May 6, 2015

Global fund investors have increased exposure to emerging markets in April, according to the IIF’s latest Trends in Investment Fund Portfolio Allocation report.

“Fund portfolio weights for emerging market equities and fixed income securities increased modestly in April”, noted Sonja Gibbs, director of capital and emerging markets policy at the IIF. “U.S. investors have been the most important source of EM bond and equity fund investment in recent weeks, while in their quest for yield, Euro Area investors continued to favor emerging market funds over emerging market equity funds.”

May 1, 2015

Bank lending conditions in emerging economies tightened abruptly to their weakest level in three years in 2015Q1, according to the latest Emerging Markets Bank Lending Conditions Survey from the Institute of International Finance.

“The sharp tightening of EM bank lending conditions is further evidence that emerging market economies are struggling,” said Charles Collyns, chief economist at the IIF. “In addition to a demand slowdown, supply conditions continued to deteriorate. Banks reported a continued tightening in funding conditions, likely reflecting the cautious tone in EM financial markets, at least until the March FOMC meeting”.

April 30, 2015

Driven by zero rates, plentiful liquidity and the expectation that this stimulus will ultimately fuel stronger global growth, financial markets have been buoyant, but this suggests that distortions may be building up, according to the latest Capital Markets Monitor from the Institute of International Finance.

“Depending on how long the “Goldilocks” economy can be sustained, market participants may be faced with a binary set of challenges – a potential disorderly adjustment if U.S. tightening is more aggressive than currently expected, or a potential “decade of zero rates” – which could have a range of negative consequences,” said Hung Tran, executive managing director at the IIF.

April 29, 2015

Portfolio flows to emerging markets picked up to $35 billion in April, making the strongest inflows since June 2014, according the latest EM Portfolio Flows Tracker by the Institute of International Finance.

“EM portfolio flows have gained momentum in recent months," said Robin Koepke, an economist at the IIF and lead author of the report. “Strong inflows in April seem to reflect dovish signals from the Fed that have reduced market expectations of rate hikes. We are concerned that flows may well continue to be volatile in the months ahead in the face of further shifts in market expectations about the timing and pace of Fed liftoff, especially if there is evidence of tightening U.S. labor markets.”

April 27, 2015

The Institute of International Finance today announced that Martin Boer has been named Director of the Regulatory Affairs Department effective May 1st.

Boer recently served as the Secretary General of the European Financial Services Round Table, a Brussels based industry organization comprising the CEO’s and Chairmen of Europe’s 22 leading banks and insurance companies.

April 23, 2015

This year has not started as well as hoped. Activity data have disappointed in 2015Q1 and business confidence has deteriorated, leading the Institute of International Finance to revise down its global growth forecast to 2.8 percent for the year, unchanged from 2014.

“The headline message of our updated outlook is again one of disappointed hopes. Global growth looks to have fallen to 2 percent in the first quarter, the lowest rate since 2014Q1,” said Charles Collyns, chief economist at the IIF. “We do still expect a growth to strengthen into 2016, but we are concerned that the global economy could remain under strain. Our biggest concerns are that supply-side problems could prompt an abrupt upward shift in the expected trajectory of Fed lift-off and the possibility of a steep growth slowdown in China.” 

April 15, 2015

Washington, D.C., April 15, 2015—Reduced secondary bond market liquidity in the context of a sustained low-rate environment could pose serious risks for the financial system, noted the Institute of International Finance in a letter to the International Monetary Fund and World Bank ahead of their Spring Meetings.

“In the wake of both regulatory and market developments that have changed the economics of market-making, market depth and liquidity have deteriorated—a problem that is not yet fully recognized or understood,” wrote the IIF. “While reducing risk in the banking sector has been an important and intended consequence of regulatory reform, the resulting reduction in market liquidity goes far beyond banks.”

April 15, 2015

Washington, D.C., April 15, 2015— The economic implications of lifting sanctions on Iran as a result of a final agreement between Iran and the P5+1 countries would be enormous but would take about a year to be felt in full, according to a new research note by the Institute of International Finance.

“The economic implications for Iran of reintegration into the global economy would be enormous,” said Garbis Iradian, chief economist for the Middle East and North Africa at the IIF. “It would spur a sharp economic recovery with a rise in oil exports, regained access to frozen foreign assets, and sizeable foreign capital inflows.”

April 9, 2015

Washington, D.C., April 9, 2015—The European Central Bank Governing Council will be faced with both good news and bad news leading into its next monetary policy meeting on April 15, according to the IIF’s updated version of “Draghi’s Dashboard”.

“The good news is that financial variables overall have held up well since the last meeting in early March with our financial variables staying firmly in ‘green’ territory”, said Felix Huefner, chief economist of global macroeconomic analysis at the IIF. “Even better news is that the real economy has shown further signs of improvement since last month. The bad news is that the monetary stimulus has yet to be reflected in any improvement in inflation indicators. Our inflation sub-index remains firmly in ‘red’ territory.”

April 8, 2015

Washington, D.C., April 7, 2015—Emerging market GDP may have grown in Q1 at its weakest pace since early 2009, according to the March update of the IIF’s EM Coincident Indicator. The IIF estimates that the EM Coincident Indicator (EMCI) declined markedly in March to 1.8 percent, continuing the weakening trend of past months.

“Aggregate EM activity weakened sharply in Q1,” said Charles Collyns, chief economist at the IIF.” Hard data were generally disappointing although the recent stabilization in financial market conditions provides a glimmer of hope.”

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