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<keyword id="21354159" type="General" weightage="100" keywordseo="Indian-government-bonds" source="keywords">Indian Government Bonds</keyword> are set to be included in the JP Morgan Government Bond Index, <keyword id="20036608" type="General" weightage="20" keywordseo="Emerging-Market" source="keywords">Emerging Market</keyword> (GBI-EM) from June 28. The inclusion will take place over a period of 10 months starting June 28, 2024, through to March 31, 2025.<br /><br />India will have a 1% weightage in the <keyword id="19967624" type="General" weightage="20" keywordseo="JPMorgan" source="keywords">JPMorgan</keyword> Emerging Market (EM) Bond index, which will gradually rise to 10% over a 10-month period, at an inclusion rate of about 1% weight per month. The inclusion is estimated to bring $20-25 billion of inflows into the Indian bond market. However, India's index-eligible bonds have already attracted $10 billion since the inclusion was announced in September last year.<br /><br />On September 21, 2023, Global index provider JPMorgan announced that it would include Indian government's bonds in its emerging market indices.<br /><br />Only Indian government bonds issued by the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) under the <keyword id="12313402" type="General" weightage="20" keywordseo="Fully-Accessible-Route" source="Orion">Fully Accessible Route</keyword> (FAR) will be included in the indices. All FAR-designated IGBs maturing after December 31, 2026, will be eligible to be included in the JPMorgan Emerging Market (EM) Bond index. In the post-monetary policy press conference on June 7, RBI Governor <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword> said the central bank is not worried about the big <keyword id="20072947" type="General" weightage="20" keywordseo="foreign-fund-inflows" source="keywords">foreign fund inflows</keyword> from global bond inclusion.<br /><br />"The RBI has a number of instrumentalities to manage the flows. We have managed it in the past and we will manage it in future also. No worries on that," Das said.<br /><br />Experts believe the index inclusion-related heavy flows is likely to boost demand for Indian government securities in the current fiscal, once short-term liquidity issues in certain papers get sorted. Vishal Gupta, Co-founder of IndiaBonds.com says the inclusion of Indian government bonds in JP Morgan Index is a watershed moment for the <keyword id="22201110" type="General" weightage="20" keywordseo="fixed-income-markets" source="keywords">fixed-income markets</keyword> in India.<br /><br />"This compulsorily puts Indian bond markets on the radar of global bond investors and although initial investments are supposed to be to the tune of $25-30 billion, index inclusion paves the way for this number to keep growing in the next few years," said Vishal Gupta.<br /><br />Gupta further added that it is important to grow the investor base for any market, and index inclusion helps in expanding the number of players, which further benefits everyone in the form of additional market liquidity.<br /><br /> "Global investors have been looking to allocate capital to emerging markets given their reluctance to invest in other large countries like Russia or China in the past couple of years. Hence, the timing of this index inclusion is also almost perfect.<br /><br /> I reckon investments will start via government bonds initially, but filter into AAA to lower credit ratings as well in the years to come", he continued. <br /><br />

Indian government bonds to be included JP Morgan Govt bond Index from June 28

<keyword id="19896016" type="General" weightage="20" keywordseo="new-delhi" source="keywords">New Delhi</keyword> [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], March 11 (ANI): Global rating agency Moody's expects India's economic growth in 2024-25 growth above that of other emerging market G20 peers, given its domestic demand managed to sustain momentum.<br /><br />India's real GDP growth accelerated to 8.4 per cent year over year in the October-December quarter of 2023, up from upwardly revised prints of 8.1 per cent in July-September and 8.2 per cent in April-June.<br /><br />The global rating agency Moody's attributed India's firm growth primarily to solid capital expenditure, defying private consumption which remained "sluggish" amid still-weak rural demand.<br /><br />On the supply side, an 11.6 per cent surge in manufacturing output and strong service sector activity more than offset a decline in agricultural output in India, it said.<br /><br />Even so, it said high-frequency indicators, including expanding <keyword id="20905252" type="General" weightage="20" keywordseo="purchasing-managers" source="keywords">Purchasing Managers</keyword>' Index (PMI), rising auto sales, consumer optimism and double-digit credit growth, suggest that the economy's strong October-December momentum carried into January-March this year.<br /><br />"Some of the large emerging market (EMs) countries stood out in 2023 for their resilient economies amid high-interest rates, exchange rate volatility, subdued capital flows and muted external demand. This year, we expect growth to slow across several major EMs as the economies transition to a post-pandemic steady growth path," Moody's said in its Macro Monday report, chaptered 'G-20 emerging markets are poised for growth stabilization'.<br /><br />In its recently published <keyword id="20905253" type="General" weightage="20" keywordseo="global-macro-outlook" source="keywords">Global Macro Outlook</keyword>, it forecasted G20 emerging market growth to stabilize around 4.0 per cent in 2024 and 2025, down from 4.7 per cent in 2023 as global monetary policy gradually normalises.<br /><br />On an annual basis, domestic demand was the primary engine of growth in several G20 emerging markets.<br /><br />"We believe growth cycles in India and Indonesia are at their peak, Brazil and Mexico are likely past their peak, and <keyword id="19899437" type="General" weightage="20" keywordseo="south-africa" source="keywords">South Africa</keyword>'s growth has likely troughed. Nevertheless, we expect relatively stable growth at close to potential in 2024 and 2025 for most G-20 EMs."<br /><br />On the policy side, the rating agency expects continuity after the general election in April-May and continued focus on infrastructure development. It forecasts India's real GDP to grow about 6.8 per cent in 2024 and 6.4 per cent in 2025, from 7.7 per cent in 2023.<br /><br />India's GDP grew at a massive 8.4 per cent during the October-December quarter of the current financial year 2023-24 and the country continued to remain the fastest-growing major economy. The Indian economy grew 7.8 per cent and 7.6 per cent during the preceding two quarters - April-June and July-September.<br /><br />The strength of domestic demand has driven the economy to a 7 per cent plus growth rate in the last three years. India's economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.<br /><br />In the next three years, India is expected to become the third-largest economy in the world, with a GDP of USD 5 trillion. India can aspire to become a USD 7 trillion economy in the next six to seven years (by 2030), India's finance ministry recently asserted. (ANI)<br /><br />

Domestic demand to keep India's growth above other G20 emerging markets: Moody's

<ul class="summary-list"><li>China's capital exodus is among the worst seen by emerging markets, said Robin Brooks, chief economist at IIF.</li><li>That's as global investors have grown wary of autocratic regimes, he tweeted on Sunday.</li></ul><p>China's capital exodus is among the worst seen by emerging markets, as global investors turn cautious on autocracies, according to Robin Brooks, chief economist at the Institute of International Finance.</p><p>In a series of tweets, he also said Russia's invasion of Ukraine last year made investors question authoritarian regimes.</p><p>"The change in global capital flows is seismic. For the past decade, China attracted the bulk of capital flows to EM, often at the expense of other BRICS," <a href="https://twitter.com/RobinBrooksIIF/status/1695812667674439717" target="_blank" rel="noopener">he wrote on X</a>, formerly known as Twitter. "But China has now seen consistent and large outflows for the past 18 months, as investors grow wary of autocracies."</p>  <p>Since early 2022, a <a href="https://markets.businessinsider.com/news/stocks/foreign-investors-china-stocks-chinese-economy-bond-markets-xi-jinping-2023-6">net $148 billion</a> of Chinese bonds were sold by international institutional investors before June of this year, while the country's equities have been pulled down by sharp withdrawals.</p><p>Despite Chinese efforts to calm global investors, its stock market recently underwent the longest stretch of outflows since 2016, hemorrhaging <a href="https://markets.businessinsider.com/news/stocks/chinas-stock-market-reels-from-record-stretch-of-capital-exodus-2023-8">$11 billion in a period of 13 days</a>. Added to that, the CSI 300 Index of Chinese shares suffered a nine-month low last week.</p><p>Meanwhile, a gauge of foreign direct investment dropped <a href="https://finance.yahoo.com/news/billions-dollars-flowing-chinese-markets-213851348.html" target="_blank" rel="noopener">87% from a year ago</a>, landing at a record low of $4.9 billion, Chinese State Administration of Foreign Exchange data shows. </p><p>The outflows have continued despite Beijing's steady trickle of policies meant to revive China's <a href="https://www.businessinsider.com/china-xi-jinping-hiding-bad-data-economy-debt-real-estate-2023-8">slowing economic growth</a>. </p><p>Brooks added that the capital flight out of China isn't due to <a href="https://markets.businessinsider.com/news/currencies/china-yuan-all-time-low-beijing-stimulus-efforts-flat-markets-2023-8?_gl=1*aycjgg*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTY5MzMxMjcwMy4xMy4xLjE2OTMzMTczNDUuOC4wLjA.">higher yields for US Treasurys</a> pulling money away, because other emerging markets haven't seen the scale that China has.</p><p>"This is a fundamental change in how people see China and they are cutting back," he tweeted, later adding, "this sentiment change on China is genuine and profound. China's policies are doing little to discourage this shift in thinking."</p><p>In fact, <a href="https://markets.businessinsider.com/news/stocks/china-economy-growth-forecasts-housing-consumer-stimulus-investor-equity-outflows-2023-6?utm_source=flipboard&amp;utm_content=user%2FInsiderBusiness">Indian and Korean equity funds</a> rose as redemptions on Chinese funds hit an 18-week high, according to June data from EPFR Global.</p><p>And last week alone, investors withdrew $527.2 million from Chinese-linked ETFs.</p><p>"That says China outflows are NOT about Fed hikes, which hit all EM equally, but instead Russia's invasion of Ukraine that's made investors question autocracies. Global markets look at China in a new light," Brooks said in a separate X post.</p><p>His tweets echo a recent op-ed from Adam Posen, president of the Peterson Institute for International Economics.</p><p>Writing in <a href="https://www.foreignaffairs.com/china/end-china-economic-miracle-beijing-washington" target="_blank" rel="noopener nofollow">Foreign Affairs</a> earlier this month, he said China's economic malaise is following a pattern of development that's <a href="https://www.businessinsider.com/china-economy-outlook-low-growth-long-covid-rebound-xi-jinping-2023-8">typical of authoritarian regimes</a>.</p>

Exodus of capital from China signals 'seismic' change in global flows as investors grow wary of autocratic regimes

<ul class="summary-list"><li>The US <keyword id="35208" type="ORGANIZATION" weightage="60" keywordseo="dollar">dollar</keyword> could decline by as much as 15% by the end of 2023, but a larger move is "certainly possible," <keyword id="6361649" type="UNKNOWN" weightage="60" keywordseo="Goldman-Sachs">Goldman Sachs</keyword> said. </li><li>The trajectory of the pandemic, the development of a successful vaccine, and the election outcome are factors affecting the timing of the dollar weakness, Goldman Sachs economist <keyword id="238670" type="PERSON" weightage="60" keywordseo="Zach-Pandl">Zach Pandl</keyword> said.</li><li>A Democratic blue wave would bring about a huge stimulus package, but would also put pressure on the dollar, the US bank said.</li><li>Even if Donald <keyword id="6354862" type="UNKNOWN" weightage="60" keywordseo="trump">Trump</keyword> is re-elected, market focus will shift to vaccine distribution and global economic performance by next year. That scenario makes Goldman Sachs expect dollar weakness in any case. </li></ul><p>The <a href="https://markets.businessinsider.com/index/us-dollar-index">dollar</a> could depreciate by 15% by the end of 2023 irrespective of the election outcome, and an even larger dip is "certainly possible," Goldman Sachs said.</p><p>The greenback is currently overvalued by 10% to 15% based on several reasons, according to Zach Pandl, co-head of global FX and EM strategy at Goldman Sachs.</p><p>A drop on this scale would bring the <keyword id="75201" type="ORGANIZATION" weightage="60" keywordseo="Dollar-index">dollar index</keyword> to its lowest since late 2014.</p><p>A sustained environment of deeply negative real interest rates in the US and a continued sharp global economic recovery from the COVID-19 recession is the "standard recipe for broad dollar weakness," Pandl said.</p><p>"We are currently forecasting about a 15% depreciation in the real trade-weighted dollar from this year's peak to the end of 2023, but a larger move is certainly possible," Pandl said. </p><p>Other factors affecting the timing of the dollar's weakness include the pandemic's course, vaccine development, and the election outcome. But these won't impact the medium-term dollar outlook, he noted.</p><p><strong><em>Read More:</em></strong> <a href="https://www.businessinsider.com/stocks-to-buy-and-avoid-in-3-election-outcomes-stifel-2020-10"><em>Stifel asked its analysts to identify stocks most likely to be positively or negatively affected by the election results. Here are the dozens of stocks to buy or avoid in each of the 3 outcomes.</em></a></p><p>"Investors still seem reluctant to embrace a lower dollar view for the remainder of this year and through 2021, given the looming uncertainty around the US election, the health of the global <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword> and how the US will perform relative to other <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>. So, many investors are not positioned for a weaker dollar in the coming months."</p><p>Goldman expects a $2.5 trillion coronavirus relief package under a Democratic sweep, but that would also bring forward a longer slide in the dollar. If investors need to be compensated to buy more Treasury bonds to fund US deficits and the central bank continues to keep real rates low, the dollar may have to weaken to encourage foreign demand, Pandl said.</p><p>A Joe <keyword id="60973" type="PERSON" weightage="60" keywordseo="Biden">Biden</keyword> presidency would mean a more multilateral approach to foreign policy, particularly US-China relations. That could boost the <a href="https://markets.businessinsider.com/currencies/usd-cny">yuan</a> against the dollar, Pandl said. The dollar may also weaken if foreign demand for US equities falls after proposals are executed to raise corporate taxes and increase technology regulation.</p><p>A status-quo outcome, where President Donald Trump gets re-elected and Republicans hold the Senate, would see the dollar well-supported through the end of 2020. But market focus will shift to vaccine distribution and global economic performance by next year, meaning that eventual dollar weakness is likely in any case, Pandl said.</p><p><strong><em>Read More: </em></strong><a href="https://www.businessinsider.com/stock-market-crash-fear-gauge-signals-meltdown-after-2020-election-2020-10"><em>Wall Street's fear gauge is warning that the upcoming election could trigger a prolonged period of stock-market chaos — one that's much worse than the aftermath of 2016</em></a></p>

The dollar could fall by 15% by the end of 2023 whether Biden or Trump wins — and a larger dip is 'certainly possible,' Goldman Sachs says

<ul class="summary-list"><li>India reported more than 300,000 cases of COVID-19 for the sixth consecutive day on Tuesday.</li><li>Despite COVID-19 risks, UBS says investors should maintain a risk-on stance to <keyword id="6359891" type="UNKNOWN" weightage="60" keywordseo="emerging-markets">emerging markets</keyword>.</li><li>India is geared to global trends and long-term growth, according to <keyword id="3648399" type="PERSON" weightage="60" keywordseo="mark-haefele">Mark Haefele</keyword>, the CIO of <keyword id="8188872" type="UNKNOWN" weightage="60" keywordseo="UBS-Global-Wealth-Management">UBS global wealth management</keyword>.</li></ul><p>In a note to clients on Tuesday, UBS Global Wealth Management's chief investment officer Mark Haefele said that despite a recent rise in COVID-19 cases in India, emerging <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> are still attractive for investors.</p><p>On Tuesday, India reported more than 300,000 cases of COVID-19 for the <a href="https://www.businessinsider.co.za/coronavirus-global-cases-all-time-high-rich-countries-recording-fewer-2021-4">sixth consecutive day.</a></p><p>While case figures in Europe and North America continue to fall, South East Asia has seen a dramatic rise in COVID-19 infections over the past three weeks, according to <a href="https://covid19.who.int/">data from the World Health Organization.</a></p><p>The situation is so dire in India that President Biden has said <a href="https://www.businessinsider.com/us-sending-oxygen-supplies-covid-19-vaccine-materials-to-india-2021-4">he will send</a> vaccine supplies, masks, oxygen, and therapeutics to help the country battle the virus.</p><p>While Haefele did say rising case figures will be a headwind for the region, the chief investment officer also believes there are "several reasons for a continued positive stance on EM (Emerging Markets) equities."</p><p>Here are the three main reasons why Haefele says investors should be "risk-on" when it comes to emerging markets.</p><h3><strong>"India's equity market is geared to global trends and long-term structural growth."</strong></h3><p>According to UBS, India now has a nearly 10% weighting within emerging market equity indexes, but that weighting is largely tied to IT companies that do business with the US, so much of it could be shielded from the worst effects of COVID-19.</p><p>Additionally, UBS says Indian companies are focused on the long-term growth story and don't actively trade shares in speculative moves, which bodes well for long-term investors.</p><p>Haefele also said that precedence shows COVID-19 surges can be "reined in" within a few months. The firm remains overweight Indian equities.</p><h3><strong>"China tech regulatory risk appears to be clearing."</strong></h3><p>China has a near 40% weighting in emerging market equities, making it one of the most important regions for investors.</p><p>UBS believes Chinese tech companies have surpassed recent government regulation hurdles and are poised to post "above-average, double-digit earnings growth" over the medium to long term as investors focus more on fundamentals.</p><p>"We see tech regulatory risks receding, with policymakers aiming to constrain monopolistic practices, not curb tech growth," Haefele said.</p><h3><strong>"A stronger dollar, higher Treasuries won't upend EM risk assets."</strong></h3><p>Emerging market equities usually struggle when the dollar is strong, but according to Haefele and UBS, the dollar is set to continue on a depreciation trend as the global economic recovery favors "pro-risk" currencies like the Euro.</p><p>Haefele also believes the fed will maintain dovish policies and Treasury yields won't rise above 2% this year, which should help stocks around the world outperform.</p><p>Haefele advised positioning for reopening and reflation through value and cyclical stocks in Asia, with a focus on capital goods, construction materials, consumer services, transportation, banks, and metals &amp; mining.</p><p>"EM value stocks have traded at a heavy discount over the past decade, leaving room for a recovery rally," Haefele said.</p>

India's surging Covid-19 cases shouldn't dissuade investors from buying emerging markets equities, UBS Wealth Management says

<p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>REUTERS/Stringer</span></p></div><p></p></div></div></strong></p><ul class="summary-list"><li><strong>Markets are falling all over the world but this should not come as a surprise.</strong></li><li><strong>From Trump's trade war to Chinese debt, global markets are full of hair-triggers waiting to be pulled.</strong></li><li><strong>You are to blame also. All that mindless ETF-buying in your retirement account has created an unsustainable momentum boom in stocks.</strong></li><li><strong>The US Fed may be making an historic mistake about the bond yield curve signal. </strong></li><li><strong>And you're probably going to be surprised to learn about the $2.5 trillion in risky leveraged loans that corporations are sitting on.</strong></li></ul><p>Global markets are falling so fast it's difficult to keep up with the numbers.</p><ul><li>The Dow Jones Index in the US fell 3.2% yesterday.</li><li>In China, the Shanghai Composite was down 5.2% overnight.</li><li>Virtually all European indices lost more than 1.5% Thursday.</li><li>Britain's blue-chip FTSE 100, lost 1.6% in midday trading. </li></ul><p>This is not random.</p><p>A major correction in the asset markets has been building for a while. There has been 10 years of economic growth since the great financial crisis of 2008, and a bull market in stocks of pretty much the same length. That's a long time in terms of economic cycles, and we were overdue for a "<a href="https://en.wikipedia.org/wiki/Mean_reversion_(finance)">reversion to the mean</a>," as statisticians say.</p><p>But it is not merely the case of the pendulum naturally swinging back. Ten factors have distorted global markets over the last few years, priming the global economy for a sharp pullback.</p><p>Here is who you should blame if this correction turns into a full-blown rout, or - worst-case scenario - a recession:</p><h2>1. President Trump, for starting a global trade war</h2><p>America voted for a race to the bottom, and now we've got it.</p><p>Putting up barriers to competing foreign goods, and taxing the services of other countries, may feel great in the short run. Who doesn't want to protect the workers at home from their cheaper competitors abroad? But in the long run, it means domestic production becomes more expensive, imports become more expensive, inflation goes up, less trade gets done in global aggregate, and investors reduce their expectations - and their actual investments - for the future. The global pie gets smaller, and markets are finally reacting to that.</p><h2>2. The Chinese government and its love of theft</h2><p>The trade war didn't come from nowhere. Trump is angry for a reason. For years, China has allowed its companies to steal Western technology and to rip off Western intellectual property. For years, the West did nothing about it. Finally, the Trump Administration has gone to war against China for its flouting of international trade norms. Now we are living with the result.</p><h2>3. The Chinese government and its love of debt</h2><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Pantheon Macroeconomics</span></p></div><p></p></div></div></p><p>Chinese debt of all types is nearly 320% of its GDP, according to Pantheon Macroeconomics. At the same time, its GDP growth has slowed. For years, the Chinese government allowed its state agencies and supported industries to take on cheap loans to fuel growth. That produced an economic miracle that has propelled the Chinese economy into the most important on the planet. But debt is debt. It doesn't go away. Someone either has to pay it (and become poorer) or suffer a default (and become poorer). Debt merely pushes problems into the future. As Chinese debt rose, the growth it got from that debt has declined. So now the country is stuck with a slowing economy but a much larger debt pile than 10 years ago. Investors don't like what they see, and Asian stocks are hurting as a result.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Pantheon Macroeconomics</span></p></div><p></p></div></div></p><h2>4. Venture capital: excessive private valuations have created a non-transparent, illiquid market</h2><p>Softbank, the vast Japanese venture capital investor, wants to invest <a href="http://uk.businessinsider.com/softbank-plans-100-billion-fund-every-few-years-2018-9">$50 billion each year mostly in tech startups</a>. It intends to raise $100 billion every few years on a rolling basis to do this. Ten years ago, if a startup in San Francisco or London received a $10 million investment it was considered a big deal. Now, companies struggle to generate headlines unless they are receiving cash injections in the hundreds of millions.</p><p>$100 billion here, $100 billion there, and pretty soon we're talking about real money.</p><p>To sustain and justify these investments, the valuation of these companies has gone through the roof. There are more "unicorns" - private tech companies worth more than $1 billion - than can be counted.</p><p>The problem is that this is all occurring in the non-transparent private market. It is difficult for outsiders to get information about these companies. Are they successful? Are they profitable? Are they growing? Do their business models make sense when scrutinized in the light of day (Case study: Tesla.) VC-funded companies sustain their valuations because VCs tell us they are valuable. The market for privately held equity is illiquid and opaque. This all works just fine in a market that is rising. But in a downturn, it will be very difficult to sell some of these stakes. So a lot of money from the large institutions - banks, retirement funds - is tied up in illiquid VC investments. Good luck, everyone!</p><h2>5. Private equity: leveraged loans are recreating the junk bond crisis of the early 1990s</h2><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://www.bis.org/publ/qtrpdf/r_qt1809a.htm">The Bank of International Settlements</a></span></p></div><p></p></div></div></p><p>The global total of "leveraged loans" has reached about $2.5 trillion. The <a href="https://www.bis.org/publ/qtrpdf/r_qt1809a.htm">Bank of International Settlements is worried</a> about them. <a href="https://www.bankofengland.co.uk/statement/fpc/2018/financial-policy-committee-statement-october-2018">The Bank of England is worried</a> about them. <a href="https://www.ft.com/content/adf5dd36-c688-11e8-ba8f-ee390057b8c9">Credit Suisse recently wrote a letter to its clients</a> defending its investments in them. Yet few normal people - people outside the world of finance geeks - know what they are.</p><p>Basically, it's high-risk, low-quality debt. As central banks have held interest rates near zero for years, private equity (PE) has been on the hunt for investments with much higher interest rates. But higher rates come with higher risks. A typical example of a leveraged loan looks like this: A PE firm finds a company that is already carrying debt, but is still in trouble. Perhaps it is an old company that has been badly run. It is in need of restructuring, and it might succeed if you can inject a bit of cash. So the PE firm partners with a bank which arranges a loan, underwrites the loan, and maybe packages it with a bond. The PE firm then bundles that with its own money, and takes over the firm. At this point, it restructures the company, which is a polite way of saying that it probably lays off a lot of workers, ousts the incumbent management, and sells off the useless bits. After a while, the PE firm finds itself in charge of a smaller but more functional company that has a future ahead of it. So it sells the company, or floats it with an IPO. In the sale, the PE company gets rich and the bank gets its loan money back.</p><p>The problem with leveraged loans is that they have a low credit rating, and the rating resets - downwards - if interest rates go up. And interest rates are going up. A lot of investors automatically sell their debt holdings when they get down-rated ... so this is a pile of $2.5 trillion in high-risk debt resting on a series of negative rating triggers.</p><p>If this sounds a lot like the junk-bond crisis of the late 1980s and early 1990s, that's because it is.</p><h2>6. You and your addiction to ETFs: Mindless buying has created a boom in stocks based on momentum, not fundamentals</h2><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Bernstein Research</span></p></div><p></p></div></div></p><p>You probably have a retirement fund, like a 401(k) in the US or a private pension fund in the UK. And inside that savings account, you are probably pouring a percentage of your salary every month into an exchange-traded fund, which is an investment that simply tracks a major market index like the S&amp;P 500.</p><p>They are good investments. Most "active" fund managers fail to beat the market each year, so an ETF guarantees that your return is the same as the market. For years, the market has been good. The more good it is, <a href="https://www.businessinsider.com/there-are-more-indices-than-stocks-2018-2?IR=T">the more people pile into ETFs</a>. It's a boom based on momentum, and <a href="https://www.businessinsider.com/the-stock-market-collapse-has-blown-a-hole-in-etf-investing-2018-2?IR=T">no one who owns an ETF actually examines the stocks inside it for their fundamental flaws or values</a>.</p><p>Booms come to an end, of course, and momentum can reverse. We might be seeing that now.</p><h2>7. The US Federal Reserve, which was warned against misreading the bond yield curve</h2><p>The <a href="http://uk.businessinsider.com/bond-yield-curve-inversion-2018-8">bond yield curve is an infamous predictor of recessions</a>. If it inverts - meaning that if the yield on the 2-year T-note becomes more than the yield on the 10-year note - recessions often follow, because such an inversion suggests that investors are very worried about the near-term economy. But US Fed chief Jerome Powell said recently that the flattening curve was less important than the neutral rate of interest. many <a href="https://www.businessinsider.com/rabobank-us-fed-mistake-bond-yield-curve-inversion-2018-10">serious people believe that is a mistake</a>, or at least a version of "this time it's different." The yield curve has trended toward an inversion and a lot of people think <a href="http://uk.businessinsider.com/statistical-evidence-unemployment-underemployment-2018-9">the Fed is misreading that signal</a>.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Federal Reserve Bank of St. Louis</span></p></div><p></p></div></div></p><h2>8. Italy, for failing to reform its politics or its banks</h2><p>Italy is the third largest economy in Europe and the 9th largest globally, and yet it's a basket case. It's bank system is riddled with sketchy debts. And the Italian economy is not growing fast enough to solve its problems. Its government is on a fiscal collision course with the EU. The EU wants to force it to set a budget that its elected government does not want. It cannot extract itself from the euro currency system without defaulting. And its people have refused to vote for reforms to their own electoral system that might end the country's infamously sclerotic governance. Italy is shuffling toward a crisis and it has neither the will nor the ability to change course. On its own, that's not a huge problem. But in times like these, it's just another layer of uncertainty that tells investors to flee.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Pantheon Macroeconomics</span></p></div><p></p></div></div></p><h2>9. Britain: Brexit has left the 5th largest world economy without a plan</h2><p>The UK is the fifth-largest economy on the planet and yet it does not have a functional economic or trade plan for after March 2019, when Brexit happens.</p><p>That's madness.</p><h2>10. Chickens coming home to roost in Turkey, Argentina, Venezuela, and Pakistan</h2><p>You can blame the individual, idiosyncratic governments of all these emerging market (EM) countries for their current economic crises but that would be like blaming the trees for being in the woods. The underlying fact is that all these EM countries took on big US dollar-denominated debts for inward investment purposes, and as the US Fed has strengthened the dollar those debts are now onerously expensive. Currency crises don't come from nowhere. In the short term, it's bad for each individual country. But in the long term its bad for the US and the West, too. EM countries grow faster than the developed economies, and if that growth disappears then that will slow down the larger economies too.</p> <p class="tagline">This is an opinion column. The thoughts expressed are those of the author.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/nikon-small-world-winning-footage-microscopic-world-around-us-2018-9">Award-winning footage of the microscopic world around us</a></h3>        <div>                    </div>    </div>

Why global markets are collapsing right now, and who you should blame for it

<p><div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div></p><ul><li><strong>Global currencies have become a front-and-center issue in the US-China trade war. </strong></li><li><strong>The yuan slid nearly 4% versus the US dollar in August, its largest monthly decline in decades. </strong></li><li><strong>That weakness could spread to other emerging-market currencies, according to a study by Institute of International Finance.</strong></li><li><strong><a href="https://markets.businessinsider.com/">Read more on Markets Insider</a>.</strong></li></ul><p>Global currencies have been pushed front-and-center as trade tensions between the US and China have escalated. Of particular interest to many watchers is the relative strength of the dollar versus the Chinese yuan, which sits at multiyear lows.</p><p>On Friday, the yuan posted its <a href="https://markets.businessinsider.com/news/stocks/china-renminbi-yuan-set-for-biggest-monthly-drop-risk-of-contagion-2019-8-1028487247">largest monthly loss</a> in 25 years after sliding 3.8% versus the US dollar in August. It fell even further against the greenback on Monday, a year-to-date low.</p><p>The decline comes on a heels of a turbulent month for the yuan. China let the value of the <a href="https://markets.businessinsider.com/news/stocks/trade-war-china-currency-hits-7-per-dollar-for-first-time-in-11-years-2019-8-1028416373">yuan slide beyond the psychologically significant 7 level against</a> the US dollar in early August. That, in turn, sparked an outcry from President Donald Trump and the US Treasury calling the <a href="https://www.businessinsider.com/china-currency-manipulator-us-says-imf-2019-8">country a currency manipulator</a>.</p><p>Trump has been long frustrated with the strength of the US dollar, <a href="https://markets.businessinsider.com/news/stocks/trump-blames-fed-for-strong-dollar-says-tariffs-arent-problem-2019-8-1028488295">something he's repeatedly blamed on the Federal Reserve</a>.</p><p>A new report from the Institute of International Finance took a look at the yuan's impact beyond the US. It ultimately concluded that if it depreciates further, it could end up weighing on the currencies of other emerging-market nations.</p><p>"For the rest of EM, RMB weakening carries contagion risk and adds to an already unsettled environment," wrote a team of economists at the IIF. There's also "evidence of mounting spillovers from the sharp depreciation in Argentina's peso," they wrote.</p><p><strong><a href="https://www.surveymonkey.com/r/BI-Young-Investor-Panel" target="_blank" rel="noopener"><em>Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.</em></a></strong></p><p>A weaker Chinese currency carries the risk of an acceleration in capital outflows, the economists said. China has worked to tighten controls to since August 2015, when the People's Bank of China shockingly devalued the yuan on three consecutive instances, creating considerable global market turbulence.</p><p>Those measures ultimately backfired on the central bank, as China saw heavy outflows. That sort of capital flight could then, in turn, cause further weaking of the yuan and could even spur China to spend down it's reserves, according to <a href="https://www.bloomberg.com/news/articles/2019-08-05/fears-of-china-capital-flight-hang-over-a-newly-sliding-yuan">Bloomberg.</a></p><p>This would be an issue because of the large amount of dollar-denominated debt that China holds. If the yuan falls significantly further against the dollar, it will be much harder for China to repay its debt. That could spread to other countries and lead to further deterioration of the global economy.</p><p>In terms of how such activity impacts other EM countries, the IIF looked at a wide range of currencies. It noted that the Russian ruble and the Colombian peso weakening the most. In addition, regional currencies like the Malaysian ringgit and the Indian rupee also saw declines, although they were smaller, the economists said. </p><p>Beyond the US-Chian trade war, there are other downward pressures on emerging-market currencies and the index tracking them. In Argentina, the peso tumbled 50% after an election earlier in <a href="https://markets.businessinsider.com/news/stocks/argentina-on-brink-of-financial-crisis-market-rout-election-surprise-2019-8-1028443209">August where current president Mauricio Macri suffered an upset loss to left-leaning Alberto Fernandez</a>. </p><p>Right now, the IIF economists say that there are signs that the rapid devaluation of the Argentine peso has spilled over into Brazil and Turkey, other key emerging-market countries. </p><p>If the yuan continues to slide, commodity exporters will be the most negatively impacted, the economists wrote. </p>

Trump's trade war has led to a historically weak Chinese currency - and a new study shows that impact could spread globally

<p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>AP/Saul Loeb</span></p></div><p></p></div></div></strong></p><ul><li><strong>Escalating trade tensions between the US and China have global markets on edge. </strong></li><li><strong>Emerging-market investors could reap great returns by differentiating between the trade war's winners and losers, said Rashmi Gupta of JPMorgan Chase Bank.</strong></li><li><strong>Gupta argues that savvy traders should be able to profit regardless of the trade war's outcome.</strong></li><li><strong>Brazil, India, and a range of Asian countries are among those highlighted as possible winners.</strong></li><li><strong><a href="https://markets.businessinsider.com/">Read more on Markets Insider</a>.</strong></li></ul><p>Regardless of outcome, the trade war could be an opportunity for investors willing to look towards often-overlooked markets abroad.</p><p>That's according to <span style="font-weight: 400;">Rashmi Gupta - a money manager at JPMorgan Chase Bank in New York - who is specifically referring to <a href="https://www.businessinsider.com/category/emerging-markets" target="_blank" rel="noopener">emerging markets</a>, which have badly lagged their developed-market counterparts for years.</span><span style="font-weight: 400;"></span></p><p><span style="font-weight: 400;">To get an idea how EM will respond to a successful trade-war resolution, look no further than the performance of the MSCI Emerging Markets index on Tuesday. It closed 1.3% higher after President Donald Trump tweeted that he  and Chinese President Xi Jinping and will <a href="https://markets.businessinsider.com/news/stocks/trump-china-tariff-war-tweets-talks-will-resume-before-g20-2019-6-1028288360?utm_source=markets&amp;utm_medium=ingest">have "extensive" discussions</a> at the upcoming G20 summit.</span></p><p><span style="font-weight: 400;">"If you also look at times when it feels that trade may be resolved or trade issues may be improved you notice how sharply emerging markets rally," Gupta told Markets Insider in a recent interview. "That's because the valuations are attractive, the earnings are attractive, and people are looking to allocate."</span></p><p><span style="font-weight: 400;">But Gupta also thinks parts of EM are poised to perform in the event the trade war rages further. For one, she thinks the group is less exposed than the US should talks go south.</span></p><p><span style="font-weight: 400;">"Emerging markets have priced a lot of fear around trade first, but I think US markets would price a lot more fear if trade doesn't get resolved," Gupta said. </span></p><p><span style="font-weight: 400;">She notes that if trade talks deteriorate, China, for example, will import more products from other countries. One winner in this scenario is Brazil, because China would likely import soybeans and meat from the country. </span></p><p><span style="font-weight: 400;">Other Asian countries could also benefit. Thailand, Vietnam and Indonesia could see an uptick if companies shift some of their manufacturing there, Gupta said.</span></p><p><span style="font-weight: 400;">Another winner could be India, which Gupta said is a much more domestic economy that is less driven by global trade than other countries. Investors looking to avoid some of the turmoil around trade could look to countries like India for growth opportunities.</span></p><p>This bifurcated but ultimately bullish view on EM highlights that major geopolitical events can cause dislocations ripe for traders to exploit.</p><p><span style="font-weight: 400;">"You have to be careful when you think about things like trade because there are always winners and losers," she said. "If you can differentiate from them or across them you can earn great returns."</span></p><p><span style="font-weight: 400;">Aside from trade, Gupta said that there are reasons to invest in EM. </span></p><p><span style="font-weight: 400;">"There are opportunities in emerging markets, and if you only think about the macro theme of trade tension you'll be missing out on pretty big opportunities," she said. </span></p><p><span style="font-weight: 400;">For one, the current economic climate looks good for EM. The Fed has taken a more dovish stance as of late, and rate cuts are on the table. If the Fed does lower rates, it's also likely that the US dollar will lose some of its strength, which would be positive for EM currencies. </span></p><p><span style="font-weight: 400;">Further, EM valuations are looking relatively inexpensive over the next year, a number of countries are positioned for growth, and many are also in the midst of reforms that could be beneficial, said Gupta. </span></p><p><span style="font-weight: 400;">"Russia is up double digits. Brazil is up double digits. And that has nothing to do with trade," Gupta concluded.</span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/manuka-honey-new-zealand-why-so-expensive-2019-6">What makes mānuka honey 100 times more expensive than regular honey</a></h3>        <div>                    </div>    </div>

A JPMorgan money manager explains how traders can profit from an unloved part of the global market, regardless of the trade war's outcome

<p><div class="KonaFilter image-container float_right"><div class="image on-image"></div><p></p></div></p><p><span>Societe Generale's </span>Albert Edwards says that market is overlooking a major problem: <strong>liquidity.</strong></p><p>The rallying US dollar is crushing other currencies in more ways than one, Edwards wrote in a note to clients on Friday. </p><p><span style="line-height: 1.5em;">Edwards highlighted that global foreign-exchange reserves are drying up because of the strong dollar.</span><span style="line-height: 1.5em;"><br /></span></p><p>Edwards writes that in periods of weakness, <span style="line-height: 1.5em;">central banks all over the world printed cash to buy up US dollars. That keeps their currencies weak and is a type of quantitative easing, he wrote, which </span><span style="line-height: 1.5em;">boosts exports and keeps economies competitive.</span></p><p>But as the dollar rallies, <strong>"</strong><strong style="line-height: 1.5em;">FX intervention rapidly dries up and can even reverse, exerting a massive monetary tightening on emerging economies and ultimately the entire over-inflated global financial complex.</strong><strong><span style="line-height: 1.5em;">"</span></strong></p><p><span style="line-height: 1.5em;">So with focus on the European Central Bank's plan to pump up to €1 trillion in liquidity through QE, Edwards says investors are ignoring the fact that reserves are drying up everywhere:</span></p><p style="padding-left: 30px;"><strong>The bottom line is that in a world of over-inflated asset values, the strength of the dollar is resulting is a rapid tightening of global liquidity as emerging economies (and indeed the Swiss) stop printing money to buy the US dollar.</strong> This should be seen for what it is: a clear tightening of global liquidity. Traditionally these periods of dollar strength are highly disruptive to emerging markets and often end in the weakest links blowing up the entire EM and commodity complex and sometimes much else besides! Investors ignore this at their peril."</p><p>The dollar's rally this year has been relentless.</p><p>And in trading on Friday, the dollar index rallied to the highest in at least 11 years after <a href="http://www.businessinsider.com/february-jobs-report-march-6-2015-3">the February jobs report beat expectations</a>.</p><p>Here's how the strong dollar is pressuring cash reserves all over the world:</p><p><div class="KonaFilter image-container display-table"><div><div class="image"></div><p></p></div></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/law-school-worth-money-job-rank-2015-1">Why Law School Is A Waste Of Money Unless You Get Into A Top School</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="Zud3Z3cjrL4xIxGc7J4p9TwY2JH3SuX2" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Albert Edwards: Global liquidity is evaporating

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Gregg Newton/Reuters</span></p><p class="caption">Nervous stock traders  at the exchange in Rio de Janeiro.</p></div><p></p></div></div></p><ul><li><strong>US equities are outperforming non-US risk assets to a degree that hasn't been seen since the financial crisis, according to Bank of America Merrill Lynch. </strong></li><li><strong>The key question investors need to answer is whether this is a buying opportunity, implying that global growth would continue and help emerging markets rebound.</strong></li><li><strong>The cross-asset investing team recommended some trades that would benefit from a recovery in risk assets and yet hedge against slower growth. </strong></li></ul><p>US markets are headed in the opposite direction to the rest of the world. </p><p>Last week, US stocks extended their recovery from the correction in February and powered to new highs. Strong second-quarter earnings were powerful enough to make this the <a href="https://markets.businessinsider.com/news/stocks/stock-market-closes-at-record-high-bull-run-intact-2018-8-1027484390">longest-running bull market</a> - a feat which was confirmed on Friday, August 23, when the S&amp;P 500 closed above its January high of <span>2,872.87.</span>   </p><p>However, emerging-market stocks and other risky assets are still stuck in a rut.</p><p>The S&amp;P 500 has gained 8.6% this year, but the MSCI Emerging Markets index has slumped by almost the same magnitude (-8.7%).</p><p>The pain in emerging markets has not been limited to equities. <a href="https://markets.businessinsider.com/news/stocks/lira-record-low-global-stock-markets-fall-on-geopolitical-news-2018-8-1027450300">Turkey's lira</a>, which lost more than one-third of its value in August, is perhaps the poster child of a sell-off in EM currencies that's was partly triggered by higher US interest rates. And right on cue, the emerging-markets carry trade, in which investors borrowed in US dollars to invest in foreign places with higher interest rates, has also fallen sharply. ...<span></span></p><p><span><strong><em>Sponsored: </em></strong><em><span style="font-weight: 400;"> If you enjoyed reading this story so far, why don't you join Business Insider PRIME? Business Insider provides visitors from MSN with a special offer.  </span></em><a href="https://www.businessinsider.com/stock-market-divergence-between-us-and-em-2018-8?r=msn-article"><em><span style="font-weight: 400;">Simply click here to claim your deal and get access to all exclusive Business Insider PRIME benefits.</span></em></a></span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/what-happens-if-you-drink-pee-2018-8">Should you actually drink your own pee in a survival situation?</a></h3>        <div>                    </div>    </div>

You Searched For "GBI EM Global index" and got 10 results

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You Searched For "GBI EM Global index" and got 10 results

Indian government bonds to be included JP Morgan Govt bond Index from June 28

ANI

Domestic demand to keep India's growth above other G20 emerging markets: Moody's

ANI

Exodus of capital from China signals 'seismic' change in global flows as investors grow wary of autocratic regimes

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The dollar could fall by 15% by the end of 2023 whether Biden or Trump wins — and a larger dip is 'certainly possible,' Goldman Sachs says

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Why global markets are collapsing right now, and who you should blame for it

Jim Edwards

Trump's trade war has led to a historically weak Chinese currency - and a new study shows that impact could spread globally

Carmen Reinicke

A JPMorgan money manager explains how traders can profit from an unloved part of the global market, regardless of the trade war's outcome

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Albert Edwards: Global liquidity is evaporating

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Global markets have not been this polarized since the Great Recession -&#160;here's Bank of America's game plan to find the strongest winners

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Global markets have not been this polarized since the Great Recession - here's Bank of America's game plan to find the strongest winners