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” 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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
This session examined the proposition that we are in a “lower for longer” environment, explored whether a reflationary environment will prevail, and determined if growth is around the corner.
This session examined how the digitalization of economies and the shift to renewable energy offer potential long-term growth opportunities in infrastructure; and how it can play a role in long-term investor portfolios.
Is distressed an indicator of public market activities. Given the recovery in markets, what does that mean for the opportunity in distressed? Will we see a divergence in the bond and equity markets? What are the regional differences and where are the opportunities?
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