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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:

Emerging markets; turning a corner

Emerging markets have been attracting healthy investment flows into their stock and bond markets for much of this year and now data compiled by consultancy CrossBorder Capital shows the sector may be on the cusp of decisively turning the corner.

CrossBorder and its managing director Michael Howell say their Global Liquidity Index (GLI) -- a measure of money flows through world markets -- showed the sharpest improvement in almost three years in June across emerging markets. That was down to substantially looser policy by central banks in India, China and others that Howell says has moved these economies "into a rebound phase".

from Expert Zone:

Higher tax revenue from higher growth

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The 2013-14 budget got completely out of hand because of a whopping shortfall in tax revenue. Development outlays had to be drastically cut to manage the fiscal deficit.

The key to the budget is revenue. The ratio of gross tax revenue to GDP reached a high of 11.9 percent when GDP growth was at its peak of more than 9 percent in 2007-08. Since then, both declined and the ratio has been in the narrow range of 10-10.7 percent. GDP growth is a painless way of raising revenue.

from Breakingviews:

Future financiers condemned to repeat sins of past

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Future financiers are condemned to repeat the mistakes of the past. Nearly 150,000 wannabe investment advisers, bankers, risk managers and analysts around the world will sit for the CFA exam this weekend. Success hinges on their understanding of the capital asset pricing model and return on equity. Knowledge of disasters like the South Sea Bubble and the Great Crash, though, are not required. Widespread ignorance of financial history is an overlooked systemic risk.

from Breakingviews:

Review: China gives Africa handy investment lesson

By Stephanie Rogan

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

In the last decade nearly a million Chinese citizens have taken up residence in Africa. In his vivid new book, “China’s Second Continent,” Howard French tells stories of these migrants and the Africans whose lives they affect. The book weaves anecdotes and interviews with historical and geopolitical background to tell a larger tale of the PRC’s economic engagement in the continent. The result is an unflattering portrait of China’s involvement.

from Global Markets Forum Dashboard:

Billionaire fund managers pick stocks amid scarce macro investing themes – Sohn Conference

Billionaire hedge fund managers are still feeling a polar vortex-like chill even as spring emerges. One by one, they lamented the lack of “macro” ideas that investors can pin their returns on this week at the annual Sohn Investment Conference in New York.

Mike Novogratz, Fortress Investment Group

Mike Novogratz, Fortress Investment Group

larry_robbins.03

Larry Robbins, Glenview Capital

Volatility is at “generational lows,” Michael Novogratz, the principal of Fortress Investment Group told the audience. This year and next year will feel a lot like last year, Larry Robbins of Glenview Capital told investors, as central banks maintain low interest rate policies.

from The Great Debate:

States act on tax reform

The United States needs tax reform -- and soon. Our corporate tax rate is 35 percent, while the European average is 25 percent. We are not competitive. Our individual tax code has rates too high and too many politically driven tax credits and deductions. All true. But it’s also likely that no real tax reform will move in Washington for the next three years.

Why? Because the Democrats,who control the White House veto pen, oppose any reform that does not include at least $1 trillion in higher taxes on net and the Republicans, who control the House of Representatives, will never vote for such a tax hike.

from Expert Zone:

Is gold a good investment once again?

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The increase in gold prices in the last two months has rekindled interest in the yellow metal as a vehicle for investment. It was after the 2008 global financial crisis that gold became the most preferred asset, with prices doubling in four years.

Why was gold preferred? It was not so much as a hedge against inflation but as an insurance against uncertainty. When the economy is faltering and the future looks bleak, gold becomes a preferred asset.

from Global Investing:

It’s not end of the world at the Fragile Five

Despite all the doom and gloom surrounding capital-hungry Fragile Five countries, real money managers have not abandoned the ship at all.

Aberdeen Asset Management has overweight equity positions in Indonesia, India, Turkey and Brazil -- that's already 4 of the five countries that have come under market pressure because of their funding deficits.  The fund is also positive on Thailand and the Philippines.

from Expert Zone:

Time for a relook at FDI in insurance intermediaries

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Insurance companies in India have an FDI limit of 26 percent, which may be revised upwards in the coming months. The industry requires funds to grow and the revision can be an enabler, but the process may take some time as it requires legislative approval and there seems to be some opposition to the move.

Since the industry is still in its nascent stage, the insurance regulator also places the same FDI cap on insurance intermediaries such as brokers and web aggregators, severely limiting their ability to raise funds to grow their business.

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