Doyen Reignited Confidence In The Fed'S Slowing Interest Rate Hike

The Federal Reserve has slowed down interest rate increases, and investors' risk appetite has increased, pushing the stock market of emerging markets into a bull market.

Market data show that as of last Friday, the MSCI emerging market index has risen for third consecutive days, rising more than 20% from its lowest level in nearly six and a half years since January.

Meanwhile, Turkey's benchmark stock index Borsa Istanbul 100 Index has risen 20% since its lows in January.

The Manila stock market has also entered the bull market, and the Philippines stock exchange index has risen 20% since its lows in January 21st.

In addition, Russia's stock market has risen for fifth consecutive weeks, the longest rise in three years.

At the beginning of this year, global market turmoil and oil prices continued to fall, investors in the stock market withdrew 35% of their capital from emerging markets, but now they are returning to emerging market equities.

According to the Bank of America's Merrill Lynch capital mobility report, 3 billion US dollars have been inflows into emerging market assets in the past two weeks, and the US dollar index has fallen to its lowest level in 5 months.

According to the data from capital flow monitoring agency EPFR, emerging market equity funds attracted a net inflow of funds for third consecutive weeks as of the 16 th week.

Last week,

Announced that the federal funds rate will remain unchanged from 0.25% to 0.5%, and the market expects the Federal Reserve to raise interest rates this year.

The Fed's latest quarterly economic forecast shows that by the end of 2016, the federal funds rate is expected to rise to 0.9%, which means that the Fed will raise interest rates two times this year. At the end of last year, Fed officials expected to raise interest rates 4 times this year.

Some analysts believe that the Fed's interest rate results are expected to be "doves" than the market expectations. The Federal Reserve's interest rate will continue to maintain low interest rates and slow pace of interest rate increases will ease the worries of the market.

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Win Thin, global head of emerging market monetary strategy at Brown Brothers Harriman, said that the weaker US dollar would bring more benefits to emerging markets as more easing measures were implemented by the European Central Bank and the Bank of Japan, which had already implemented negative interest rates.

Amer Bisat, portfolio manager of the fixed income division of BlackRock group, said the Federal Reserve would slow down the rate hike, the depreciation of the US dollar and the rise in commodity prices.

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Amer Bisat points out that the value of Mexico, Indonesia and Argentina has already been seen.

However, some market participants worry that the signs of stabilization in emerging markets may be calm before the storm.

After the financial crisis in 2008, emerging market companies increased their borrowing strength of the US dollar, making full use of the low interest rates at that time and the ample funds that the Federal Reserve provided to the global market due to massive injection of funds into the financial system.

According to overseas media reports, over the next five years, there will be up to US $1 trillion and 600 billion in maturity debt, and a sharp increase in demand for debt repayment may lead to new turbulence.

According to the bank for International Settlements, emerging market countries account for nearly half of the US dollar debt issued by non bank entities outside the United States since 2008, almost 3 times the issuance of eurozone debt.