EM debt trading rises 13% in first-quarter to $1.3 trillion

Trading volumes of emerging markets debt rose by 13 percent in the first quarter of 2016 from the fourth quarter of last year, a survey showed on Thursday.
Trading grew to USD 1.299 trillion in the first three months of this year, according to EMTA, the trade association for the emerging markets debt trading and investment industry. The group found that debt trading also was 6 percent higher than during the same period in 2015.

The figures are based on reports by 48 international banks, asset management firms and hedge funds.

That bump came during a period that marked both significant inflows and outflows of capital from emerging markets.

“Up to the middle of February, the market was very weak on fears of capital outflows from China, a Fed intent on multiple rate hikes, and low oil prices; and these factors weighed significantly on trading volumes," said Gordian Kemen, global head of emerging market fixed income strategy at Morgan Stanley. "However, as the Fed turned decidedly more dovish, China fears abated, and oil prices rose, asset prices recovered in the second half of the quarter.”

Turnover in local market instruments rose to USD 819 billion in the first quarter, accounting for 63 percent of total reported volume. Turnover was USD 652 billion in the first quarter of 2015 and USD 740 billion in the fourth quarter, accounting for increases of 26 percent and 11 percent respectively.

Total debt trading volumes last year fell to their lowest level since 2009, at USD 4.726 trillion, and had fallen 20 percent from volumes in 2014, according to reporting from EMTA.

Mexican debt securities were the most frequently traded local emerging market debt in the first quarter, at USD 179 billion, EMTA said.

Mexico was followed in popularity by local instruments from India (USD 167 billion), Brazil (USD 64 billion), South Africa (USD 65 billion) and China (USD 61 billion).