20131111-巴黎银行证券-EM_Flows_Tracker_12页_1mb

FX & IR EM STRATEGY Summary

Core Content

This document provides an overview of foreign exchange (FX) and investment-grade (IR) emerging markets (EM) strategy, focusing on capital flows, FX reserve accumulation, and bond ownership in different regions: Asia, CEEMEA, and LATAM. It highlights the performance of various markets and the impact of macroeconomic and monetary policy developments on investor behavior.

Main Points

Asia

• Equity Flows: In the week to 6 November, equity flows were negative, with notable outflows from South East Asia (Thailand, Philippines, Indonesia) and Korea. India was the only market with a net positive inflow, though marginally.
• Bond Flows: Bond flows in Asia were weak, with Indonesia seeing a moderation in inflows and Korea and Thailand experiencing outflows.
• FX Reserves: Korea and Singapore saw significant increases in FX reserves, suggesting their currencies are trading above comfort levels.
• Korea Specific: Korea had USD 2.3bn in bond outflows in October due to large bond redemptions, which offset net purchases. Foreign ownership of Korean bonds fell slightly from 17.2% in September to 17.0% in October.
• India Specific: India had a net positive inflow in October, with foreign bond ownership at 25.1bn USD.
• Thailand, Philippines, and Indonesia: These markets experienced outflows in bond and equity sectors, with Thailand and Indonesia showing notable declines in foreign ownership.
• Market Vulnerability: Poor fundamentals in Turkey and South Africa make their debt markets vulnerable, especially with the prospect of Fed tapering acting as a headwind.

CEEMEA

• Equity and Debt Flows: The week to 6 November saw poor performance in local debt markets, despite the ECB's rate cut. Outflows occurred in Turkey, South Africa, and Hungary.
• Fundamentals: Weak fundamentals in South Africa and Turkey increase their vulnerability to market sell-offs. Hungary is considered bearish due to low interest rates.
• Bond Ownership: Foreign bond ownership in Turkey, South Africa, and Hungary has been declining, with Thailand and Korea showing similar trends.
• Market Outlook: The region is viewed as having weak fundamentals, making it susceptible to broader market declines.

LATAM

• Colombia: In October, Colombia saw a significant inflow of COP 1,213bn, the highest since January 2011, raising the foreign participation rate in the TES market to 6.6%. This may have been influenced by government clarification on tax haven definitions.
• Mexico: Mexico experienced large outflows of MXN -14.32bn between Oct 23rd and Oct 29th. The outflows were particularly notable on Oct 25th following Banxico's rate cut and communication that further cuts were unlikely.
• Bond Ownership: Brazil and Colombia showed varying levels of foreign bond ownership, with Colombia's participation rate at 6.6% in the TES market.
• Market Reactions: The front-end of the yield curve sold off after the rate cut, indicating market reaction to policy signals.

Key Information

• Data Sources: The report uses data from EPFR, BNP Paribas, Bloomberg, and local financial authorities.
• Methodology: Some data may not fully reflect actual cross-border flows due to limitations in reporting. For example, Korea's daily data refers to "net purchases" not "net investment," and India's data is based on SEBI auctions.
• Regional Trends:
  • Asia: Mixed performance with some markets showing inflows and others outflows. Korea and Singapore had strong FX reserve accumulation.
  • CEEMEA: Weak fundamentals and outflows in debt markets, with a bearish outlook for Hungary.
  • LATAM: Colombia had a strong inflow, while Mexico experienced notable outflows, influenced by monetary policy changes.

Summary Table of Key Flows

Disclaimer

• This document is classified as non-independent research and is a marketing communication.
• It does not purport to be an exhaustive analysis and may be subject to conflicts of interest.
• The information and opinions are based on public sources and are not guaranteed to be accurate or up to date.
• No liability is accepted for any losses arising from the use of this report.
• The report is intended for professional clients only and not for retail clients.
• It is subject to legal restrictions and must not be reproduced or transmitted without prior written consent.