Photo: Linkedin. Rob Young. Rafael Tovar Leaves Compass Group to Join the Sales Team at Nikko AM
Rafael Tovar has joined the Sales and Marketing team at Nikko Asset Management. As confirmed to Funds Society by sources familiar with the appointment, Tovar will be based in New York serving institutional clients and family offices throughout the region of the Americas.
Tovar joins the Japanese firm from Compass Group, where he was responsible for business development for institutional clients in Brazil, Miami and New York, covering private banks, family offices, wholesalers, broker-dealers, and pension funds. Prior to that, he worked for renowned companies such as Goldman Sachs and Accenture.
He holds a Bachelor of Engineering degree from the Universidad Simón Bolívar in Venezuela, an MBA in Finance and an MA in International Studies from The Wharton School- University of Pennsylvania.
I recently returned from two eye-opening weeks in southern Thailand to visit an American friend who had been living there. The beauty of the islands and the friendliness and hospitality of the Thai people made for a wonderful first experience in Asia.
I had already been planning to make this trip to see my friend when the country’s military seized control of the country in a coup in May. My friend assured me I should go ahead with my plans since she still felt completely safe—aside from the occasional electrical brown-outs. In fact, the coup was actually helping tourism in some ways, particularly with the regulation of Thailand’s taxi system.
Signs posted in airports and hotels warn visitors to take metered taxis only, and offer phone numbers for placing complaints should a taxi driver try to overcharge you. All of this is well and good, but once visitors leave the airport or hotel, virtually no metered taxis can be found. In Thailand, where haggling is a way of life for those in the tourism industry, everything from tailored suits to trinkets can be bargained down to surprisingly low prices. But private taxis, or gypsy cabs, (often controlled by crime groups informally known as the “taxi mafia”) tend to be an exception to the bargaining. And, unfortunately, metered taxis in Bangkok and Thailand’s southern islands are few and far between.
This leaves tourists to pay much higher rates for transportation. For example, I took a metered taxi from my hotel in Bangkok to the backpacker mecca of Khoa San Road to do some souvenir shopping. The fifteen-minute, roughly 4.5 kilometer ride cost me 45 baht (~US$1.50). For my return, however, I had to go to a stand (purportedly for taxis), and ask an attendant to help me get a ride back to the hotel. While many attendants did not seem willing to haggle, I managed to talk down one attendant from a 600-baht (approximately US$19) fare to 250 baht (~US$8)—better, but still almost six times the amount the metered taxi had cost me for the same distance. The attendant told the driver where to take me and told me how much to pay the driver, and then the driver handed the attendant what appeared to be his share of the fee (about 20 baht).
Both prices were cheap compared to what I’m used to paying in the U.S. and I could certainly afford both fares, but getting “taken for a ride” in more than one way did not sit well with me, nor does it for most of the other travelers and foreigners living in Thailand I spoke to about this issue.
During our stay in the resort city of Phuket, we were never able to find metered taxis once we left the airport. Even our hotel couldn’t help us. To put the high cost of taxis into perspective, a one-night stay at our beautiful four star hotel in Karon Beach cost us just 500 baht (roughly US$15). When my friend and I went to Patong Beach, a 10-minute drive away, the round trip cost—by private taxi going there and a tuk-tuk on the way back—was 800 baht (US$25).
Most of these drivers are actually legal metered taxi drivers, however, I was told that they are so worried about the backlash from the “taxi mafia” that they go along with the informal system.
In early August, the Thai military issued a threat to police officers that do not protect metered drivers from the taxi mafias and demanded that they track down and arrest the leaders of these operations. The military has also promised legal drivers protection from any retribution.
Locals told me that since the coup, there appear to be more efforts to tame this practice of gypsy cabs. Ex-pats living in Thailand told me that they have recently seen an increase in metered taxis, and are hopeful that the military’s intervention will improve fares and the country’s overall taxi system.
By Jessica Feller, Online Marketing Coordinator; Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
John Ryan, president at CISA Trust Company (Switzerland). Courtesy photo. Switzerland in The Age of Transparency, Information Exchange and Anti Money Laundering
Although collective efforts to combat international tax evasion are not new, the 2008 financial crisis saw the industrialized countries team-up against the financial centers with dramatic results. Under threat of sanctions from the OECD and FATF, the financial centers changed their laws and practices, became more transparent, adopted stricter KYC and anti-money laundering rules, and implemented mechanisms to exchange information with on-shore jurisdictions.
The 2011 OECD peer review found that Switzerland was not compliant with certain aspects of the OECD transparency standards, regarding availability of information mechanisms were lacking to identify beneficial ownership of Swiss bearer share companies and foreign companies with a permanent establishment in Switzerland and regarding access to information the Swiss authorities have no ability to access bank information under the older Double Tax Treaties (DTTs) except in cases of tax fraud. To deal with these and other concerns, Switzerland introduced legislation in October, 2013.
Traditionally, Switzerland did not exchange information in tax matters and DTTs did not contain exchange of information clauses. This practice evolved, and exchange of information clauses were gradually introduced for cases of tax fraud, not tax evasion, and were limited to enforcing the DTTs but not enforcing the domestic laws of the requesting state. Under pressure from the OECD, Switzerland abandoned its longstanding reservation to Article 26 of the OECD model Convention and agreed to implement the OECD “foreseeably relevant” standard, to eliminate the distinction between “tax evasion”and “tax fraud,” and to amend its DTT agreement accordingly.
The new OECD standard calling for automatic information exchange was announced on February 13, 2014. On July 21, 2014, the OECD approved and released the complete version of the new automatic standard, with annexes. The new standard will require jurisdictions to exchange information automatically on a yearly basis, including investment income (interest and dividends), account balances, and sale proceeds. Financial institutions will be required to adopt a “look-through” approach and report information on beneficial owners of legal entities and trusts. However, the OECD has apparently exempted the United States from this requirement.
As an OECD member, Switzerland has endorsed the new automatic standard, including the adoption of a “look-through” approach. Prior to adoption of the standard, Switzerland raised concerns of a level playing field. After the new standard was announced, Switzerland stated that it expects that the exemption given by the OECD to the United States from adopting a “look through” approach to be of a temporary nature. Switzerland has also stated that in implementing the new automatic standard, priority will be given to countries with which Switzerland has close economic and political ties that will provide regularization opportunities to non-compliant taxpayers and market access to Swiss institutions.
In respect of Recommendation 3 of the FATF to treat tax crimes as predicate money laundering offenses, in December, 2013, the Swiss government submitted enabling domestic legislation treating “tax fraud” as a predicate money laundering offense. The legislation, which is still pending, is expected to have broad repercussions in the Swiss banking industry as banks tighten rules on the acceptance and retention of untaxed assets to mitigate exposure to money laundering offenses.
In respect of suspicious activity reports, the Financial Intelegence Unit of Switzerland is the Money Laundering Reporting Office Switzerland (MROS), which receives and analyses Suspicious Activity Reports (SARs) filed by financial intermediaries. The Swiss FIU historically did not share financial information contained in SARs with foreign FIUs due to legal impediments under Swiss secrecy laws. However, under pressure from the FATF and The Egmont Group, Switzerland amended its anti money laundering legislation to authorize MROS to exchange SAR information with foreign FIUs. MROS may now share information with foreign FIUs provided the foreign FIU guarantees that it will use the information solely for purposes of analyzing the SAR and that it will not share the information with third party authorities without the express consent of MROS. Furthermore, MROS may consent to the foreign FIU referring such information to its domestic authorities for prosecution, provided that the crimes are predicate offenses under Swiss law.
From 2018 on, the US will become a key exporter of liquid natural gas, says Van der Welle, strategist at Robeco. “New export terminals are under construction and president Obama has already issued a number of export permits. What’s more, the price of liquid natural gas is high enough to make export profitable.”
Van der Welle thinks that Japan will be the biggest customer. “Specifically exports to Japan are profitable due to the high prices of liquid natural gas. It is a market that just can’t wait for US shale gas.”
He does not expect a return to nuclear energy there. “After the Fukushima disaster, Japan has switched from nuclear energy to natural gas. The chance of Japanese nuclear power stations starting up again is small. There is little support among the population, with 95% expressing opposition. Even the Japanese prime minister Abe appears to grasp this, says Van der Welle. “He is traveling around the world talking to potential energy exporters. It’s no accident that he has visited 47 countries since he took office.”
There is a lobby for the US domestic industry – specifically the petrochemical industry – that is trying to avert further exports. But he expects this ultimately to be just a stay of execution. “The shale-gas sector has launched a counter lobby.”
“US political groups see the export of liquid natural gas as a useful ‘geopolitical weapon’ to weaken the global hegemony of an energy-rich Russia. Exporting US LNG would make other countries less dependent on Russian imports. Particularly in the wake of the conflict in Crimea and Eastern Ukraine, tensions between Russia and the West have intensified and this geopolitical argument has gained ground in Washington.”
“The West’s sanctions against the Russian energy sector will not have any impact on Russian gas production in the short run. What’s more, the West is also keen to keep the gas flowing from Russia. However, sanctions are delaying the development of new gas fields in the North of the country. For its development of new fields, Russia is dependent on Western companies like Total and BP that are now becoming more reticent.
Shale-gas production will remain a US phenomenon for the time being
In the US, shale-gas production continues to increase, while it is not really getting off the ground in other countries, says Van der Welle.
“Until now, most production forecasts in the US have been realized and there is no sign of shale-gas production having peaked. “And there doesn’t seem to be any end in sight on the demand side either. In addition to exports, domestic demand is also set to keep increasing, he expects. “The huge supply of natural gas is leading to new applications in the transport sector. Trucks powered by natural gas instead of diesel.”
He doesn’t expect other countries and regions elsewhere on earth to contribute significantly to shale-gas production over the short term. “China will not become a major producer of shale gas in the next ten years. A key obstacle for them is the volume of water required for production, and what’s more, China’s geology is more complex than that of the US. And that means technological innovation is required to extract shale gas. China wants to develop new technologies together with Exxon Mobil and Shell to extract shale gas in a more environmentally friendly way.“
And in Europe too, shale gas is gradually taking off. “Trial drilling in the UK and Poland has not yet been successful and there is a great deal of opposition on environmental aspects. The European debate over shale-gas extraction would get a boost from technological innovations from China.”
The door for exports is set to open further
The international trade in natural gas is increasing as the door to exports from the US is opening further and further. Van der Welle expects this to have an effect on gas prices. “Customers will get more choice, as arbitrage between the gas markets in Europe, Asia and the US increases. Parties could for instance buy US shale gas and sell it on immediately in Asia or Europe. This will prevent gas prices from fluctuating too much, but sharp differences will remain due to transport costs. But sharp differences will remain due to transport costs.”
“US shale gas is ultimately destined for Japan and not so much China. As a US ally and traditional customer for liquid natural gas, Japan in particular could be a major buyer of US shale gas. Over the longer term, China will develop its own shale gas production and will not become a major importer of US shale gas.”
Shale gas is having a positive impact on the global economy, concludes Van der Welle. “US economic productivity is rising and the rest of the world is benefiting from cheap – or at least cheaper – imports of US coal, natural gas, diesel and chemicals. Over time, (crude) oil may well be added to this list. This week, for the first time since the nineteen seventies, a US tanker carrying a load of crude oil set sail from Texas to South Korea. ”This creates a precedent and signals the shifting balance in the global energy chain”.
You may access Robeco‘s full Insight through this link
Foto cedidaVideo cedido por Natixis GAM. Natixis GAM lanza su nueva melodía corporativa compuesta por un estudiante de música
Natixis Global Asset Management has announced the release of its new signature sound as part of the company’s Soundscape project, an innovative partnership between Berklee College of Music’s Contemporary Writing and Production (CWP) department and the Boston-based firm. The Soundscape project was launched in May in an effort to create the music Natixis will use in various commercial applications globally – at conferences, on radio and television ads, and within the company telephone system. Three students were selected to compete by Berklee faculty and had the opportunity to present their ideas before a panel of Natixis employees, who selected Andres Villareal’s entry as the winner.
“We have a longstanding partnership with Berklee College of Music, and what better way to provide students with real-world application of classroom learning than the unique opportunity to craft a composition and give voice to a brand,” said John Hailer, president and chief executive officer, Natixis Global Asset Management – The Americas and Asia. “We are very fortunate to be able to work with such a talented young musician and hope that this project encourages more young artists to pursue careers in music.”
The Natixis team was in search of a musical arrangement that conveyed the innovation, durability and stability of their company.
“It’s not often that students have an opportunity like this,” said Matthew Nicholl, chair of Berklee’s CWP department. “Composing music for advertising is one of the most popular career fields for our graduates. This project showed young musicians how their expertise can be used and applied across a variety of industries ranging from entertainment to financial services.”
The judges praised Villareal’s composition as modern, upbeat, diverse, global and energetic and were especially struck by the way he used the piano to represent the individual investor, breaking it off from a group of instruments and playing a prominent role in the composition.
“I was thrilled to have my piece selected to represent Natixis Global Asset Management,” said Villareal, who came from Monterrey, Mexico, to study at Berklee. “This competition has provided me with priceless experience that I know will be immensely helpful as I pursue a professional career in the music industry.”
In addition to the opportunity to have his music played around the world by Natixis, Villareal was also awarded $2,500 for placing first in the competition and was hired by Natixis to further develop the soundscape for the company. Natixis awarded $1,000 to Miguel Coca, from Madrid, Spain, who placed second, and $500 to Ella Joy, from Kiryat Tiv’on, Israel, who finished in third place.
The Natixis music competition is another example of the company’s commitment to supporting and expanding music education. This year, the firm launched the new “2014 Jazz Diplomacy Project,” which included a series of more than 200 events celebrating jazz and bringing together thought leaders to explore solutions to challenges facing the world today. As part of the Jazz Diplomacy Project, Natixis provided support to the Foundation for the National Archives and also partnered with Newport Festivals Foundation, Boston Public Schools and JazzBoston to make it possible for nearly 100 public school students to attend the legendary Newport Jazz Festival. Ahead of Berklee’s BeanTown Jazz Festival, Natixis will continue to work with the college to provide opportunities for extraordinary young musicians to pursue their musical dreams through the 2014 Natixis-Berklee City Music Scholarship. This year also marks Natixis’ fourth year as presenting sponsor of the BeanTown Jazz Festival.
. The Santiago Stock Exchange & Depósito Central de Valores Release IPO Manual for MILA Brokers
The Santiago Stock Exchange and Depósito Central de Valores released a new manual that specifies the characteristics and functionality with which to participate in Initial Public Offerings within the scope of the Latin American Integrated Market, MILA. The document is intended to guide and orient Chilean brokers in order that they can receive orders from investors of brokers of Colombia and Peru who are enrolled in MILA, and thus be able to participate in a primary placement in Chile.
Through this new tool, foreign brokers will be able to offer their clients more investment alternatives using MILA infrastructure, which will additionally translates into a direct benefit for Chilean issuers as it expands the variety of investors who may participate in an opening.
The document considers the intermediaries, the order registry, the responsibility of brokers and investors, the manner in which transfers should be made, the procedure for entering orders and the guarantees exigible to MILA institutional and non-institutional clients, among others.
This manual driven by the Santiago Stock Exchange and DCV is part of the continuous work of the institutions in search of further contributing to the MILA value proposition, which seeks to help brokers expand their business, increasing the market activity of the countries that comprise the Integrated Market.
The document may be downloaded from the Santiago Stock Exchange corporate website, www.bolsadesantiago.com, and DCV´s.
Foto: MC1 Chad J. McNeeley, U.S. Navy. Chile vs Rusia, lo mejor y lo peor de los mercados de renta fija emergente
July proved a more challenging month for emerging markets as geopolitical tensions came back to the fore after the tragic downing of flight MH17 over eastern Ukraine. The US government had already announced fresh sanctions before the tragedy, but the incident and Russia’s subsequent reaction prompted Western governments to launch a fresh round of sanctions targeting specific sectors of the Russian economy. The souring sentiment and deteriorating economic outlook led to a sell-off in Russian assets, and forced the central bank to raise interest rates 50 basis points, to 8%, in a bid to stem ruble weakness.
In its latest emerging markets debt indicator, Investec AM highlights other more positive developments elsewhere; reformist candidate, Joko Widodo, secured victory in the Indonesian presidential elections. The new Indian government unveiled its first budget, promising a significant reform programme. More negatively, but in line with expectations, South Africa had its credit rating downgraded and Argentina entered a technical default after refusing to pay the holdouts.
Global macro data remains generally encouraging. US second quarter growth surprised to the upside and the Chinese economy expanded in line with its government target. Moreover, the latest Chinese manufacturing purchasing managers’ index (PMI) hit an 18-month high. The top performing currency was the Indonesian rupiah, helped by Joko Widodo’s election victory. Stronger exports helped boost the Thai baht and the Nigerian naira also performed well. As discussed, the Russian ruble sold-off and it was the worst performing currency in the index. The Hungarian forint and Chilean peso were also relatively weak as their central banks eased rates over the month.
Given its interest rate cut and worsening growth outlook, the top performing bond market was Chile. The Philippines and Indonesia also posted solid returns over the month. Given the sell-off in Russia, it was by far the weakest bond market. Colombian and Turkish bonds also lagged their peers.
Mel Lagomasino, managing partner and CEO at WE Family Offices. Courtesy photo. Women in Wealth Management - The Conversation Continues at The FIBA Forum 2014
When asked if she deals with women wealth owners differently than their male counterparts, Maria Elena Lagomasino responds with conviction that indeed she does. Lagomasino, Managing Partner & CEO of WE Family Offices, will be sharing her insights about gender differences in wealth management as part of the interactive panel discussion “Women in Wealth Management – The Conversation Continues…” during the 2014 FIBA Wealth Management Forum, taking place September 15-16 at the JW Marriott Marquis Hotel in Miami.
According to Lagomasino, who has been working with financially successful families for almost four decades, nearly every family unit she advises has at least one woman and sharp distinctions can be noticed between the way men and women approach financial topics.
Lagomasino recalls a recent family meeting where the man was focused on investment performance, access to investment products and other hard data. The woman on the other hand, was concerned with how to determine which investments would be right for the family, and how to best communicate that to others involved in the decisions. “The areas of focus are totally different,” says Lagomasino. “With men you communicate with a lot of charts and numbers, but if you put that chart in front of most women it’s a huge turnoff.”
More women than ever need wealth management; they comprise 50 percent of the overall population. “It is an inexorable, incremental slope upward,” says Maria Elena. “More women will inherit wealth, because we outlive men. More women are creating wealth themselves. So increasingly, more women are becoming our central clients.” Still, they represent only about 13 to 25 percent of the financial services industry.
In Lagomasino’s opinion, the biggest challenge for women in regards to wealth management, whether on the investor or advisor level, is the fact that women are not usually encouraged to become financially savvy when they are young. “I think this may be changing,” she says. “In my generation, finances were something you let the men in your life handle. I have actually conducted research on this. It is typical to let men handle all the financial affairs. To this day, statistics show that if women have a man in their life – father, husband, brother, son – who is financially savvy, they are more than glad to delegate all the decisions about their wealth to the men in their life.”
Letting the man in a woman’s life take charge of the wealth management can be a plus if the man is skilled at this task, but it can become rough once that person is removed either through death or divorce. “Women need to take ownership of their own wealth, rather than remain dependent on someone else to make decisions that are vitally important to their life. I always encourage women to be financially savvy themselves.”
When it comes to women considering finance as a career, some barriers – such as cultural traditions that have never considered the financial arena a place for women – still exist. “This is changing now,” Lagomasino says. “As in the field of engineering today, more doors are open, and there are many more women in this space.”
Referring to her experiences as a bank executive, Lagomasino notes that traditionally, if she recruited 100 young people, the split was evenly divided, with fifty percent women, and fifty percent men. “But over time, we ended up keeping a lot less women and that was a challenge,” she says. “Much of the attrition was due to life decisions, with the women wanting to start a family. They didn’t feel that a career in the financial services industry provided the flexibility. Technology is changing that.”
“Women wanting to enter this field and succeed, must to do their homework,” says Lagomasino. “You need to know your material, and your job. You have to understand a series of different disciplines, including investing, tax and planning issues, governance and family education. Then you need to connect the dots between all of these, integrating that knowledge for your client. Wealth Management is about helping, and making a difference,” stresses Lagomasino.
This panel discussion is designed to support and advance the core objectives at the heart of every FIBA conference: helping participants become more successful at what they do, and more attuned to the needs of their clients. “Attendees can expect a mix of dialogue and evaluation on women as wealth advisors as well as wealth owners,” says Lagomasino. “Depending on the trajectory of the questions, we will discuss the challenges in our own careers, along with the contrasting ways men and women approach financial issues.”
Last year, FIBA’s panel on Women and Wealth drew more men than women by a ratio of 8 to 1. “Men want to understand how to be better advisors to women clients,” she says. “That’s the opportunity presented in the upcoming conference. Our audience is already working with clients. Any insights to help them be better at their job will make the Forum, and this panel, worthwhile for them.”
For more details, or to register, visit this link.
Stephen Cohen, director de estrategia de inversión de iShares para EMEA. iShares: la renta variable emergente aún tiene recorrido
Stephen Cohen, Chief Investment Strategist at iShares EMEA, considers there is still potential for emerging markets equities. Even after the last rally. “EM equities’ out performance in the past five months has left broad EM and China testing recent year highs. Since mid-March, EM has outperformed developed markets, with the MSCI EM up 15%, China H Shares 24% and China A Shares 13%. Despite these gains, we think there could be more to go in the EM trade”.
According to Cohen, while still underweight EM equities in many portfolios, investors are turning significantly more positive. “This has been driven by a broad improvement in sentiment and fundamentals, led by China, positive speculative impact from elections such as India, Indonesia and Brazil, a shift from the tightening stance across EM CBs earlier this year, and markets pricing out – for now – developed market policy normalisation”.
EM data upward trend intact despite European growth tailing off
The upward trend of EM data has stayed intact even as growth has tailed off in Europe. “On a corporate level consensus, EM earnings growth for this year has been revised upwards steadily, albeit incrementally. This contrasts with Europe where consensus earnings growth has almost halved compared to the start of the year”.
According to Cohen, a change in the developed market policy outlook could undermine EM momentum but a lack of wage growth in the US and the UK, and fast falling inflation expectations in Europe are currently providing a renewed benign rate environment.
Reiterate call on China, Korea and Taiwan
“For China, headline easing is not likely but Chinese authorities should continue to ease on the margin in order to meet the year-end growth target, especially since recent data is starting to plateau. We also reiterate our call on Korea, which has recently delivered a rate cut and announced plans for reform, and Taiwan”.
Nonetheless, investing in EM does not come without its risks. “Geopolitical risks continue, giving a safe haven bid to the US dollar and a headwind for EM currencies. On a country level we are watching the upcoming October election in Brazil. BOVESPA has rallied 25% during the EM recovery on hopes for a market-friendly election outcome while fundamentals have deteriorated sharply.”
Photo: Martin Falbisoner. Investors Still Believe in the Emerging Market Story
Emerging market (EM) equities have performed well this year, thanks to better Chinese data and improved attractiveness relative to Europe. Inflows therefore are strong. In a recent report ING IM states that, although the asset management firm remains overweight EM equities, they did close their overweight position in EM debt in Hard Currency recently.
Emerging market equities have performed relatively well in the past months. One of the reasons is that the concerns about China have been pushed to the background in recent months.
In reaction to a persistently weakening trend in economic data, the Chinese authorities announced a fresh stimulus package back in early April. Effects of those measures became visible pretty quickly in higher infrastructure investment growth, among others. China also profited from a rise in export growth as the global growth picture improved.
Also in relative terms emerging markets looked a bit better, something which is largely the result of weaker European economic data and the increased risk to the European growth outlook coming from the conflict with Russia about Ukraine.
Stabilizing economic momentum and lower expectations
Furthermore, although the EM growth momentum continues to be weak, it has not deteriorated anymore in recent months. The EM economic surprise index has declined a bit recently, but remains close to zero. Expectations are clearly not as high as they used to be. This is also reflected in relative valuations of EM equities, which are firmly below their five-year average.
Strong inflow into EM equity funds
Moreover, there has been a strong fund flows in the past months. Even in weeks when general risk aversion pushed markets lower, EM equity funds received fresh money. In the past two months, weekly inflows have averaged US$ 2 billion. Of course, fund flows can reverse quickly and should never be the main reason to like a market, but their resilience in difficult times does say something about the strength of an investment theme.
ING IM holds on to their overweight position in EM equities
At this point, it is mainly the negative dynamics in Europe that justify a more positive stance towards emerging markets. These worsened dynamics probably have diverted a significant part of investment flows from Europe to EM equities.
Stabilizing growth, more realistic expectations, low relative valuations and good fund flows are positive factors as well, but are not very convincing given the still negative fundamentals in the emerging world. Nevertheless, as long as flows into EM equities remain significant, ING IM does not see enough reason to reduce their (small) overweight position in EM equities.
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