LONDON: After the end of last year’s banner, investors piled up billions of dollars in emerging assets in early 2021, showing how the flood of central bank stimulus is seeking revenge.
In the first three weeks of January alone, a group of 30 major developing countries attracted آمد 17 billion, according to an analysis by the Institute of International Finance’s Daily Statistics Financial Times.
The strong start to 2021 came with a dramatic change last year, with large-scale equities coming in. After a record spending of about 90 90 billion in March on the onset of the epidemic, investors returned to the EM stock and bond markets in a rising flood, with nearly b 180bn in the fourth quarter in the last nine months of 2020. Overall revenue. e over 3 360bn, according to a broader IIF dataset covering 63 emerging economies.
“The search for productivity is certainly ongoing and will continue for a long time to come,” said Robin Brooks, IIIF’s chief economist.
According to the MSCIEM and World Index, MM stocks have risen by 20% to 9% in 2021, leaving development markets behind. Bond prices have eased, however, reflecting the strong start to 2021 for global fixed-income markets.
Bank of America has ماہ half a trillion in assets under management in this month’s Investors Survey, which shows how many fund houses are happy in the asset class this year.
The bank had a record 62% of fund managers with overweight EM equities in January. Two-thirds of fund managers surveyed said EM 2021 would be the highest performing asset class.
The survey found that growing frustration with US assets was offset by growing optimism about EM.
However, analysts warn that, although economic and business conditions are favorable for many EMs, recent inflows of foreign capital through the US Federal Reserve and other central banks have largely spread during the recent epidemic. Is, which has left a large amount of investment capital. Finding more profit than those usually available in developed markets.
Many developing economies have performed better than expected during epidemics and are pleased with the early arrival of vaccines. Despite high mortality rates in some countries, especially in Latin America, many people have suffered less than expected, which has put less strain on health services and increased public funding.
Billions of dollars in liquidity injections from the Fed and other central banks, which swap from the Fed to several major EM central banks, and the rapid response to emergency lending by the IMF and World Bank The system has stopped. Debt problems.
Many investors expect rising demand from China to boost EMOs’ confidence in exports of commodities and other goods, where the economy grew 2.3 percent last year after a deal with other major economies, and from the United States. , Where Biden’s administration is expected to spend heavily on infrastructure and other productive investments.
They also point to the relatively low prices of some EM assets.
Analysts at Goldman Sachs said EMs should “stay on track” in the coming months, thanks to its exposure to China and expectations of a broader rise in the global economy, as well as rising commodity prices.
Earlier this year, Wall Street Bank said it had cut expectations for EM currencies, bonds and equities earlier this month.
However, David Hunner, an EM strategist and economist at BOFA Securities, said the start of 2021 was more difficult for EM bonds than expected due to rising US interest rates and a stronger-than-expected dollar.
Both developments could be bad for EM assets, as rising U.S. yields make investors less willing to buy risky assets elsewhere, and a stronger dollar creates difficulties for EM governments and businesses that value dollars. Has issued a loan abroad.
“Most EMs are fundamentally solid enough to deal with rising prices,” he wrote in a January 14 report. Even so, owning one is still beyond the reach of the average person. “
Philip Turner, a lecturer at the University of Basel and a former senior official at the Bank for International Settlements, said EM Centris could easily lend during the crisis thanks to the efforts of EM Central, the Fed and others Could take To facilitate banks to operate local financial markets.
But while governance has improved in many areas at the company and national level, he said the flow of portfolios has driven EMs primarily through global liquidity and posed a risk of instability.
“Interest rates have been low for a long time and we don’t have any previous experience,” he said. “The risk of interest rates is very high in the world. We have never had a stress test and it is very difficult to know what will happen when things change.
Financial Times Limited 2021 Copyright