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We expect ongoing easing in global uncertainties, and policy support to sustain flows into EMs, mainly those implementing ‘sound’ policies and with stable currencies. However, concerns over underlying vulnerabilities and the potential for further bouts of cross asset volatility will restrain a sharp recovery in EM inflows.
‘Search for yield’ has emerged as the predominant driver of funds flows in the current low yield backdrop marked by a complicated global macro outlook and supportive central banks.
The dynamics of Global Investment Funds flows in 1Q19 can be characterized by a widening bond-equity divergence, and a visible moderation in inflows to EMs. Looking ahead, we expect EM outflows to continue at a moderate pace until global volatility eases. In a risk scenario, EMs to face more intense and persistent outflows.
Global Investment Funds (GIF) flows have been on a roller coaster ride since the start of Q418. Sharp pullback in portfolio flows in late 2018, focus on DMs, but since the start of this year, GIFs inflows recovered particularly to EMs. Looking ahead, EMs would continue to outperform DMs over the short term although hinged o…
The high volatility and sharp falls in stock markets which have been dominating global markets these past few days leave a bitter year-end taste and raise quite a few questions for 2019. This past year 2018 was never going to be easy, with the environment of abundant liquidity and low interest rates drawing to a close.
As expected, Global investment funds registered net outflows for a 2nd quarter in a row. Withdrawals from EM continued while DM’s outflows were an unwelcomed surprise: those from Europe accelerated to a pace not seen since 2011. According to our baseline scenario (cyclical downturn, monetary policy normalization and volati…
July 20, 2018
Mexico | NAFTA: uncertainty will continue and so therefore will exchange rate volatility
Over the past two years movements in the peso’s rate of exchange against the dollar have tended to follow more than anything the prospects for the North American Free Trade Agreement (NAFTA) and trade relations between Mexico and the United States in general.
Global Investment Funds still attracted sizable flows in 1Q18 while. Recently, some moderation has already occurred with the bulk of flows retrenchment concentrated in developed markets. The financial outlook is certainly challenging for Emerging Markets as volatility and interest rates “normalize” in a context of high debt…