WEDNESDAY, MARCH 11TH, 2020: DAY TWO – EMERGING MARKET SELECTION AND OUTLOOK
7:30 am - 8:10 am REGISTRATION AND BREAKFAST
8:10 am - 8:15 am WELCOME FROM PROGRAM DIRECTOR
8:15 am - 8:30 am CHAIRPERSON’S INTRODUCTION
8:30 am - 9:10 am KEYNOTE: Outlook on the U.S. / China Relationship: Trade Wars, Technology, and National Security
By spring 2020 we can expect a clearer view of “phase one” of the new trade deal between the U.S. and China. What does it mean – and what’s coming next? As policy makers and economists focus more sharply on China’s industrial policy, and the national security implications of the “Belt and Road Initiative” and 5G tech giants, you can expect tensions in new and different forms. As Chief U.S. Economist at Barclays, Michael Gapen is responsible for that firm’s outlook on the U.S. economy, monetary policy, and the impact of financial markets; between that and his prior roles at the Federal Reserve and the IMF, he can provide unmatched insight on trade deals with China and where they are likely to head.
• Assess the influence that China’s party leaders have on rising tech companies – and why Western leaders are concerned
• Understand the conflicts related to IP theft, technology transfer, dual-use technologies and U.S. national security
• Prepare for a transition beyond tariffs to potentially include “blacklists”, export restrictions, and limitations on Chinese investments in the U.S.
9:10 am - 9:50 am KEYNOTE PANEL: Facing the Changing Vulnerabilities of Sovereign Credit – and the Risk of Contagion
Some countries use barriers and protections to deal with sovereign vulnerabilities as they grow more pronounced. Why has recent contagion risk changed, and is that likely to stay in place for the next 12-18 months?
•Map vulnerabilities by macro environments and by countries
•Emphasize how liquidity problems in Argentina and Turkey did not lead to broader-scaled problems in the last 1-2 years
•Grapple with why this change occurred and whether it is likely to last further
9:50 am - 10:20 am NETWORKING BREAK
10:20 am - 11:00 am PANEL: Profiting From Volatility and Export Limitations Due To Trade Wars
Trade wars hurt the ability of countries to pay back debt in full, while also limiting exports. Investors in debt are more likely to be impacted - but there are ways you can prepare and protect yourself.
• Prepare rapid response kits for swings due to tariffs
• Re-examine holdings in light of new volatility
• Plan for outsized effects on fixed income markets
11:00 am - 11:40 am PANEL: Analyzing Opportunities in Emerging Market Infrastructure
Infrastructure debt is a compelling asset class, with some of the best risk-adjusted returns in the EM sector. It’s politically attractive, with less regulation and less of a block on ability to repay. Yet asset managers typically aren’t set up to look at infrastructure, and may let key opportunities pass them by.
•Base estimates on the credit and cash flow of each infrastructure project
•Find appropriate public market debt instruments
•Distinguish between how much of your EM portfolio is state-owned or non-state-owned
11:40 am - 12:10 pm DISCUSSION: Strengthen Your Trading Position In Light Of Recent Regulations And The Likelihood Of Future Downturns
Regulations enacted in response to the financial crisis made trading desks far more expensive, and made it more difficult for banks to provide liquidity. Geopolitical crises in Asia and eastern Europe, combined with dramatically less stable markets that are more sensitive to single sizable deals, have made traders more likely to steer clear of once-favored opportunities.
· Stay aware of changes in investment horizons among multiple players
· Outline how central bank policies will influence your trading models and strategies
· Calculate the odds of an EM bubble and its likely impact on you
12:10 pm - 1:20 pm Lunch
1:20 pm - 2:00 pm PANEL: Correcting for Local Bias in Latin America
Smaller Latin American countries can be seen as “niche” and require a lot of educational hand-holding for clients to feel comfortable investing. Country bias can make it hard for even large clients to gain access in local markets where personal relationships are long-established.
•Internalize that people tend to overconcentrate on local economies and are more reactive than proactive
•Capture assets and get the best pricing internationally when investment capacity is small
•Navigate advances when products are basic for U.S.-based investors but sophisticated for locals
2:00 pm - 2:30 pm DISCUSSION: Following EM Geopolitical Hotspots While Keeping All Options Open
From Russian sanctions to Middle Eastern unrest to the weakening of democracy in Turkey and Venezuela, and the rise of nationalist strongman leaders worldwide, political risks will always have an impact on your regional FI portfolio. If you know the strategic political objectives of EM governments, you should be able to purchase securities that match those. In that case, the government is more likely to support those companies so it has the werewithal to repay its needs.
• Determine whether you are willing to take on sovereign risk
• Recap the most concerning geopolitical challenges in EM regions
• Recognize trends in liquidity driven by external politics
• Mitigate exposure to troubled regions
2:30 pm - 3:00 pm NETWORKING BREAK
3:00 pm - 3:40 pm PANEL: Niche No More: Debunking Myths in EM Corporates
There are important lessons to be found through gauging the risks and rewards of EM corporates compared to sovereigns and U.S. high yield. The EM corporate external bond market is now over $2 trillion U.S. yet still gets overlooked. What are the reasons for this?
•Keep up with the latest developments with AMLO and Pemex
•Evaluate the outlook for Argentina
•Understand the asset class, from internal team dynamics to how indices are defined
•Compare the liquidity of various asset classes and default rates
Sarah Leshner Carvalho
Emerging Markets Fixed Income InvestorCapital Group
3:40 pm - 4:20 pm PANEL: Construct Appropriate Nation-Specific Approaches for Frontier Markets
Frontier markets are typically not covered in EM local indices and require an entirely different strategy. They may be easier to trade, but you must take into account many issues of logistics and execution.
•Prepare for challenges in foreign exchange conversion
•Build a deep bench of knowledge to extract value
•Anticipate challenges with foreign currency conversion
