Why DICE 2008?
According to IMF’s 2007 Global Financial Stability Report, low interest rates and low volatility in many mature markets have encouraged investors to seek higher-yielding assets in emerging markets. Therefore capital inflows to some of them have risen rapidly and now emerging markets funds are managing a total of over £900 billion out of $20,000 billion held by the global fund management industry at the end of 2006.
 However, despite the stellar rise of emerging markets equities since 2003 (50-80 per cent annually compare with the growth of stock markets in the US and UK of respectively 26 and 14 per cent), their derivatives markets are widely recognised as being underdeveloped.
A number of common factors across all emerging markets include inadequate legal framework, political risks, flaws in corporate governance and of course the issues of volatility and liquidity. In addition, due to the fact that until recently emerging markets assets were highly undervalued, hedging risks was not necessary in the view of most fund managers.
However, this picture is gradually changing. First of all, there has been substantial improvement to the legislative and regulatory frameworks. Secondly, due to the fact that numerous new products are being launched by both exchanges and banks thus helping to solve the liquidity problem. Last but not least, markets’ volatility is increasingly seen by hedge fund managers as an opportune time to switch to long/short strategies. While a long only approach has worked well over the past few years, funds with a long/short component are increasingly coming to the fore in terms of investment return performance.
DICE Emerging Markets 2008 will address these and many other issues crucial to Western institutional investors in emerging markets.
- Why is it appropriate to be overweight in emerging markets?
- High premiums: are investors paying for the risks they are no longer taking?
- Which sectors can be best served by derivatives? Energy and utilities vs consumer fuelled industries
- Crucial changes in the legislation: what has been implemented and what still needs to be done to ensure the successful market development
- How are the markets being liberalised?
- Cloning existing Western models or creating a unique domiestic style?
- Resolving the liquidity problem: how soon will it reach the level of developed markets?
- Examining the value of a long/short strategy in emerging markets: has long only outlived itself?
- Are long/short funds increasingly coming to the fore of investment return performance?
- Are traditional asset managers and mutual funds catching up with hedge funds?
- What active derivatives strategies are proving most successful and why?
- Why are pension funds increasingly using emerging markets index-linked derivatives and credit default swaps (CDS)?
- Exchange traded derivatives vs OTC products: Is the competition between the two accelerating or are they increasingly complementing each other?
- What are the latest innovations in product structuring: equity, credit, interest rates and FX products
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