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EPFR - fund flow & allocations data

Funds with SRI/ESG mandates end second quarter on a high note

Global Navigator

The final week of June was marked by uncertainty about the trajectory of America’s economic recovery and the future of its relations with China as new daily COVID-19 cases in the US topped 50,000 on the last day of the reporting period and China unveiled its new national security law for Hong Kong. Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates, however, enjoyed a very good week with both groups setting new inflow records.

Topic Industry News

IGM FX and Rates

THE US INVESTMENT GRADE NEW ISSUE MARKET

THE US INVESTMENT GRADE NEW ISSUE MARKET

As a result of the Covid-19 induced lockdowns, many cash-strapped corporations - those who could - descended on the US public debt market in droves, raising an unprecedented $723bln in Q2 2020. That brought ex-SSA H1 issuance to an unheard of $1,214,331bln, topping all estimates for the year. Fun fact: 2020 high grade issuance is running 101.8% higher than last year at this time. Along the way, many milestones were set including a quarter that produced (1) three of the top six busiest ex-SSA issuance months on record (2) the busiest ex-SSA issuance month on record (April’s $297.775bln) (3) and needless to say, the busiest issuance quarter, and half, of all time ($723.121bln and $1,214,331bln respectively).

Topic Industry News

EPFR - fund flow & allocations data

Quants Corner - South Korea: Success containing pandemic not translating into flows

Quants Corner

The first case of the virus now designated COVID-19 was detected last December. The epidemic, which became a global pandemic during 1Q20, had an immediate impact on nearby South Korea. At first markets viewed Korea, whose response to the pandemic garnered widespread accolades, as a haven. By late March, however, the bloom had come off the Korean rose with Korean Equity Funds compiling a 12-week, $10 billion outflow streak that ran into mid-June...

Topic Industry News

IGM FX and Rates

EM Viewpoint: Brazil's deep economic crisis, political & fiscal risks leave us viewing BRL with caution

IGM FX and Rates

The broad consolidation in USD/EMs of late has led to a discussion of whether the EM FX recovery of the past couple of months has run its course. The Brazilian Real is one EM currency in particular that we retain a cautious outlook over the medium-term, with little scope seen for it to shed its title as the worst performing major currency ytd. This is based on a combination of factors, most notably lingering political risks and a deep economic crisis caused by the coronavirus that should keep fiscal risks elevated in H2; plus the continuation of a rather unattractive carry. For more read our EM Viewpoint Blog >

Topic Industry News

IGM Credit, IGM FX and Rates

China Insight: Implications of a Sustained Rise in Repo Rates

China Insight

China onshore interbank CNY repo rates (chart 1 and 2) have been creeping upward since CBRC chairman Guo Shuqing at the beginning of the month openly stressed the importance of financial risk control.

Topic Industry News

EPFR - fund flow & allocations data

Inflation Protected Bond Funds post new inflow record going into final week of 2Q20

Global Navigator

Although the US headline inflation rate dipped to just 0.1% in May investors appear to be unconvinced this is the new normal for prices. During the week ending June 24 the Inflation Protected Bond Funds tracked by EPFR set a new weekly inflow record, breaking the $2 billion mark for the first time, as governments and central banks open the stimulus spigots ever wider to offset the economic impacts of the COVID-19 pandemic. Gold Funds also pulled in over $1 billion for the 11th time in the past 14 weeks. The flows into Inflation Protected Bond Funds contributed to another solid week for EPFR-tracked Bond Funds, which collectively extended their current inflow streak to 11 straight weeks. During than run, they have recouped some 40% of the $445 billion that investors pulled out of these funds in March.

Topic Industry News

IGM FX and Rates

FX Viewpoint – Quick Seasonality in June recap

IGM FX and Rates

Recalling our FX Seasonality Viewpoint published at the start of the month. From the trends of the last 15 years, we wrote that we could see the USD can be a broad loser in June. We noted that among those beneficiaries can be the commodity bloc, including the AUD. To date, this is just how it has panned out. For more read our EM Viewpoint Blog >

Topic Industry News

IGM Credit, IGM FX and Rates

China Insight: Policymakers Give Hawkish Signals

China Insight

The 12th Lujiazui Forum, a gathering of senior government officials in economic and financial areas, was held on 18 June in Shanghai. At the forum, the remarks by CBIRC Chairman Guo Shuqing and PBOC Governor Yi Gang drew a lot of attention. - CBIRC Chairman Guo Shuqing: "China will neither adopt flood-like stimulus nor negative rates". He also urged major global economies to consider how to exit from massive easing. - PBOC Governor Yi Gang: "we should consider the timely withdrawal of policy tools (the counter-pandemic) financial support in advance". Interestingly, Guo's and Yi's remarks came after Premier Li Keqiang at a State Council meeting on 17 June emphasized the need for further cuts in the reserve requirement ratio and relending facilities to bring borrowing costs downward and support the real economy as well as small/micro enterprises (chart 1) but did not mention the possibility of interest rate cuts.

Topic Industry News