Latest news with #EMBI
Zawya
29-04-2025
- Business
- Zawya
Analysts optimistic as Nigeria moves to rejoin JP Morgan's emerging market debt index
NIGERIA'S moves for reinclusion into JP Morgan's Emerging Market Debt Index (EMBI) have sparked optimism among analysts, who believe the move will attract significant foreign investment inflows, boost market liquidity, and enhance the country's credibility in the global financial landscape. The development is expected to create a positive ripple effect on the nation's economy, particularly in the fixed income market, as investors seek to tap into the potential growth opportunities in the region's largest economy. Nigeria has started discussions for re-admission into JP Morgan's Local Currency Emerging Market Debt Index, according to the Debt Management Office (DMO). The announcement was made during the recently concluded Spring Meetings of the International Monetary Fund (IMF) and World Bank in Washington, D.C. The country was removed from the index nearly a decade ago following concerns over foreign exchange liquidity, after the Central Bank of Nigeria (CBN) introduced market control measures that hindered foreign investors' ability to track Nigeria's weight in the index. However, the DMO stated that recent reforms have improved dollar liquidity, potentially restoring Nigeria's eligibility. Over the past year, under new leadership, the CBN has launched several market-oriented initiatives aimed at improving transparency and efficiency in the foreign exchange market. Among these is the introduction of the Electronic FX Matching System (EFEMS), designed to enhance price discovery and reduce information gaps. The reforms have helped rebuild investor confidence and restore the institutional credibility of the CBN, which had been strained under previous administrations. International bodies, including the IMF, have praised Nigeria's commitment to unifying its exchange rate system, while credit rating agencies have highlighted the policy adjustments and enhanced liquidity in recent assessments. 'If Nigeria secures re-inclusion, it could act as a major catalyst for renewed foreign investment into the country's local currency bond market,' say analysts from CSL Research. Institutional investors that benchmark against JP Morgan's index may be prompted to reallocate funds to Nigeria, bolstering capital inflows and signaling increased global confidence in the government's reform agenda. Nonetheless, analysts warn that risks remain. Nigeria's heavy dependence on oil — accounting for roughly 88 per cent of foreign exchange earnings over the past five years — means that volatility in crude oil prices and domestic production could threaten recent gains. A sustained drop in oil revenues could strain dollar liquidity once again and dampen foreign investor appetite. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Zawya
24-02-2025
- Business
- Zawya
JPMorgan's reclassification of Kuwait signals strong economic prospects
KUWAIT CITY: Kuwait is set to make a significant transition in the global financial landscape, with JPMorgan announcing its reclassification from an emerging market to a developed market. This change is part of a broader shift that also affects Qatar, with both nations scheduled to be gradually removed from JPMorgan's Emerging Markets Bond Index (EMBI). The removal process, which begins on March 31, is expected to unfold over a six-month period. Although the reclassification primarily impacts government bonds, the move is anticipated to open new avenues for foreign investment, further stabilizing and growing Kuwait's financial environment. JPMorgan's EMBI is a key reference for investors tracking emerging market bonds, which typically carry higher risk but offer potentially higher returns. As a result of the reclassification, Kuwait's bonds will no longer be included in the EMBI, a shift that will impact capital flows for investors involved in emerging market debt. As of January 31, Kuwait accounted for 0.6% of the EMBI Global Diversified Index, and the nation's exit from the index will contribute to a narrowing of bond trading opportunities in emerging markets. For Kuwait, the reclassification is seen as a step forward, reflecting its growing economic stability. Although the change will likely reduce the investor base within emerging markets, experts suggest that Kuwait will continue to attract investment from those looking beyond the EMBI's scope. Anders Faergemann, co-head of global fixed income in emerging markets at Pinebridge Investments, stated that, even without being part of the benchmark, Kuwait's economy remains a promising destination for investment due to its fiscal prudence and solid credit profile. Kuwait's reclassification aligns with a broader trend of economic and legislative reforms designed to bolster foreign investment. The country's Finance Minister, Noura Al-Fassam, recently stated that Kuwait's debt law is now in its final stages. The passage of this law is expected to enable Kuwait to issue debt for the first time since 2017, potentially raising up to $65 billion over the next 50 years. This move, which is part of a larger effort to diversify Kuwait's revenue base away from oil dependence, signals a long-term commitment to improving the country's financial infrastructure. The reclassification is also expected to draw more foreign investors into the local market, particularly in the Kuwait Stock Exchange (KSE). The KSE has been preparing for this shift by introducing new investment tools such as corporate bonds, sukuk, and index funds, all of which are likely to attract greater capital flows. Additionally, a new central counterparty (CCP) system is being developed to further enhance market liquidity and facilitate investment, particularly from foreign institutions. These reforms are poised to strengthen investor confidence in Kuwait's economic prospects and boost long-term market stability. Despite the positive outlook, Kuwait faces fiscal challenges. The government has projected a budget deficit of 6.31 billion dinars ($20.4 billion) for the fiscal year 2025-2026, a significant increase from the current year's estimated deficit of 5.6 billion dinars ($18.2 billion). This rise is partly due to lower-than-expected oil revenues, underscoring Kuwait's ongoing vulnerability to fluctuations in global oil prices. However, analysts remain optimistic that Kuwait will successfully manage its fiscal challenges, especially as the government continues to invest in infrastructure projects and diversify its economy. The country's planned debt issuance under the new law will provide additional resources for capital expenditure, which is vital for ongoing development efforts. The reclassification of Kuwait, along with Qatar, from emerging to developed market status, will likely influence broader financial trends. The removal of both nations from the EMBI is expected to reduce the amount of capital flowing into emerging markets, which may increase the yield investors demand to hold emerging market bonds compared to U.S. Treasuries. This yield spread is expected to widen by approximately 11 basis points as a result of the reclassification. Kuwait's departure from the EMBI reflects its increased financial stability, but it also suggests a shift in the global investment landscape. With Kuwait's bond market now outside the EMBI framework, it is expected to continue drawing attention from investors seeking low-risk opportunities in developed markets, especially as global demand for stable and diverse investment opportunities grows. The transition to developed market status marks a critical juncture in Kuwait's economic evolution. As the country navigates its fiscal challenges and undertakes new legislative measures, the reclassification is poised to enhance its global financial standing. With increased foreign investment, greater market liquidity, and a commitment to economic diversification, Kuwait is positioning itself for long-term growth. As foreign institutions and global funds increasingly look to invest in Kuwait, the country's financial markets will continue to expand. The reclassification not only reflects Kuwait's evolving creditworthiness but also underscores the nation's growing importance as an attractive investment hub in the Middle East. While Kuwait's removal from the EMBI will affect emerging market bond traders, the reclassification has clear long-term benefits. As Kuwait moves toward a more diversified and stable economic future, the investment community will likely examine the opportunities emerging within its borders more closely. The next few years will be critical for Kuwait as it continues to strengthen its financial framework and attract international investment.
Arab Times
23-02-2025
- Business
- Arab Times
JPMorgan's reclassification of Kuwait signals strong economic prospects
KUWAIT CITY, Feb 23: Kuwait is set to make a significant transition in the global financial landscape, with JPMorgan announcing its reclassification from an emerging market to a developed market. This change is part of a broader shift that also affects Qatar, with both nations scheduled to be gradually removed from JPMorgan's Emerging Markets Bond Index (EMBI). The removal process, which begins on March 31, is expected to unfold over a six-month period. Although the reclassification primarily impacts government bonds, the move is anticipated to open new avenues for foreign investment, further stabilizing and growing Kuwait's financial environment. JPMorgan's EMBI is a key reference for investors tracking emerging market bonds, which typically carry higher risk but offer potentially higher returns. As a result of the reclassification, Kuwait's bonds will no longer be included in the EMBI, a shift that will impact capital flows for investors involved in emerging market debt. As of January 31, Kuwait accounted for 0.6% of the EMBI Global Diversified Index, and the nation's exit from the index will contribute to a narrowing of bond trading opportunities in emerging markets. For Kuwait, the reclassification is seen as a step forward, reflecting its growing economic stability. Although the change will likely reduce the investor base within emerging markets, experts suggest that Kuwait will continue to attract investment from those looking beyond the EMBI's scope. Anders Faergemann, co-head of global fixed income in emerging markets at Pinebridge Investments, stated that, even without being part of the benchmark, Kuwait's economy remains a promising destination for investment due to its fiscal prudence and solid credit profile. Kuwait's reclassification aligns with a broader trend of economic and legislative reforms designed to bolster foreign investment. The country's Finance Minister, Noura Al-Fassam, recently stated that Kuwait's debt law is now in its final stages. The passage of this law is expected to enable Kuwait to issue debt for the first time since 2017, potentially raising up to $65 billion over the next 50 years. This move, which is part of a larger effort to diversify Kuwait's revenue base away from oil dependence, signals a long-term commitment to improving the country's financial infrastructure. The reclassification is also expected to draw more foreign investors into the local market, particularly in the Kuwait Stock Exchange (KSE). The KSE has been preparing for this shift by introducing new investment tools such as corporate bonds, sukuk, and index funds, all of which are likely to attract greater capital flows. Additionally, a new central counterparty (CCP) system is being developed to further enhance market liquidity and facilitate investment, particularly from foreign institutions. These reforms are poised to strengthen investor confidence in Kuwait's economic prospects and boost long-term market stability. Despite the positive outlook, Kuwait faces fiscal challenges. The government has projected a budget deficit of 6.31 billion dinars ($20.4 billion) for the fiscal year 2025-2026, a significant increase from the current year's estimated deficit of 5.6 billion dinars ($18.2 billion). This rise is partly due to lower-than-expected oil revenues, underscoring Kuwait's ongoing vulnerability to fluctuations in global oil prices. However, analysts remain optimistic that Kuwait will successfully manage its fiscal challenges, especially as the government continues to invest in infrastructure projects and diversify its economy. The country's planned debt issuance under the new law will provide additional resources for capital expenditure, which is vital for ongoing development efforts. The reclassification of Kuwait, along with Qatar, from emerging to developed market status, will likely influence broader financial trends. The removal of both nations from the EMBI is expected to reduce the amount of capital flowing into emerging markets, which may increase the yield investors demand to hold emerging market bonds compared to U.S. Treasuries. This yield spread is expected to widen by approximately 11 basis points as a result of the reclassification. Kuwait's departure from the EMBI reflects its increased financial stability, but it also suggests a shift in the global investment landscape. With Kuwait's bond market now outside the EMBI framework, it is expected to continue drawing attention from investors seeking low-risk opportunities in developed markets, especially as global demand for stable and diverse investment opportunities grows. The transition to developed market status marks a critical juncture in Kuwait's economic evolution. As the country navigates its fiscal challenges and undertakes new legislative measures, the reclassification is poised to enhance its global financial standing. With increased foreign investment, greater market liquidity, and a commitment to economic diversification, Kuwait is positioning itself for long-term growth. As foreign institutions and global funds increasingly look to invest in Kuwait, the country's financial markets will continue to expand. The reclassification not only reflects Kuwait's evolving creditworthiness but also underscores the nation's growing importance as an attractive investment hub in the Middle East. While Kuwait's removal from the EMBI will affect emerging market bond traders, the reclassification has clear long-term benefits. As Kuwait moves toward a more diversified and stable economic future, the investment community will likely examine the opportunities emerging within its borders more closely. The next few years will be critical for Kuwait as it continues to strengthen its financial framework and attract international investment.
Bloomberg
20-02-2025
- Business
- Bloomberg
JPMorgan Reclassifies Qatar, Kuwait as Developed Markets
JPMorgan Chase & Co. reclassified Qatar and Kuwait as developed markets and will soon start their removal from its Emerging-Markets Bond Index in a phased manner. It also said the United Arab Emirates may be taken out of the cluster next year. The elimination of Qatar and Kuwait from EMBI will take place over six months starting with the month-end rebalancing on March 31, JPMorgan's Global Index Research team said in a statement. From now on, new bond issues from these markets won't be included in the EM index, JPMorgan said. That includes two benchmark-sized sovereign dollar bonds being sold by Qatar on Thursday.
