{"id":601448,"date":"2019-02-28T03:38:47","date_gmt":"2019-02-28T03:38:47","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/02\/28\/ems-beginning-to-boom\/"},"modified":"2019-02-28T03:38:47","modified_gmt":"2019-02-28T03:38:47","slug":"ems-beginning-to-boom","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/02\/28\/ems-beginning-to-boom\/","title":{"rendered":"EMs beginning to boom?"},"content":{"rendered":"<p><a class=\"content-anchor\" id=\"tldr-story-07\"><\/a> <b>EM inflows in January could signal the start of a boom period for developing economies,<\/b> CrossBorder Capital MD Michael Howell argues in a <u><a href=\"https:\/\/www.ft.com\/content\/45dfee9a-36da-11e9-bb0c-42459962a812\">piece for the FT<\/a><\/u>. Data from multiple sources has suggested that financial inflows into emerging markets hit their highest levels in over a year in January. CrossBorder\u2019s latest estimates indicate that USD 58 bn of net inflows entered emerging markets (minus China) while <u><a href=\"https:\/\/enterprise.press\/stories\/2019\/02\/04\/egypts-short-term-usd-debt-down-by-usd-3-25-bn-to-usd-14-bn\/\">figures from the Institute of International Finance<\/a><\/u> showed that USD 51.1 bn was invested in EM equities and bonds last month. Expectations of further gains in the coming months are being driven by the US Federal Reserve\u2019s recent dovish tone and continued the preference of investors for the USD. \u201cCould January\u2019s large monthly step-up signal that the vital EM capital flow\/liquidity cycle is restarting again?\u201d he asks. \u201cIt may.\u201d<\/p>\n<p><b>The risk cycle<\/b>: When financial analysts talks about the EM risk cycle, they are referring to the process of boom and bust, caused in part by the Fed\u2019s monetary policy. Easing \u2014 or even just the expectation of easing \u2014 can precipitate large inflows into emerging markets, weakening the USD. As emerging markets boom, local investors pour capital into safer overseas investments, causing the USD to strengthen. This in turn increases demand for safer assets which puts increasing amounts of pressure on emerging currencies, and causing capital flight.<\/p>\n<p><b>But don\u2019t always rely on the rating agencies to gauge risk: <\/b>Credit rating agencies cannot be relied on to accurately monitor risk, Kate Allen writes in <u><a href=\"https:\/\/www.ft.com\/content\/24b2c50e-39a4-11e9-b72b-2c7f526ca5d0\">a separate article for the FT<\/a><\/u>. \u201cThe problems comes when credit ratings are combined in a mechanistic and simplistic way with other ways of outsourcing decisions, such as passive funds and index compilers,\u201d she writes. This leads to funds unwittingly investing in risky assets, believing them to be investment-grade. \u201cIt is an investment structure that is revealed to have done a bad job only when disaster arrives, as in the financial crisis,\u201d she says. \u201cBy the time the downgrades come, it will be too late.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>EM inflows in January could signal the start of a boom period for developing economies, CrossBorder Capital MD Michael Howell argues in a piece for the FT. Data from multiple sources has suggested that financial inflows into emerging markets hit their highest levels in over a year in January. CrossBorder\u2019s latest estimates indicate that USD [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":601449,"comment_status":"closed","ping_status":"open","sticky":false,"template":"single-feature.php","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9272],"tags":[82,380,115,72,164,1510],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-601448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-macro-picture","tag-bonds","tag-currencies","tag-emerging-markets","tag-enterpriseam","tag-equities","tag-the-macro-picture","wpautop","entry"],"acf":{"mongo_id":"dbecfe9d-143c-437a-b3cf-5716b781be86","is_powered_by":true,"story_type":"1","photo_url":"https:\/\/ent.news\/2019\/2\/EM-currencies-web.jpg","photo_position":"above","related_issue":[601432],"teaser":"","voice_url":""},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>EMs beginning to boom? - EnterpriseAM Egypt<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/egypt\/2019\/02\/28\/ems-beginning-to-boom\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"EMs beginning to boom?\" \/>\n<meta property=\"og:description\" content=\"EM inflows in January could signal the start of a boom period for developing economies, CrossBorder Capital MD Michael Howell argues in a piece for the FT. 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EM stocks and bonds attracted some USD 53.5 bn of net inflows\u2026","rel":"","context":"In &quot;Macro picture&quot;","block_context":{"text":"Macro picture","link":"https:\/\/enterpriseam.com\/egypt\/category\/explainers\/macro-picture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2021\/2\/415.jpg?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":594648,"url":"https:\/\/enterpriseam.com\/egypt\/2019\/09\/03\/investors-pulled-usd-13-8-bn-from-emerging-markets-in-august-iif\/","url_meta":{"origin":601448,"position":1},"title":"Investors pulled USD 13.8 bn from emerging markets in August -IIF","author":"enterpriseam admin","date":"3 September 2019","format":false,"excerpt":"IIF tracker confirms EMs might want to wipe August from their memories: Net emerging markets portfolio inflows witnessed their most unfortunate month in August since November 2016, according to the Institute of International Finance\u2019s (IIF) most recent capital flows tracker. Investors pulled out roughly USD 13.8 bn from EM stocks\u2026","rel":"","context":"In &quot;THE MACRO PICTURE&quot;","block_context":{"text":"THE MACRO PICTURE","link":"https:\/\/enterpriseam.com\/egypt\/category\/the-macro-picture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2019\/9\/248.jpg?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":591667,"url":"https:\/\/enterpriseam.com\/egypt\/2019\/12\/12\/how-do-analysts-feel-about-emerging-markets-going-into-2020\/","url_meta":{"origin":601448,"position":2},"title":"How do analysts feel about emerging markets going into 2020?","author":"enterpriseam admin","date":"12 December 2019","format":false,"excerpt":"How do analysts feel about emerging markets going into 2020? Emerging markets are set to outperform developed markets in 2020, predict 57 global investors, traders and strategists in a Bloomberg survey, with all assets \u2014 currencies, stocks, and bonds \u2014 having rallied this year after 2018\u2019s EM Zombie Apocalypse. Total\u2026","rel":"","context":"In &quot;THE MACRO PICTURE&quot;","block_context":{"text":"THE MACRO PICTURE","link":"https:\/\/enterpriseam.com\/egypt\/category\/the-macro-picture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2019\/12\/2354.jpg?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":572665,"url":"https:\/\/enterpriseam.com\/egypt\/2020\/07\/05\/em-portfolio-inflows-continue-to-recover-in-june-as-sentiment-shifts\/","url_meta":{"origin":601448,"position":3},"title":"EM portfolio inflows continue to recover in June as sentiment shifts","author":"enterpriseam admin","date":"5 July 2020","format":false,"excerpt":"Net portfolio inflows to emerging markets continued to recover in June, soaring to USD 32.1 bn from USD 3.5 bn in May, according to the Institute of International Finance\u2019s (IIF) most recent capital flows tracker. Equity flows also turned positive again from a negative performance in May, with USD 3.4\u2026","rel":"","context":"In &quot;THE MACRO PICTURE&quot;","block_context":{"text":"THE MACRO PICTURE","link":"https:\/\/enterpriseam.com\/egypt\/category\/the-macro-picture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2020\/7\/20.jpg?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":564326,"url":"https:\/\/enterpriseam.com\/egypt\/2021\/08\/24\/commodities-strong-earnings-could-resuscitate-emerging-market-stocks-say-analysts\/","url_meta":{"origin":601448,"position":4},"title":"Commodities, strong earnings could resuscitate emerging-market stocks, say analysts","author":"enterpriseam admin","date":"24 August 2021","format":false,"excerpt":"A \u201clost decade\u201d for emerging-market stocks could be coming to an end, as the commodities boom and earnings optimism perk investors\u2019 interest in companies in the developing world, Bloomberg reports. Goldman Sachs, Bank of America and Lazard Asset Management all expect inflows into undervalued EM equities to pick up as\u2026","rel":"","context":"In &quot;THE MACRO PICTURE&quot;","block_context":{"text":"THE MACRO PICTURE","link":"https:\/\/enterpriseam.com\/egypt\/category\/the-macro-picture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/ent.news\/2021\/8\/516.png?fit=%2C&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":573397,"url":"https:\/\/enterpriseam.com\/egypt\/2020\/08\/04\/em-portfolio-inflows-fall-m-o-m-in-july-but-equity-debt-flows-are-continuing-to-recover-iif\/","url_meta":{"origin":601448,"position":5},"title":"EM portfolio inflows fall m-o-m in July, but equity + debt flows are continuing to recover -IIF","author":"enterpriseam admin","date":"4 August 2020","format":false,"excerpt":"Net emerging markets portfolio inflows nearly halved in July to USD 15.1 bn from USD 29.2 bn in June, according to the Institute of International Finance\u2019s (IIF) monthly capital flows tracker. 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