Could green be the new safe haven? Flows to ESG-dedicated equity funds remain robust in February. Global environmental, social and governance (ESG) disclosure varies widely: it’s more prevalent in Singapore, Malaysia and China but firms tend to focus on only a few data points.  Governance disclosures remain largely incomplete. The level of environmental disclosure is highest among firms in Europe, Hong Kong, and South Africa. Only 60% of large companies listed in the S&P 1200 index disclose data on carbon emissions. 

Though the average capital adequacy ratio of Chinese banks is higher than the required minimum, banks still need to raise more capital for both regulatory and business reasons. Chinese policymakers have introduced new rules and instruments to help bank capitalization. 

Real convergence in Sub-Saharan Africa has been weak despite robust growth. We believe that low total factor productivity growth is partially responsible. Furthermore, relatively weak investment is weighing on economic activity. As population growth slows, both will be key for standard-of-living gains.

Growth has come to a halt, mainly due to weak investment. While external headwinds exist, domestic policy uncertainty has been a drag, especially for non-residential investment and domestic machinery. Lacking more decisive measures to boost investment, macroeconomic conditions could quickly worsen. 

Romania’s fiscal picture continued to deteriorate significantly in 2019. Corrective measures are needed, including a delay of pension increases. Early elections could provide a new government with the needed mandate. In the absence of fiscal consolidation, the loss of investment grade looms.

The February 2020 IIF Global Regulatory Update provides updates on current work streams.