April 2, 2015

Washington, D.C., April 2, 2015—Global mutual fund and ETF investors reduced exposure to  emerging market equities and fixed income securities in March, according to the IIF’s latest Trends in Invesment Fund Portfolio Allocation. 

“The strength of the U.S. dollar and uncertainty about how—and when—the Fed will engineer an increase in the Fed funds rate is keeping all eyes on emerging markets.  In March, portfolio allocations to emerging market assets were reduced to their lowest level since 2009, while global investors increased allocations to U.S. bonds and Euro Area equities,” said Sonja Gibbs, director of capital markets and emerging markets policy at the IIF. “However, while overall allocations to emerging market assets have fallen, we are seeing continued differentiation—India, Indonesia, and the Philippines have seen big increases in portfolio allocations during the first quarter of 2015, while weightings for Brazil, Russia, and Mexico have declined.”

April 1, 2015

Washington, D.C., April 1, 2015— Uncertainty about how and when the Fed will engineer an increase in the Fed funds rate has led to a notable rise in volatility in the U.S. rate market, according to two new research notes by the Institute of International Finance.

In this month’s CMM Key Issues, the IIF noted that corporate sectors in many emerging market countries now have significant USD liabilities, in both bank loans and bonds.  While some of this exposure may be effectively hedged, a number of EM countries are likely to face daunting debt servicing and refinancing risks in the next few years.

“Against this backdrop, and with further U.S. dollar strength in prospect, portfolio capital flows to emerging markets have been subdued—but with a high degree of differentiation” said Hung Tran, executive managing director at the IIF. “EM countries that have implemented sensible macroeconomic policies with a reasonable reform agenda to boost economic potential have been much more resilient—good policy pays off.”

March 26, 2015

Portfolio flows to emerging markets continued at a below-trend pace of $16 billion in March, nearly unchanged from the prior month, according to the latest EM Portfolio Flows Tracker by the Institute of International Finance.

"Portfolio flows have responded strongly to shifts in the outlook for Fed tightening later this year," said Charles Collyns, chief economist at the IIF. "After weak inflows in the first few weeks of March, emerging markets have benefitted from dovish signals by the Fed following the March FOMC meeting."

March 16, 2015

The slump in oil prices will present challenges and opportunities for the Middle East and North Africa (MENA), according to the latest regional report by the Institute of International Finance (IIF).

"While overall growth in the oil exporting countries will moderate and their large fiscal surpluses will decline or shift to significant deficits, low oil prices may encourage these countries to accelerate and deepen structural reform efforts to improve energy efficiency and diversify their economies," said George Abed, senior counselor and director for Africa and the Middle East." Non-oil exporting countries in the region will benefit from the fall in oil prices through reduced oil import bills and lower fuel subsidies."

March 12, 2015

Frontier Asian economies have enjoyed stronger growth than most emerging markets over the past decade, but face a range of challenges in achieving macroeconomic and political stability, according to a new report by the Institute of International Finance.

This in-depth report, first in a series covering frontier markets, defines Frontier Asia as Bangladesh, Mongolia, Myanmar, Pakistan, Sri Lanka and Vietnam, with plans to add Cambodia and Laos at a later stage.

March 11, 2015

As the European Central Bank begins asset purchases under an expanded quantitative easing program, the IIF has developed a new "Draghi Dashboard" to assess the success of the ECB's efforts. 

"The stakes are high for the ECB's expanded QE program, and its impact will be closely watched, said Charles Collyns, chief economist at the IIF. "This simple but intuitive tool will be used to track the success of the ECB's easing policies in returning inflation to its medium-term target."

The call by some members of OPEC for an emergency meeting to reexamine current strategy brings into focus the unique role this organization has played in shaping the global oil market. However, the virtual veto from Saudi Arabia and its Gulf Cooperation Council (GCC) partners also highlights the internal fissures that have impaired the organization’s ability to act as a market stabilizer, especially since the dramatic rise of the U.S. role in the global energy market.
March 10, 2015

Emerging market GDP growth is moderating further according to the February update of the IIF's EM Coincident Indicator. The IIF estimates suggest that growth will moderate to 2.6 percent in Q1 2015 down from an estimated 3.4 percent in Q4 2014 and 4.3 percent in Q3.

"The persistent downward trend in financial market variables and hard data suggests that EM growth is continuing to sag at the start of 2015," said Charles Collyns, chief economist at the IIF.  "However, business confidence has been more resilient and we still expect a strengthening in activity later in the year."

March 5, 2015
Investors have been confronted with a fundamental "asset-liability mismatch", owing to low interest rates and a shortage of high quality assets, according to the Institute of International Finance's latest Capital Markets Monitor.
"Globally, institutional investors have boosted their holdings of corporate and foreign bonds by 65 percent since 2008 to $5.1 trillion, including a record level of $2.1 trillion of high-yield bonds," said Hung Tran, executive managing director at the IIF. "This strategy has produced good returns in recent years as rates declined and credit spreads narrowed.  However, investors may find it difficult to rebalance their portfolios away from credit risk as market liquidity has deteriorated greatly in recent years."
March 2, 2015

Global fund investors increased exposure to Euro Area equities in February following the ECB's announced expansion of their quantitative easing program, according to the new monthly Trends in Investment Fund Portfolio Allocation report by the Institute of International Finance.

The IIF has introduced this new monthly report to closely monitor emerging trends in asset allocation of mutual fund and exchange-traded fund (ETF) investors.

Media Contacts

Dylan Riddle

Tel: +1 202.857.3626

Email: driddle@iif.com