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IIF: Emerging Markets in ‘The Perfect Storm’ August 4, 2015 - 11:31am

Emerging markets are suffering from what appears to be a “perfect storm” in recent weeks, with equities, bonds and currencies seeing declines, according to a new research note by the Institute of International Finance.

“Emerging market countries navigating harsh global economic and financial conditions must pursue strong economic policies to reduce vulnerabilities,” said Hung Tran, executive managing director of the IIF. “These countries will need to articulate a reform agenda designed to improve potential future growth.”

IIF August Global Regulatory Update August 4, 2015 - 11:02am

This month’s IIF Global Regulatory Update provides updates on current work streams in regulatory capital, liquidity, accounting, disclosure, insurance, systemically important financial institutions, regulatory impact as well as coherence and calibration.

Daily Flows Database August 4, 2015 - 11:34am
Emerging Markets—The Perfect Storm? August 4, 2015 - 9:58am

In recent weeks, emerging markets have suffered from what appears to be a perfect storm. Over the past three months, EM equities have declined by almost 15%, trading at a price-to-forward-earning ratio of 11x—close to a record discount against mature equity markets, now trading at over 17x. While not as battered, EM bonds have also suffered, with yields rising and sovereign spreads widening to over 400 basis points from 380 basis points in late April.

IIF Flows Alert: Reversal in Late July August 3, 2015 - 5:23pm

EM investor sentiment seems to have taken a turn for the worse in late July. Our early warning system for EM portfolio flows indicates that a reversal episode began on July 28. Outflows may have been triggered by concerns about China and the broader EM outlook.

Weekly Insight: Inching Towards a Hike July 30, 2015 - 9:17pm

*Dollar strengthens, EM investors take cover
*U.S.: moderate growth resumes, Fed remains on track
*Caution but not panic: EM portfolio flows subdued in July
*EM portfolio allocations at their lowest level since the crisis
*Brazil: central bank signals end of the monetary tightening cycle
*Greece: the IMF will not join the third Greek bailout—complicating the process
*Puerto Rico: looming nonpayment increases concern about debt burden and serviceability

Czech Republic: Commitment to Weak Koruna July 30, 2015 - 12:24pm

The CNB has used the exchange rate as a tool since 2013 when it set the cap for the koruna at CZK/€ 27. The recent koruna appreciation indicates markets are reassessing the risk of an earlier FX floor exit. In the end, the central bank will likely to retain commitment until the second half of 2016.

Brazil: The Tortuous Path to Fiscal Rightness July 30, 2015 - 10:37am

Implementation of fiscal adjustment needed to restart economic growth and retain the sovereign's investment grade credit rating is proving more complex than anticipated amid strong economic and political headwinds.

Caution, But Not Panic: EM Portfolio Flows Subdued in July July 29, 2015 - 12:42pm

Emerging market portfolio inflows weakened to $6.7 billion in July from $11.3 billion in June, according to the latest EM Portfolio Flows Tracker by the Institute of International Finance.

“EM portfolio flows have been subdued in recent weeks,” said Robin Koepke, an economist at the IIF and lead author of the report. “Investors seem to be in a ‘wait-and-see’ mode amidst concerns about Chinese equity market volatility and continued uncertainty regarding Fed liftoff and Greece.”

Portfolio Allocation Trends Data July 29, 2015 - 4:24pm
July 2015 EM Portfolio Flows Tracker July 29, 2015 - 1:48pm

Portfolio flows to emerging markets continued on a weak trend, with total inflows estimated at $6.7 billion in July. EM equity inflows slowed to a year-to-date low of $1.6 billion, while debt flows remained subdued at $5.1 billion. EM Asia saw its weakest inflows of the year as concerns about China seem to have held back flows to other markets in the region.

Portfolio Allocation Trends July 29, 2015 - 4:18pm

To better reflect its coverage, we renamed our monthly “Trends in Investment Fund Portfolio Allocation” report as “Portfolio Allocation Trends—A monthly look at mutual fund and ETF portfolio allocations.”

Flows to EM funds have been particularly volatile in recent weeks, amid concerns about Chinese equity markets, developments in Greece, falling commodity prices and shifting perceptions on the timing of the first Fed rate hike.

IIF: Drop in Allocations to Emerging Markets July 28, 2015 - 2:58pm

Flows to emerging market funds have been particularly volatile amid concerns about Chinese equity markets, falling commodity prices and shifting perceptions on the timing of the first Fed rate hike, according to the IIF’s latest Portfolio Allocation Trends report. Portfolio Allocation Trends report was formerly known as the Trends in Investment Fund Portfolio Allocation.

“The share of emerging market assets in fund investors' portfolios has dropped to a post-crisis low," said Sonja Gibbs, director of capital markets at the IIF.  “This month's volatility in Chinese equity markets has actually masked the broader EM picture. Flows to Chinese onshore equity funds surged in early July, reflecting the impact of recent stimulus measures, which encouraged Chinese fund managers to use their own capital to buy shares. Stripping out China, EM mutual funds and ETFs have actually seen net outflows of $2.3 billion month to date." 

Mexico: Exposed But Hardly Vulnerable July 27, 2015 - 3:55pm

Despite peso depreciation, solid fundamentals and an overall sound policy framework continue to be strong lines of defense against evolving global conditions. Trade and financial openness force discipline.

Executive Program on Investing in Emerging and Frontier Markets July 30, 2015 - 11:28am

Assess current and future financial market and economic trends across key emerging and frontier markets.

July/August 2015 Capital Markets Monitor Chartbook July 24, 2015 - 1:40pm

While the July agreement between Greece and its Euro Area creditors sparked a broad-based relief rally, falling commodity prices--and the Fed's signals of readiness to begin raising U.S. rates in H2 2015--have spelled trouble for emerging markets.

IIF Dispatch: Update from Brazil July 26, 2015 - 7:41pm

Brazil has revised down its fiscal targets, reflecting the economy’s deeper downturn and stronger political headwinds. The government has reset targets for the public sector primary surplus at 0.15% of GDP for 2015 (down from 1.1%), and 0.7% and 1.3% of GDP for 2016 and 2017 respectively (down from 2.0% of GDP for both years). This implies a 0.8% of GDP fiscal adjustment in 2015. While the revision was not a surprise given worse-than-anticipated conditions, its magnitude was unexpected.

Weekly Insight: Double Trouble July 24, 2015 - 1:48pm

* Falling commodity prices and looming Fed rate hike hit emerging markets
* Greece—negotiating the third program
* U.S. property market—signs of strength
* Not all is well on the Mexican front
* Bad today, worse tomorrow: pessimistic public perspectives on the global economy

IIF Dispatch: Update on India July 23, 2015 - 10:37am The monsoon session has begun with much-anticipated drama. The opposition Congress Party has sought to stall proceedings until the foreign minister and the chief ministers of Rajasthan and Madhya Pradesh resign over their alleged involvement in scandals, including improper state-level civil-service recruitment and medical college admissions. As the Bharatiya Janata Party-led (BJP) government stands firm, the disruptions should dissipate after the first week of the session, which ends August 13.
Philippines: Resilient Despite Risks July 23, 2015 - 10:25am

Economic growth slowed recently with disappointing trade and public consumption. Strong private consumption and investment along with a pickup in government spending should help GDP rebound. The Philippines is likely to be resilient to volatility ahead of expected Fed tightening and 2016 elections.