Looser DM monetary policy and the US-China truce drove flows to EM. 2019 saw an important rebound in portfolio flows compared to 2018. Foreign currency and local debt attracted the bulk of non-resident flows. Going forward, foreign investors will likely focus on idiosyncratic stories.

We are expanding our capital flows data to include derivatives, starting with an analysis of non-resident currency forwards in Chile. On aggregate, non-residents are usually short CLP via forwards. The correlation between forwards and capital flows isn’t very strong. Recent drops in carry did not result in a shorter forward position.

Portfolio flows to EM stood at $30.7 bn in December. Equity and debt were $12.9 bn and $17.8 bn, respectively. Net capital flows to EM reached $0.7 bn in November.

Structural impediments remain unaddressed and constrain near-term growth. Low growth is the main reason for revenue underperformance and rising debt. Credible fiscal consolidation could improve business and consumer sentiment, paving the way for real GDP growth to pick up to around 2% in the medium term.

As a roadmap to carbon neutrality by 2050, the Green New Deal is seeking profound structural change in the EU’s growth model—in production, consumption, investment and saving.

The annual RiskMinds International conference was held in Amsterdam during the first week of December, drawing an extensive Chief Risk Officer (CRO) community from all continents, including many of the regular participants in the IIF’s various regional CRO Fora.

This month's topics include:

• FSOC Final Interpretive Guidance on Non-Bank Financial Company Determinations
• IAIS Draft Application Paper on Liquidity Risk Management
• IAIS Annual Conference, November 14-15, 2019, Abu Dhabi, UAE
• IIF Insurance Dialogue - December 6, 2019, London, U.K.