Emerging Markets Has Liquidity Bottomed?

by Michael J. Howell10. July 2014 16:25

The CrossBorder Capital index of Total EM Liquidity appears to have bottomed according to latest June 2014 data. The CBC index is a broad measure of money flowing into EM financial markets and leads business activity and asset prices. This is good news for investors in EM shares and should help to stabilise and refresh EM economies over the next year. The CBC EM Liquidity index hit 24.1 in June or up from 20.4 in May (‘normal’ range 0-100). Admittedly, it remains depressed, but it is finally climbing after 2-3 years in the doldrums. Weak liquidity has been the key reason why EM shares have underperformed for so long. More liquidity may now allow EM markets to ‘catch-up’.


Emerging Markets Liquidity/ Capital Flows May 2014 Data Release

by Michael J. Howell15. May 2014 21:34
Emerging Market Liquidity remains weak according to our latest GLI data. End-April saw aggregate EM liquidity fall to an index score of 18.5 from 22.9 in March (‘normal’ range 0-100). EM liquidity is therefore below its trend and decelerating. Notably, Chinese liquidity slumped to an index value of 28.7. Typically, this is an unattractive investment environment and foreshadows an upcoming period of economic weakness.


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