Poland, and Turkey, and higher in Egypt, Indonesia, Russia, and South Africa, due to policies and FX. Importantly, pressure on EM to defend their currencies has declined in recent years. However, EM are now more directly exposed via foreign investment in local bonds. And the synchronization of global inflation makes them vulnerable to DM inflation.

Non-resident flows to EM local markets x/ China have now recovered from the Covid shock. Dynamics differ among countries, however, with some still seeing large cumulative outflows. Foreign investors currently hold around $600 bn in local government debt outside of China. Inflows have been relatively weak in recent months and cost of funding has risen across EM. The opening of China’s local market has had a large impact with $250 bn in inflows since ‘18. The country now accounts for close to 40% of total foreign investor positions in local EM debt.

Frontier Sub-Saharan Africa is emerging from the pandemic shock, but growth is comparably weak. We project a strong pickup in non-resident capital flows to $56.1 bn in 2021 from last year’s $23.6 bn. The recovery in FDI is robust, but persistently higher investment will be needed over the medium term. Financial conditions remain favorable, and strong Eurobond issuance drives the rise in portfolio flows. IMF emergency financing in 2020 and this year’s general SDR allocation have provided critical support. Assistance from IFIs will continue going forward, albeit at lower levels and with stronger conditionality. In addition, external financing needs are set to rise as substantial Eurobond amortization looms large. Thus, the region will need to attract higher and less volatile inflows to reduce external vulnerabilities. External financing risks are highest in Ghana, where market concerns over the country’s dent are rising. Angola and Nigeria are under less pressure, while IMF programs should help Kenya, Senegal, and Zambia.

We project non-resident flows of $128 bn to CEEMEA countries in 2021. Higher FDI and the IMF’s SDR allocation are the most important drivers. Excluding one-offs, however, flows will remain below pre-pandemic levels. G3 tightening will likely reduce investors’ appetite for EM assets in 21Q4. But further rate hikes in CEEMEA should improve portfolio flows in 2022. Non-resident flows to the region are estimated to reach $98 bn next year.