A lack of transparency and sound data remain huge challenges in many emerging markets. So how should investors assess the risk of investing in emerging markets given the inefficient access to information? How does ‘economic transparency’ affect asset prices? The panel discussed the link between governance principles, asset prices, trust in government and investment volatility and what investors can do about it.[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Majdi%20Chammas%22%2C%22job_role%22%3A%22Head%20of%20external%20asset%20management%2C%20AP1%20(Sweden)%22%2C%22content%22%3A%22Joined%20AP1%20in%20December%20of%202000%20as%20quant%20analyst%20developing%20internal%20risk%20and%20performance%20attribution%20system.%20In%202006%20he%20joined%20the%20external%20management%20team%20as%20analyst%20developing%20tools%20and%20analysis%20to%20monitor%20and%20evaluate%20managers%20in%20the%20equity%2C%20fixed%20income%20and%20alternative%20space%20and%20later%20became%20portfolio%20manager%20with%20responsibility%20of%20the%20emerging%20market%20portfolio%20at%20AP1.%5Cn%5CnIn%202015%20Chammas%20become%20head%20of%20external%20management%20team%20at%20AP1%20managing%20the%20external%20assets%20within%20equities%20and%20fixed%20income.%20In%20December%202019%20the%20team%20was%20incorporated%20into%20the%20external%20partnerships%20and%20innovation%20team%20at%20AP1.%20Prior%20to%20joining%20AP1%2C%20he%20worked%20as%20consultant%20at%20Tieto%20Enator.%20Chammas%20has%20a%20Degree%20in%20Electro%20Engineering%20from%20the%20Royal%20School%20of%20Technology%20in%20Stockholm%20and%20Financial%20Analyst%20from%20the%20Stockholm%20School%20of%20Economics.%22%2C%22image%22%3A%2244362%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fmajdi-chammas-b191531a%2F%3ForiginalSubdomain%3Dse%22%7D%2C%7B%22name%22%3A%22Marshall%20Stocker%22%2C%22job_role%22%3A%22Director%20of%20country%20research%2C%20emerging%20markets%2C%20Eaton%20Vance%20Management%20(United%20States)%22%2C%22content%22%3A%22Marshall%20L.%20Stocker%20is%20a%20vice%20president%20of%20Eaton%20Vance%20Management%2C%20director%20of%20country%20research%20and%20portfolio%20manager%20on%20Eaton%20Vance%E2%80%99s%20global%20income%20team.%20He%20is%20responsible%20for%20buy%20and%20sell%20decisions%2C%20portfolio%20construction%20and%20risk%20management%20for%20equity%20assets%20managed%20by%20the%20global%20income%20team%2C%20including%20an%20equity%20fund%20investing%20in%20emerging%20and%20frontier%20markets.%20As%20director%20of%20country%20research%2C%20he%20leads%20a%20team%20focused%20on%20analysing%20country-level%20political-economic%20policies.%20He%20joined%20Eaton%20Vance%20in%202013.%5CnStocker%20began%20his%20career%20in%20the%20investment%20management%20industry%20in%201999.%20Before%20joining%20Eaton%20Vance%2C%20he%20served%20as%20co-founder%20and%20managing%20member%20of%20Emergent%20Property%20Advisors%2C%20LLC.%20Previously%2C%20he%20was%20a%20portfolio%20manager%20with%20Choate%20Investment%20Advisors%20and%20Sanderson%20%26%20Stocker.%5CnHe%20earned%20a%20B.S.%20and%20an%20MBA%20from%20Cornell%20University%2C%20where%20he%20was%20a%20Park%20Leadership%20Fellow%2C%20and%20a%20Ph.D%20in%20Economics%20at%20Universidad%20Francisco%20Marroquin.%20He%20is%20also%20a%20CFA%20charterholder%20and%20is%20conversant%20in%20German%20and%20Arabic.%20He%20is%20a%20benefactor%20of%20the%20Cato%20Institute%2C%20Foundation%20for%20Economic%20Education%20and%20the%20Atlas%20Network.%20In%202017%2C%20he%20became%20a%20member%20of%20the%20Mont%20Pelerin%20Society.%5CnStocker%E2%80%99s%20commentary%20has%20appeared%20in%20The%20New%20York%20Times%2C%20The%20Wall%20Street%20Journal%2C%20Barron%E2%80%99s%2C%20Financial%20Times%20and%20The%20Washington%20Post%20and%20Bloomberg.%20He%20has%20also%20been%20featured%20on%20Bloomberg%20Radio%2C%20Fox%20Business%20News%20and%20Nikkei%20CNBC%20Japan.%22%2C%22image%22%3A%2244363%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fmarshallstocker%2F%22%7D%5D” title=”Speakers” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Amanda%20White%22%2C%22job_role%22%3A%22Director%20of%20institutional%20content%2C%20Conexus%20Financial%20%20(Australia)%22%2C%22content%22%3A%22White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20She%20is%20responsible%20for%20directing%20the%20bi-annual%20Fiduciary%20Investors%20Symposium%20which%20challenges%20global%20investors%20on%20investment%20best%20practice%20and%20aims%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20She%20is%20the%20editor%20of%20conexust1f.flywheelstaging.com%2C%20the%20online%20news%20and%20analysis%20site%20for%20the%20world%E2%80%99s%20largest%20institutional%20investors.%20White%20has%20been%20an%20investment%20journalist%20for%20more%20than%2020%20years%20and%20has%20edited%20industry%20journals%20including%20Investment%20%26%20Technology%2C%20Investor%20Weekly%20and%20MasterFunds%20Quarterly.%20She%20was%20previously%20editorial%20director%20of%20InvestorInfo%20and%20has%20worked%20as%20a%20freelance%20journalist%20for%20the%20Australian%20Financial%20Review%2C%20CFO%2C%20Asset%20and%20Asia%20Asset%20Management.%20She%20has%20a%20Bachelor%20of%20Economics%20from%20Sydney%20University%20and%20a%20Master%20of%20Arts%20in%20Journalism%20from%20the%20University%20of%20Technology%2C%20Sydney.%20She%20was%20previously%20a%20columnist%20for%20the%20Canadian%20publication%2C%20Corporate%20Knights%2C%20which%20is%20distributed%20by%20the%20Globe%20and%20Mail%20and%20The%20Washington%20Post.%20White%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20consists%20of%2022%20fellows%20and%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2243061%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
Sovereign transparency helps improve the value of assets, enables countries to lower their borrowing costs and achieve a better credit rating.
The discount rate on assets shrinks as transparency improves resulting in assets going up in value.
Key points that help sovereign transparency include economic data being published in English and regularly updated.
Economic development and transparency are linked, making transparency crucial for emerging markets.
Transparency does not create more volatility but higher levels of sovereign transparency don’t necessarily increase levels of trust in a government.
Some countries (like Ukraine) have relatively high levels of transparency, but struggle to subsequently enforce rules and laws to deal with the challenges transparency reveals.
Asset owners have an important role in engaging on transparency.
Swedish buffer fund AP1 uses a corporate scoring process whereby more transparency increases a company’s weighting in its index investment.
AP1 has begun excluding fossil fuels from its entire exposure. The process has included launching some new funds and strategies with managers.
The decision was based on the fund’s climate and scenario analysis and the financial risk posed from fossil fuel groups.
In many cases, companies have the data investors want disclosed, but are often not aware of it.
The big difference between the vaccine rollouts and the scale of the stimulus measures across the world could result in a K-shaped global economic recovery, with much of the developed world booming but poorer countries continuing to struggle. However the
With hopes of a sharp rebound from the pandemic-induced recession quickly fading, policymakers should pause and take stock of what it will take to achieve a sustained recovery.
The technology already exists to make the due diligence process when selecting and monitoring managers more efficient, less arduous and highly productive.
Insights into private markets and venture may provide a real competitive edge for asset managers in demonstrating to investors an understanding of innovation and disruption and how this affects public market portfolios
Driven by active return, AP4 produced a stellar 9.6 per cent in 2020. But its chief executive, Niklas Ekvall remains cautious about the economic outlook and its impact on the portfolio, especially with regard to inflation.
USS's head of dynamic asset allocation Bruno Serfaty reflects on the inflation risk coming down the track, and suggests ways investors can build alternative liability matching portfolios beyond government bonds.
In this episode Amanda White talks with engagement specialist at Robeco, Peter van der Werf, about the importance of engagement; what good engagement looks like; and what financially material sustainability themes are important right now.
Leave a Comment
You must be logged in to post a comment.
Login