IMF wins Best Emerging Markets Paper 2020
|It's been a tough year for the global economy. In Asia, where the coronavirus pandemic began, the IMF predicts a growth rate of -2.2%. However, the economic fundamentals that make emerging markets an attractive asset class remain, as seen by China’s faster-than-expected rebound. The winning paper in this category, authored by the IMF, takes a broad but detailed look at Asia’s multispeed recovery. Alongside some excellent analysis and practical suggestions for governments to consider, it warns that the recovery is not without risks.|
WINNING PAPER: IMF
This 35-page report by the IMF provides detailed analysis of the impact of this year’s recession on different Asian economies. It examines the multispeed recovery that’s taking place in the region and explores how governments can ease lockdown restrictions. The report also highlights some of the potential risks that policymakers might face, such as rising inequality and social unrest. With the pandemic still far from over, the authors suggest that policy support should be sustained, and in some cases, increased.
HIGHLY COMMENDED PAPERS
As a relatively high-yielding asset offering long-duration bonds across several high-quality countries, EM local currency debt should, in theory, attract investors in their droves. However, pension funds and other liability-driven investors have until recently shunned this particular asset class. This paper by PGIM Fixed Income examines some of the reasons for the shifting dynamics and focuses particularly on the role of FX in this.
This 21-page paper by FTSE Russell presents a helpful outline of the development and characteristics of the emerging market fixed income asset class. The authors draw on FTSE Russell data that goes back to the 1980s. They find that although EM fixed income suffered major setbacks in 1997-98, it is now viewed very differently with investors increasingly allocating funds to it.
For compliance reasons, this paper is only accessible in certain geographies
China’s biopharmaceutical industry is changing. With an ever-increasing opportunity set, Capital Group analysts believe that the industry is at an inflection point. Consumer demand, government reforms and ageing demographics are all fuelling innovation across a sector that is also opening up to foreign players. While the fundamentals are there, winning talent remains a major challenge.
ESG awareness in Asia is growing but there are still major challenges. The region is the world’s largest emitter of greenhouse gases and investment funds that abide by global ESG standards account for a tiny 0.8% of the global whole (June 2020). But according to Manulife IM, important foundations are being laid. Crucially, the growing sustainability drive could unlock compelling opportunities for fixed income investors.
In recent years, the Chinese fund management industry has been opening up to foreign firms. This report by Z-Ben Advisors examines which global managers have been making inroads into the country. It delves into three business channels – onshore fund management, inbound and outbound – to provide a comprehensive list of how they’re fairing relative to each other. The report also briefly discusses some recent regulatory developments.
Global bond investors are paying more attention to China these days. The country’s fixed income markets are integrating with the world economy much more and this paper makes the case for adding this unique asset class to investors’ portfolios. It also describes the impact of some key structural shifts such as the RMB’s rise as a reserve currency, changing demographics and the growing pensions sector.
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READ MORE ON EMERGING MARKETS
Check out the latest thinking on investing in emerging markets, including featured papers and Q&As with prominent industry experts in our Special Report “Emerging Market Debt Outlook: Risks and opportunities”.
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