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IGM Credit, IGM FX and Rates
As widely expected, FTSE Russell on 24 Sep in the New York afternoon announced that China Government Bonds (CGBs) will be included into the World Government Bond Index (WGBI), effective Oct 2021. Major investment banks estimate that CGBs would receive a weighting of around 5.7% in the WGBI. Assuming AUMs benchmarked to WGBI index is around USD2.5tn, the inclusion would result in USD142bn inflows to the CGB market. Assuming the phasing-in will last for 20 months, same as the time frame set for Bloomberg Barclay's Global Aggregate Index inclusion, CGBs will receive USD7bn inflows per month as a result of WGBIs month-end rebalancing. Once included, China will become the second highest-yielding country in the WGBI (chart 1), which should be very appealing to yield-seekers.
Topic Industry News
EPFR - fund flow & allocations data
A run of inflows that started in late March came to an end for EPFR-tracked US Bond Funds going into the final week of September as investors digested the US Federal Reserve’s tepid outlook for the American economy and took a harder look at the swelling pile of corporate debt. High Yield Bond Funds, which invest sub-investment grade corporate bonds, saw over $5 billion redeemed. Elsewhere during the week ending September 23, China’s footprint in the emerging market universe continued its rapid expansion with China Bond Funds posting their third weekly inflow record since mid-August and China Equity Funds recording the biggest inflows among EM Country and Regional Equity Fund groups. Sentiment towards Europe, meanwhile, is heading in other direction: for the second week running Europe Equity and Bond Funds both posted net outflows. Overall, Bond Funds experienced a collective net inflow of $1 billion the week ending Sept. 23. Investors pulled $343 million out of Balanced Funds, $6.8 billion from Money Market Funds and $22.7 billion from Equity Funds. In the case of the latter, the headline number was influenced by the “triple witching’ that occurred on Sept. 18 when the contracts for stock index futures, stock options and stock index options expired on the same day, triggering significant shifts within US Equity Funds. Quarter-to-date, US Bond Funds remain the biggest magnets for investor cash, a share of which is being pulled out of US Money Market Funds which topped the flow table for the second quarter but anchor the bottom of the table for the current quarter. Amidst the fixed income groups in the top 10, Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates continue to stand out in what has been a banner year for them – year-to-date flows into SRI/ESG Equity Funds already exceed 2019’s record-setting total.
Topic Industry News
Zephyr Portfolio Analytics
Once reserved for institutional investors or ultra-high-net-worth clients, separately managed accounts (SMAs) are suddenly growing more popular in U.S. wealth management portfolios. Why? With more and more asset allocators strategically seeking mass affluent clientele to add to their books of business, there is also a need to diversify from traditional, more one-size-fits-all investment products. Allocators are now adding products such as SMAs and UMAs to differentiate their product line-up and attract new clients in an increasingly competitive market. In this first webinar of Zephyr’s Be Active series on SMAs, we’ll shed some light on the industry in a fun, interactive webinar format modeled after the boardgame Mystery Date. You’ll hear from leading due diligence experts as they explain their approach to SMAs. And learn from top-performing SMA providers who illustrate their different investment strategies, philosophies and approaches to aligning SMAs with SRI and ESG investments to meet the growing demand for more transparency, control and customization in a post-pandemic world.
Topic Industry News
EPFR - fund flow & allocations data
Our webinar demonstrates the 'predictive power' of EPFR Fund Flows and Allocations data for our APAC audience! Our event, hosted by our EPFR Director of Research - Cameron Brandt and our esteemed Quant team, Vik Srimurthy, Steven Shen and Sayad Baronyan provides a walkthrough of the EPFR models that support tracking peers, market predictions and risk management, as well as a deep dive into China through the lens of the pandemic, and valuations on Equity Flows and Rotations.
Topic Industry News
Zephyr Portfolio Analytics
Data from the red-hot housing market continues during the upcoming week with the release of existing and new home sales. Both numbers should be strong, particularly new homes, as we found out this week the confidence for home builders is at record highs due to the increase in demand for new homes, as limited existing home inventory has pushed buyers to build. Additionally, the manufacturing and services PMIs for September will be released on Wednesday. After rising above the breakpoint level of 50, which signals expansionary conditions, the question remains will both PMIs continue to signal expansion. Ryan Nauman's Weekly Recap: COVID-19 Market Edition and subscribe to have it delivered to your inbox each week!
Topic Industry News
EPFR - fund flow & allocations data
EPFR subscribers have traditionally looked at the kinds of funds money is moving into. Active or passive? ETF or mutual fund? Equity or Bond? Energy or Technology? They have also looked at where: Pacific or Europe, Global or GEM. They have usually overlooked factors. Based on their prospectus, EPFR’s data team classifies funds by Style (Growth/Value/Blend), Size (Large/Mid/Small) and Social Responsibility (ESG/not ESG). However, merely by looking at past returns, it is also possible to also classify funds by Momentum, Reversal, Volatility, Beta and Oil Sensitivity. Finally, to add icing to the cake, it is possible to classify funds based on Flow. This blog details what happens, both in terms of additional information and for returns, when you break down money flow in terms of these factors.
Topic Industry News
IGM FX and Rates
In this piece we highlight the underperformance of IDR FX within the USD/Asia bloc in Q3. We outline the likely drivers of this underperformance, with pay back from an exceptional Q2 performance, central bank intervention to accumulate USDs and weaker seasonality (particularly in August and September), as the most likely drivers. Lack of offshore capital inflows into the local bond market was also a contributor. Looking ahead into Q4 we argue that IDR can play catch up with the stronger EM Asia FX trend. Seasonal headwinds should dissipate, the central bank should be more comfortable with appreciation and guard against a break above 15000, whilst there is ample scope for offshore investors to re-allocate to Indonesia, given attractive real yields on offer and dovish Fed backdrop. We recognize that global equity market sentiment is weaker now, but USD/IDR spikes should be used as opportunities to average into a short USD position. Read more...
Topic Industry News
IGM FX and Rates
Since the start of Q3 the Mexican Peso has been the best EM currency performer vs the USD, rising over 7.0%. However, as an EM sentiment bellwether the MXN may well have had its best run. There is also the risk of a credit rating downgrade to junk which could spur huge outflows. For more read our EM FX Viewpoint Blog >
Topic Industry News
IGM Credit, IGM FX and Rates
PBOC on 15 September conducted a CNY600bn 1-year medium-term lending facility (MLF), more than enough to roll over the same type of facility (sized at CNY200bn) that expired in the same week. Despite the rate being unchanged at 2.95%, the facility size was large enough to stir up speculation over a possible re-emergence of a looser liquidity environment before and after the upcoming Golden Week holiday. However, what actually happened over the rest of the week suggested the surprisingly large MLF operation was mainly aimed at supporting market sentiment before the CGB auction held on 16 September. As soon as the auction was wrapped up, PBOC immediately showed its reluctance to let liquidity go any looser again. On 17 Sep, PBOC only conducted a small-sized 7-day OMO reverse repo, resulting in a re-emergence of net liquidity withdrawal.
Topic Industry News
IGM Credit, IGM FX and Rates
Read more from The Context and subscribe to have it delivered to your inbox each week!
Topic Industry News
EPFR - fund flow & allocations data
With COVID-19 caseloads on the rise in Europe and key emerging markets, predictions for effective widescale vaccination slipping into 2Q21, last week’s technology sell off jolting market confidence and Sino-US tensions still running high, investor sentiment took a turn for the defensive during the second week of September. US Bond and Equity Funds absorbed a combined $33 billion, with the latter posting their biggest weekly inflow since 1Q19, while redemptions from Emerging Markets Equity, Europe Bond and Alternative Funds hit six, 12 and 25-week highs respectively.
Topic Industry News
IGM FX and Rates
Green bond issuance recovers after early 2020 pause & wider ESG sales pick up pace Green and sustainable/social bond issuance has exploded in very recent years as sovereigns, corporates and financials have all rushed to tap into investors' increasing care for the environment and climate change, and subsequent demands for their money to make a positive impact on society and the world at large. 10-years ago such issuance totalled just USD600mn globally, increasing to almost USD35bn in 2015, and in 2019 it topped USD200bn, according to our database, which tracks just international syndicated bonds. 2020 was expected to be an even stronger year for issuance, particularly with the sustainable bond market still in its infancy and seen having plenty of room to grow. For more read our Viewpoint Blog >
Topic Industry News
Zephyr Portfolio Analytics
The week ahead will be highlighted by the Federal Reserve (Fed) meeting announcement and Chairman Powell’s follow-up press conference. It is well documented that the Fed plans on keeping interest rates low for the foreseeable future as the central bank has laid their monetary policy on the table so there shouldn’t be much anticipation in terms of their rate policy. However, many may want to listen to their economic forecasts and expectations moving forward. As for economic data, the week contains multiple releases from the red-hot housing market. Additionally, retail sales for the month of August will be released which will be widely watched as the pace of sales slowed in July. Finally, consumer sentiment will be updated, which is an important indicator for consumer spending and the potential health of the economy. Ryan Nauman's Weekly Recap: COVID-19 Market Edition and subscribe to have it delivered to your inbox each week!
Topic Industry News
IGM FX and Rates
CEE focus is on the HUF, which has been testing lows since April. This after Q2 GDP saw the steepest contraction amongst its peers of and CPI began to accelerate sharply in July, reducing the real rate on the HUF so that it is now the most negative it has been since January. For more read our EM FX Viewpoint Blog >
Topic Industry News
IGM Credit, IGM FX and Rates
Interbank liquidity tightening during August coincided significantly with the policymakers' introduction of a set of new regulatory measures targeted for property developers. PBOC and the Ministry of Housing and Urban-Rural Development (MOHURD) in mid-Aug had a meeting with major property developers in Beijing on the new rules set to monitor property developers' funding and financing outlook. The new rules include: (1) debt-to-asset ratio must not exceed 70% after contract liabilities; (2) net gearing must not exceed 100%; and (3) Cash-to-short-term debt ratio has to be not less than 1. Developers who fail to meet these requirements are required to submit an action plan by the end of Sep on how to reduce their debt levels within a year and meet all the above three requirements within 3 years. A significant fall in structured deposits and ordinary deposits since the beginning of the year (chart 1) suggests a lot of money has been poured into the real estate market again. That's reflected in the rapid rise in real estate FAI year-to-date (chart 2). Against this backdrop, policymakers have found it necessary to curb the pace of property developers' re-leveraging before it's too late.
Topic Industry News
23 Nov 2020 , 08:00
USA
Conference
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