Reuters blog archive

from Global Investing:

The people buying emerging markets

We've written (most recently here) about all the buying interest that emerging markets have been getting from once-conservative investors such as pension funds and central banks. Last year's taper tantrum, caused by Fed hints about ending bond buying, did not apparently deter these investors . In fact, as mom-and-pop holders of mutual funds rushed for the exits,  there is some evidence pension and sovereign  wealth  funds actually upped emerging allocations, say fund managers. And requests-for-proposals (RFPs) from these deep-pocketed investors are still flooding in,  says Peter Marber, head of emerging market investments at Loomis Sayles.

The reasoning is yield, of course, but also recognition that there is a whole new investable universe out there, Marber says:

There has been so much yield compression that to get the returns investors are accustomed to, they have to either go down in credit quality or look overseas. Investors have been globalizing their equity portfolios for 25 years but the bond portfolios still have a home bias. We are starting to see more and more institutional investors gain exposure to emerging markets, and a large number of recent RFPs highlight more sophisticated mandates than a decade ago.

The allocation swing has been especially marked since the 2008 crisis and subsequent Fed money printing that flattened yields across developed markets - the IMF estimated earlier this year that of the half trillion dollars that flowed to emerging bonds between 2010-2013, 80 percent came from big institutional investors.

from Global Investing:

A drop in the ocean or deluge to come?

Glass half full or half empty? For emerging markets watchers, it's still not clear.

Last month was a record one in terms of net outflow for funds dedicated to emerging equities, Boston-based agency EPFR Global said.  Debt funds meanwhile saw a $5.5 billion exodus in the week to June 26, the highest in history .

from Financial Regulatory Forum:

DAVOS-Capital inflows rebound to emerging markets – IIF

By Sven Egenter

ZURICH, Jan 26 (Reuters) - Private capital inflows to emerging markets are set to soar by two thirds this year as countries like Brazil and China drive global recovery and fuel "hot money" risks, the Institute of International Finance (IIF) said on Tuesday.

Emerging markets seemed to be aware of risks from short-term, yield-chasing cash inflows, the global banking association said. Mature economies need to come up with credible plans to tackle spiralling debt and liquidity, it said.

from MacroScope:

Trust us, we’re the bank

Josef Ackermann, Chairman of the Institute of International Finance and the head of Deutsche Bank, says he's confident leaders from around the world will take needed steps to bringing normality to the world's struggling financial system.

"I am pretty sure that the governments will guarantee parts of the whole sale funding and that should actually tell people that there is no risk and you don't lose money while investing in other banks and I think that is important," the head of Germany's largest bank said Sunday.

from MacroScope:

Shifting tides of confidence

Charles Dallara, managing director of the Institute of International Finance (IIF), a global association of financial firms, says the United States has larger worries than a weak U.S. dollar.

"The dollar is just a function I think now of the shifting tides of confidence in the system," Dallara tells Reuters.

from MacroScope:

Bankers, bailouts and laughs

Stocks are tumbling around the world and Mainstreet is feeling the crunch, but at the Institute of International Finance (IIF) luncheon it was hard to see the dark side past the luxurious chocolate mousse cake and keynote comedy.

Jacob Frenkel, the vice-chairman of American Internal Group (AIG) -- yes, that insurer on the receiving end of an $85 billion government bailout a few weeks ago (and now an extra $37.8 billion loan ), gave a light-hearted address on the G7's plan of action to combat the credit crisis.