Fixed Income Leaders Summit: Emerging Markets 2020
March 09 - 11, 2020
The Ritz-Carlton Westchester, White Plains, NY
TUESDAY, MARCH 10TH, 2020: DAY ONE – ANTICIPATING AND MANAGING RISK
7:30 am - 8:00 am REGISTRATION AND BREAKFAST
8:00 am - 8:20 am WELCOME FROM PROGRAM DIRECTOR
8:20 am - 9:00 am KEYNOTE: Recognizing How Environmental, Social and Governance Risks Affect Financial Stability
The International Monetary Fund is focused on understanding the interaction of ESG risks and macro-financial stability. Initiatives covering bilateral and multilateral surveillance are underway, emphasizing how efforts for greater sustainability can also benefit financial stability. Are emerging market assets more exposed to ESG-related risks? Gain these and other crucial insights from Evan Papageorgiou, who has nearly eight years of experience as the IMF’s Deputy Division Chief for Global Markets Monitoring and Analysis. Evan is a prolific author on emerging markets, sovereign credit risk, sustainable finance, and macroprudential issues, sharing keen insights from direct experience.
•Learn about new IMF initiatives and publications on environmental and other sustainability issues
•Analyze the scope of ESG for EMs
•Map out what policymakers can do to help the transition to more sustainability and encourage further development of sustainable finance
9:00 am - 9:40 am KEYNOTE PANEL: Will ESG be a Bigger, More Integrated Aspect of EMFI?
Is ESG a product, a process, or a marketing gimmick? Wealth managers and family offices are increasingly prioritizing it, and it is expected by a rising generation of Millennials – but it is viewed very differently within EMs themselves, which want to use their resources for growth. Any future ESG outreach must emphasize community engagement and avoid a patronizing approach.
•Recognize when CEOs in Asia and elsewhere see ESG as unimportant
•Weigh different philosophies for ESG – whether rewarding the best or improving the worst
•Grapple over whether green bonds are a form of risk management and less volatile than others
•Confront the vulnerability of EM economies to climate change
9:40 am - 10:20 am NETWORKING BREAK
10:20 am - 10:40 am SPONSORED KEYNOTE: iShares by Blackrock
10:40 am - 11:20 am KEYNOTE PANEL: Devoting More Energy to Country Selection As Success Rates Get More Selective
Speakers:
Sarah Ponczek News Reporter Bloomberg LP
Peter Marber Chief Investment Officer, EM Aperture Investors
Olga Yangol Portfolio Manager, Emerging Market Debt HSBC
Erik Vynckier Partner Insuretech Venture Partners
Michael Cirami Vice President, Portfolio Manager, Co-Director of Global Income Eaton Vance
Thomas Smith Managing Director, EM, Senior Portfolio Manager Metlife
Sarah Ponczek News Reporter Bloomberg LP
Peter Marber Chief Investment Officer, EM Aperture Investors
Olga Yangol Portfolio Manager, Emerging Market Debt HSBC
Erik Vynckier Partner Insuretech Venture Partners
Michael Cirami Vice President, Portfolio Manager, Co-Director of Global Income Eaton Vance
Thomas Smith Managing Director, EM, Senior Portfolio Manager Metlife
Does a rising tide really lift all boats? In the last 5 years clearly not all EM are doing well at the same time. In the last big commodity supercycle uptake, a lot of commodity producing countries worldwide saw currencies appreciate, hard currency rise, and credit reserves fall. If global growth picks up it might be more domestically-driven than cross-border trade-driven than in the past.
•Do security-specific analysis for performance
•Use major divergence as a spur for active management
•Anticipate a deglobalizing environment
Sarah Ponczek
News ReporterBloomberg LP
11:20 am - 11:40 am SPONSORED PRESENTATION
11:40 am - 12:20 pm KEYNOTE PANEL: Blending Local and Hard Currency In Your Portfolio
Speakers:
Alejo Czerwonko EM Investment Strategy UBS
Ritirupa Samanta Head of Systematic Fixed Income and Currency Strategy GMO
Eric Fine Portfolio Manager/Managing Director Van Eck Global
Waleed Shoukry Portfolio Manager – Global Emerging Markets Debt United Nations Joint Staff Pension Fund
Alejandro Padilla Head Strategist of Fixed-income, FX and Commodities Banorte
Alejo Czerwonko EM Investment Strategy UBS
Ritirupa Samanta Head of Systematic Fixed Income and Currency Strategy GMO
Eric Fine Portfolio Manager/Managing Director Van Eck Global
Waleed Shoukry Portfolio Manager – Global Emerging Markets Debt United Nations Joint Staff Pension Fund
Alejandro Padilla Head Strategist of Fixed-income, FX and Commodities Banorte
Local currency is the fastest-growing asset class, with money going into local funds quadrupling in the last 5 years. But volatility in many local currencies can raise doubt about returns over 10 years. What’s the best advice that managers can give about their blending strategies? Who decides how it is blended, and how flexible is that decision?
•Use flexibility on currency to make better credit
•Devote the time, resources, and partnerships necessary to guide a 50/50 currency ratio
•Show how to hedge currency risk – and how much yield you would give up in the process
•Judge how weighted and dynamic strategies are
•Outline the process of moving local currency to new milestone levels
Waleed Shoukry
Portfolio Manager – Global Emerging Markets DebtUnited Nations Joint Staff Pension Fund
12:20 pm - 1:20 pm LUNCH
SUCCEEDING IN ALTERNATIVE FI ASSET CLASSES
1:20 pm - 2:00 pm PRESENTATION: Building Strategies for Emerging Market SecuritizationAs EMs lend more, and their citizens increasingly get credit cards, more of their assets get securitized. EMs now regularly feature mortgage-backed securities, asset-backed securities, and collateralized loan obligations. What techniques and habits of mind are best used for these instruments? Get crucial answers from Mayra Rodriguez Valladares, the Managing Principal at MRV Associates, who has over 25 years of experience in project management on risk, capital markets, and financial derivatives.
· Pinpoint the asset categories beyond sovereign and corporate debt
· Assure the necessary legal framework for securitization
· Focus on where securities are pooled
RISK EXPOSURE IN VOLATILE MARKETS
1:20 pm - 2:00 pm PRESENTATION: Anticipating a U.S. Recession’s Impact on Emerging Market Risk and Trading OpportunitiesA recession looks increasingly likely for 2020, and if it does happen it will effect spreads on every credit risk asset class, including EMs, from a debt and equity standpoint as well as a currency standpoint. As a dip in the U.S. business cycle coincides with a U.S. / China trade war that was unthinkable just a few years ago, what will be the impact on global risk sentiment? And how will it interrelate with the unique national issues of each EM?
· Determine the likelihood of sudden stops
· Forecast new risks for commodity markets, currency markets, and credit markets
· Outline the region- and country-specific factors most likely to be inflamed by a recession
2:00 pm - 2:40 pm PRESENTATION: Emphasizing Transparency in Cross-Ownerships with Multiple Players
Public market instruments in EM are often holdings of large family offices or conglomerates that have cross holdings. In such cases it is best to think holistically and maintain alignment with their interests and priorities. Ken Monahan of Greenwich Associates brings you specific strategies for family offices that he learned during his 12-year tenure managing equities at major banks, addressing market structure issues in emerging markets, and orchestrating the first trades on DIFX in Dubai.
•Minimize the risk of being squeezed out
•Beware of being put into bankruptcy over co-ownership of a debt instrument when their interests are not aligned with yours
•Hedge your stances when there is not perfect transparency and disclosure
2:00 pm - 2:40 pm PRESENTATION: Pricing Risk Into Your EM Trades
EM trading strategy must always account for geopolitical risk. Average trading costs in EM regions are far higher, and the spreads far wider, than those in developed markets. In addition to a higher trading cost increase, there is additional risk of information leakage that your strategy must take into account.
•Prioritize a trading strategy that reduces costs when prices are moving away from you
•Stay mindful of how often your EM trading strategy crosses the spread
•Seek out the best trading platforms and tools that can source liquidity at lower costs
2:20 pm - 2:40 pm SPONSORED PRESENTATION
2:20 pm - 2:40 pm SPONSORED PRESENTATION
3:00 pm - 3:40 pm PRESENTATION: Making Sense of Divergence in Local and FX Rates
Typically you expect to see local currency rates and FX outperforming in a supportive macro environment – but this has not been seen in EM in the past year. Even though local rates performed, FX did not. Why is this happening and what does it mean? Uncover the best responses thanks to Tania Reif, acclaimed as one of the 50 Leading Women In Hedge Funds in 2017 and who uses more than 15 years of experience in hedge funds, private banking, and public international lending to construct and lever macro-thematic trading ideas.
•Track the flow of central bank policy from developed markets to EM
•Quantify the shortfalls of asset allocation due to FX not performing
•Set expectations for rates in 2020
3:00 pm - 3:40 pm PRESENTATION: Challenges and Opportunities in Systematic Approaches to EM Investing
Emerging markets are often perceived to be a challenging sector in which to apply quantitative or systematic approaches. However as markets have become more open and mature, and data more consistently reported and accessible, there are some key ways in which the primary sources of “beta” risk premia within emerging markets can be systematically measured and evaluated. And there’s no one better at helping you measure these risks than GMO’s Head of Systematic Fixed Income and Currency Strategy, Riti Samanta, who has over 15 years of experience in managing beta investing, active quantitative credit, and currency investment strategies.
•Differentiate ability to pay vs. the willingness to pay
•Review currency market fair pricing models
•Visualize credit and rate premia as being consistently measured
•Understand systematic processes are necessary but not sufficient
•Pair considerations of liquidity, investor rights, and willingness to pay
•Discuss innovations in currency and EM rate markets allow for a range of liquid options
•Appreciate systematic portfolio construction methods and their role in risk management
3:40 pm - 4:20 pm Networking Break
4:20 pm - 5:00 pm PRESENTATION: Predicting Growth Potential in ETFs
ETFs can be the cheapest way to access an asset class, and they bring new competitive pressure for asset managers. Unexplained activity in ETF growth and trades may be a signal of new, unexpected growth in underlying markets.
•Trace flows from ETFs to transaction volumes in underlying securities
•Determine impact of ETF trading on future liquidity
•Navigate challenges in competition and fee structures
4:20 pm - 5:00 pm PRESENTATION: Map Emerging Market Megatrends onto Global Asset Allocations
Changing demographics in emerging markets, particularly a rising middle class and growing urbanization, directly impact the development and trading of new debt instruments there. What are the key megatrends that will shape these markets in the next decade? Sarvjeev Sidhu, the global head of emerging markets at Aegon Asset Management will illuminate the most important demographic trends that he has seen – and forecasted – across his more than 25 years of managing emerging market sovereign and corporate trades.
•Explore the likely impact of a new generation of digital consumers
•Forecast the debt instruments to benefit most from new infrastructure developments
•Benefit from rising financial inclusion
5:00 pm - 5:20 pm FIRESIDE CHAT: Comparing Advantages of Active and Passive ETF Investing
Should EM portfolio managers make active decisions? Most do, but passive is on the rise. Proper due diligence can reveal how well each style performs – and that’s more important now than ever, since there is more retail money going into ETFs than into mutual funds. You can learn all this and more from Eric Pollackov, Global Head of ETF Capital Markets at Invesco, since he has specialized in ETFs since 1999, implementing capital markets strategies and developing and measuring the success of client business plans.
• Construct a passive blending strategy
• Specify what distinguishes a good active manager
• Determine the processes and philosophies most important for ETFs
5:00 pm - 5:20 pm FIRESIDE CHAT: Focusing on Risk Adjustment Around Tactical Market Deepening
Going down a market allocation can multiply your risk exposure. Wise portfolio strategy will aim at achieving macro consistent representative of the full breadth of the asset class – though you may find yourself skewed into large local curves.
•Cultivate a tolerance of mathematical volatility and large allocations of local currency
•Accept that local currency, though volatile, is under-allocated and left behind by a majority of institutional clients
•Decide which chunks of the market you will ignore as based on your allocation of hard or local currency
