scholarly journals Benchmark-Driven Investments in Emerging Market Bond Markets

2020 ◽  
Vol 20 (192) ◽  
Author(s):  
Serkan Arslanalp ◽  
Dimitris Drakopoulos ◽  
Rohit Goel ◽  
Robin Koepke
Keyword(s):  
Capital Flows ◽  
Policy Making ◽  
Emerging Market ◽  
Recipient Country ◽  
External Factors ◽  
Bond Markets ◽  
Investment Funds ◽  
Local Currency ◽  
Bond Indices

This paper reviews the role of benchmark-driven investments in EM local bond markets. We provide an overview of how key EM bond benchmark indices are constructed, how they affect the behavior of investment funds, and what are the likely implications for capital flows and policy-making. Several methods are presented suggesting that the amount of assets benchmarked against widely followed EM local-currency bond indices have risen fivefold since the mid-2000s to around $300 billion. Our review suggests that the benefits of index membership may be tempered by portfolio outflow risks for some countries. This is because benchmark-driven investments may increase the importance of external factors at the expense of domestic factors, raising the risks of outflows unrelated to recipient country fundamentals. Some countries may be disproportionately exposed to these risks, reflecting the way the indices are constructed.

scholarly journals Guidance Note For Developing Government Local Currency Bond Markets

2021 ◽  
Vol 21 (001) ◽  
Author(s):  
◽  
Keyword(s):  
Technical Assistance ◽  
Developing Economies ◽  
Emerging Market ◽  
World Bank Group ◽  
Bond Markets ◽  
Sector Reform ◽  
Local Currency ◽  
Guidance Note ◽  
Financial Sector Reform ◽  
Bank Group

This guidance note was prepared by International Monetary Fund (IMF) and World Bank Group staff under a project undertaken with the support of grants from the Financial Sector Reform and Strengthening Initiative, (FIRST).The aim of the project was to deliver a report that provides emerging market and developing economies with guidance and a roadmap in developing their local currency bond markets (LCBMs). This note will also inform technical assistance missions in advising authorities on the formulation of policies to deepen LCBMs.

scholarly journals Comparative analysis between global sukuk and bond indices: value-at-risk approach

2020 ◽  
Vol 11 (6) ◽  
pp. 1245-1256
Author(s):  
Rubaiyat Ahsan Bhuiyan ◽  
Maya Puspa ◽  
Buerhan Saiti ◽  
Gairuzazmi Mat Ghani
Keyword(s):  
At Risk ◽  
Value At Risk ◽  
Emerging Market ◽  
Management Tool ◽  
Bond Markets ◽  
Investment Portfolio ◽  
Financial Contracts ◽  
Content Type ◽  
Risk Approach ◽  
Bond Indices

Purpose Sukuk is an innovative financial instrument with a flexible structure based on Islamic financial contracts, unlike a bond which is based on the structure of a loan imposed with interest. With the notion that sukuk differs considerably from the conventional bonds in terms of risks related to investment, this study aims to examine whether the sukuk market is different from conventional bond markets based on the value-at-risk (VaR) approach. Design/methodology/approach The VaR of a portfolio consists of sukuk and bond indices and is undertaken to determine whether there is any reduction in the VaR amount through the inclusion of the sukuk index in the portfolio. The analysis is undertaken based on the developed and emerging market bond and sukuk indices from January 2010 to December 2015. Findings This paper examines whether the VaR of sukuk market differs from conventional bond markets by using fundamental techniques. It was observed that the VaR amount of sukuk indices is comparatively much lower than the VaR of bond indices in all the cases. Including the sukuk index with each bond index can reduce the VaR of the portfolio by around 30 to 50 per cent for all the developed and emerging market bond indices. Research limitations/implications This research is limited to covering six years of data. Nonetheless, it is able to provide findings which are believed to be useful for the market players. Practical implications This study unveils attractive opportunities in terms of diversification benefits of sukuk indices for international fixed-income portfolios. Originality/value The VaR method is a useful risk management tool. This study uses this method to emphasise the significant reduction of risks and diversification benefits that sukuk investment could offer by including it in the investment portfolio.

Central European local investors will hold on to bonds

2017 ◽  
Keyword(s):  
Emerging Market ◽  
Bond Markets ◽  
Content Type ◽  
Developed Economies ◽  
Local Currency ◽  
Domestic Debt ◽  
The Us ◽  
Debt Market ◽  
Us Presidential Election ◽  
To Come

Significance The lira’s collapse is fuelling outflows from Turkey’s local currency government debt market, as foreign investors reduce their purchases of emerging market (EM) domestic debt amid a sharp sell-off in bond markets following Donald Trump’s upset victory in the US presidential election. Both Hungary and Poland -- hitherto two of the most resilient EMs -- suffered net outflows last year and are likely to come under further pressure as the ECB starts to scale back, or ‘taper’, its programme of quantitative easing (QE) in April. Impacts The dollar’s rise against a basket of other currencies since the US election will put severe strain on EM assets. The surging price of Brent crude is improving the inflation and growth outlook. Higher international oil prices will also reduce the scope for further easing of monetary policy in developing and developed economies.

scholarly journals Do Multi-Sector Bond Funds Pose Risks to Emerging Markets?

2020 ◽  
Vol 20 (152) ◽  
Author(s):  
Fabio Cortes ◽  
Luca Sanfilippo
Keyword(s):  
Asset Allocation ◽  
Financial Stability ◽  
Emerging Market ◽  
International Investment ◽  
Bond Markets ◽  
Investment Fund ◽  
Investment Funds ◽  
Bond Funds ◽  
Adequate Representation ◽  
Allocation Decisions

Emerging economies in the post-crisis period increasingly saw portfolio debt inflows from a type of large international investment fund: Multi-Sector Bond Funds (MSBFs). These investors have lacked adequate representation in the literature. This paper constructs a new detailed database from micro-level MSBF emerging market (EM) holdings from 2009:Q4–2018:Q2. Exploiting this data, the paper assesses the risks they pose to the financial stability of specific emerging bond markets. The data shows that MSBFs are highly concentrated–both in their positions and their decision-making. The empirical results further suggest that MSBFs exhibit opportunistic behavior (and more so than other investment funds). In periods of high risk aversion, large MSBF portfolio reallocations out of EMs can be associated with underperformance of the same markets, signaling the importance of monitoring their footprint and better understanding their asset allocation decisions.

scholarly journals The Macroprudential Role of International Reserves

2016 ◽  
Vol 106 (5) ◽  
pp. 570-573 ◽  
Author(s):  
Olivier Jeanne
Keyword(s):  
Financial Crisis ◽  
Capital Flows ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Capital Controls ◽  
International Reserves ◽  
International Banking ◽  
Flow Management ◽  
The Global Financial Crisis

There has been a lot of interest since the global financial crisis in policies allowing emerging market economies to smooth the effects of the global financial cycle. Although the literature has focused mostly on capital controls emerging market governments have relied mostly on international reserves management. This paper discusses the role of reserves in capital flow management based on a simple welfare-based model of capital flows with international banking frictions.

scholarly journals Peran Langsung NGO dalam Pembuatan Kebijakan Luar Negeri Indonesia terkait Sampah Impor 2019: Studi Kasus ECOTON

2021 ◽  
Vol 1 (1) ◽  
pp. 298-313
Author(s):  
Yusril Ihza Ali ◽  
Maria Indira Aryani
Keyword(s):  
Foreign Policy ◽  
Policy Making ◽  
Negative Impact ◽  
Recipient Country ◽  
Direct Role ◽  
Qualitative Descriptive ◽  
The Government ◽  
New Policies ◽  
Waste Trade

In 2018, the world of global waste trade received a major shick that has an impact to both waste exporting countries and waste importing countries, and that was the closure of waste imports by China, which was the largest recipient country at that time through National Sword Policy. Exporting countries were forced to duvert  their waste to the recipient countries that have not implemented new policies related to the imported waste such as Indonesia. As a result, Indonesia received a significant increase imported waste and cause a negative impact on various sectors, one of which was the environment sector. This then triggered some parties who have concerns regarding environmental issue such as ECOTON to resolve this issue by pressing the government to make new policies to stop imported waste that continues to degrade the environment.the author use a qualitative-descriptive method so that the authors can explain in detail and systematically the role of ECOTON in foreign policy making by using the theory of the direct role of NGOs in foreign policy making as the basis.

Book Reviews

2012 ◽  
Vol 50 (3) ◽  
pp. 821-823
Keyword(s):  
Capital Flows ◽  
Financial Stability ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Central Banking ◽  
Financial Policies ◽  
Global Affairs ◽  
The Global Financial Crisis

Ashoka Mody of International Monetary Fund reviews “Growth with Financial Stability: Central Banking in an Emerging Market” by Rakesh Mohan. The EconLit abstract of the reviewed work begins: Explores the evolving roles of fiscal, monetary, and financial policies in India and their interaction and adaptation since India's independence, focusing on reforms since the early 1990s. Discusses the growth record of the Indian economy -- a story of sustained savings and investment; sustaining growth with stability -- the role of fiscal and monetary policies; innovation and growth -- role of the financial sector; development of banking and financial markets in India -- fostering growth while containing risk; development of the Indian debt market; financial inclusion in India; communication in central banks -- a perspective; volatile capital flows and Indian monetary policy; liberalization and regulation of capital flows -- lessons for emerging market economies; the global financial crisis -- causes, impact, policy responses, and lessons; emerging contours of financial regulation -- challenges and dynamics; and economic reforms in India --where we are and where we go. Mohan is Professor in the Practice of International Economics and Finance with the School of Management and Senior Fellow at the Jackson Institute of Global Affairs at Yale University. Index.

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