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IIF Flows Alert: Bond Tantrum Reversal Ends After 18 Days May 26, 2015 - 2:24pm

The recent reversal of EM portfolio flows lasted from May 1 to May 18, according to our Flows Alert methodology. We estimate that the episode saw total EM outflows of about $10-15 billion. The reversal came to an end as global bond yields have stabilized in recent days.

Weekly Insight: Disruption Watch May 21, 2015 - 8:05pm

* Calmer markets—for now
* Dispatch from Silicon Valley
* Global growth—still waiting for the rebound
* Introducing IIF Flows Alerts
* Turkey—central bank remains on hold

IIF Conference Call on India: Taking Stock May 21, 2015 - 6:04pm

Dr. Bejoy Das Gupta will discuss his key findings and impressions from his recent visit to India, where he met with senior officials and private sector participants. Dr. Das Gupta will assess the progress made during the first year of Prime Minister Narendra Modi’s government, as well as the opportunities and challenges ahead as the government pursues historic structural reforms.

Teleconference: Capital Flows to EMs – Where Next?" May 21, 2015 - 5:53pm

Hung Tran, Executive Managing Director, Charles Collyns, Managing Director & Chief Economist; Sonja Gibbs, Director of Capital Markets & Emerging Markets Policy and Felix Huefner and Robin Koepke from our Global Macro team, will lead the discussion. If you are unable to call in, please note that an audio recording of the call will be available on our website after completion of the call.

Executive Program on Islamic Finance May 21, 2015 - 5:16pm

A strategic perspective on the key issues facing the Islamic Finance sector.

China Spotlight: Who is afraid of the big bad swap? May 19, 2015 - 11:48am Bottom Line: The Chinese government has stepped up its efforts to launch a big local government debt swap as part of broader plans to boost the economy. The local government fiscal reforms launched last year are big and bold. Little progress enacting the reforms and uncertainties over local government finances have been a major source of drag on an economy already struggling to maintain momentum. The Chinese central government has stepped up its efforts to sweeten the deal as part of broader plans to do what it takes to get local governments to start spending again.
Saudi Arabia: Opening Capital Markets for Foreign Investment May 20, 2015 - 10:46am

The decision to publish regulations governing direct ownership of shares listed on the stockmarket, Tadawul, by Qualified Foreign Financial Institutions marks an important step to open the Saudi economy to foreign equity investors. A growing allocation to Saudi stocks by global investors could translate to significant inflows within a few years if the country is eventually included in major benchmarks such as the MSCI emerging market index. Allowing ownership of shares by QFIs is intended to reduce market volatility, increase efficiency and transparency, and, ultimately, support economic growth.

IIF Flows Alert: EM Portfolio Flows Reverse Amid Bond Tantrum May 19, 2015 - 11:00am

Emerging market portfolio flows have suffered a significant retrenchment since early May, according to the first issue of the IIF Flows Alert.

“EM outflows seem to have been triggered by the fallout from the global bond tantrum,” said Charles Collyns, chief economist at the IIF. “Even though the impact on EM spreads has been fairly limited so far, our data shows that the jump in global market interest rates has spilled over into portfolio outflows from emerging markets.”

IIF Flows Alerts are an early warning system that is based on daily portfolio flows to 7 EMs, including India, Indonesia, Korea, Thailand, South Africa, Brazil, and Hungary. Collectively, these countries suffered outflows of $3.2 billion in the first half of May. The reversal was broad-based, affecting all countries except Brazil.

IIF Flows Alert: Bond Tantrum Takes Toll on EM Flows May 21, 2015 - 10:44am

Our new early warning system for EM capital flows indicates that a reversal episode began on May 1, with daily data showing a sharp decline in portfolio inflows. The reversal was broad-based across EMs and affected EM Asian countries most. Outflows seem to have been triggered by the fallout from the global bond tantrum.

IIF Statement on Principles for Orderly and Fair Sovereign Debt Restructuring May 18, 2015 - 10:11am

The Institute of International Finance today issued the following statement on discussions between the Ukrainian government and the bondholder committee.

“On May 12, 2015, Ukraine's Ministry of Finance posted a statement in its website referring to the IIF Principles of transparency and disclosure, in the context of its discussion with the bondholder committee about a restructuring of its international debt obligations.”

IIF Flows Alerts: An Early Warning System for EM Capital Flows May 20, 2015 - 3:24pm

Introducing IIF Flows Alerts: An early warning system designed to detect turning points in capital flows to emerging markets. Recipients will get real-time notifications of incipient surges and reversals of foreign portfolio flows. These alerts build on a new database of daily portfolio flows to emerging markets that is updated every Monday and posted on the top right of this page. Daily portfolio flows can help analysts monitor shifts in investor sentiment, understand the drivers of flows, and predict future changes in flows and asset prices.

Daily Flows Database May 25, 2015 - 9:55pm
Weekly Insight: Revenge of the Term Premium May 14, 2015 - 8:22pm

* Adjusting to higher bond yields
* Euro Area growth—getting better
* EM growth starts Q2 on a weak note
* China—economy remains tepid

Venezuela: Praying for a Miracle May 13, 2015 - 2:41pm

The oil price collapse and policy inaction have thrown the economy into a downward spiral. The policy response so far has mainly consisted of increasing external borrowing, but this life line runs the risk of being exhausted. While authorities set up a new foreign exchange regime in February, dollar supply via official channels has been insufficient, and the required bolivar devaluation to adjust for terms of trade losses has been precluded. With stagflation deepening, we believe the opposition will win a commanding majority in the legislative elections expected to be carried out in the fourth quarter of this year.

Russia: Recession Begins May 14, 2015 - 12:02pm

Despite major real GDP decline in the first quarter of 2015, a stronger ruble and recovering oil prices encouraged officials to proclaim the economic crisis mostly over in Russia. To alleviate the recession, the government committed more than 3% of GDP in its “anti-crisis” spending program and the central bank has cut its policy rate three times so far this year. The economic recession, however, is likely to be deep with real GDP likely falling 4.5% this year and 1% in 2016. Domestic demand would be hit especially hard, as private consumption and investment decline are steeply hampered by falling real wages and complicated access to financing.

Zambia: Prospects Hinge on Copper May 13, 2015 - 11:08am

Uncertainty shrouding the copper mining industry has now been addressed. After negotiations earlier this year, the government modified its proposed changes to the mining tax regime that were introduced in the 2015 budget, concerned that the industry was not paying sufficient taxes and much-needed revenue for infrastructure investment was being foregone. The compromise, which has helped stabilize the foreign exchange market and reduced the likelihood of mine closures and job losses, should pave the way for renewed investment and higher output going forward and push the current account back into surplus by 2016. The main economic risk is the price of copper, which we assume will recover gradually this year.

Emerging Market GDP Growth On Track To Fall To 6-Year Low May 13, 2015 - 9:33am

Emerging market GDP growth is on track to decline further in Q2 to 1.6 percent from 1.9 percent in Q1, according to the April update of the IIF’s EM Coincident Indicator. This marks the weakest reading since spring of 2009.

“Emerging markets started Q2 on a very weak note, with a downshift in both real activity and business surveys,” said Kristina Morkunaite, lead author of the report. “However, the pace of deceleration has at least eased, and a pickup in financial market variables provides grounds for cautious optimism that the downturn has now almost run its course.”

VENEZUELA: Database Summary May 13, 2015 - 2:11pm
VENEZUELA: Full Economic Database May 13, 2015 - 2:11pm
April 2015 EM Coincident Indicator May 13, 2015 - 5:25pm

The IIF EM Coincident Indicator declined further in April to 1.6%, continuing the downward trend since last autumn. This suggests that EM growth in Q2 could turn out even weaker than the implied 1.9% q/q, saar in Q1. However, at least the pace of deceleration has eased markedly, and a pickup in financial market variables provides cautious optimism that the downturn has now almost run its course.