The January 2019 IIF Global Regulatory Update provides updates on current work streams in market fragmentation, regulatory capital, recovery and resolution, accounting, digital finance, sustainable finance, AML/CFT, insurance, and upcoming events.
This survey covers issues affecting asset allocation, including current macro-financial dynamics as well as structural trends that will shape the future of the industry, including sustainable finance, infrastructure investment and regulatory reform.
We assess the impact of potential policy surprises, using our BoP Nowcast and positioning toolkits. Low current account deficits pose limited risk, but in Mexico heavier positioning than in Brazil could amplify the impact of negative policy surprises.
The Basel Committee on Bank Supervision finalised the Basel III Market Risk standard on January 14, 2019.
Policy dissonance has been a key factor in market volatility, yield curve flattening; Growing concern about the longer-term implications of a U.S. government shutdown; If bank stocks are a bellwether, signals are not reassuring; China deleveraging on the back burner; rising refinancing risk for U.S. corporates
Not much has changed in the macro landscape, but markets have shifted to price an end to the hiking cycle. In effect, the Fed has become a casualty of the trade war, and further tightening (which we expect) is now harder.
Global debt has grown by over 12% (or $27 trillion) since 2016, reaching $244 trillion (318% of GDP) in Q3 2018.
Turkey and Argentina saw sharp depreciations in 2018, that erased substantial real exchange rate overvaluations. We assess the BoP impact in 2019 using our Nowcast.
Portfolio inflows to EMs were $3.1 bn in December. Equity and debt flows softened to $2.9 bn and $0.2 bn, respectively. Net capital flows remained in negative territory in November.