Post on 23-Mar-2018
transcript
The World Bank & International Finance CorporationSecurities Markets Annual Conference 2010
Developing Local Currency Bond Markets in Emerging Economies
Washington, DC
June 16, 2010
Cynthia SteerChief Research Strategist
Managing Director, Beta ResearchTelephone: 203-656-6716
cynthia.steer@rogerscasey.com
3 3
2008 Asset Class Returns
2.10
-2.35
5.24
10.118.01
-25.91
-47.72
-37.30
-43.06 -41.70
-10.91
-53.18
-19.86
-60.0
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
%
2008 Returns
Cash ILBs Core FI Dev FI Unhdgd Dev FI Hdgd
High Yield Global REITs U.S. Equity Dev EQ Unhdgd Dev EQ Hdgd
EMD EME NDHF
Source: Bank of America- Merrill Lynch, Barclays Capital, Citigroup, FTSE, HFRI, J.P. Morgan, MSCI, Russell
4 4
2009 Asset Class Returns
0.17
11.415.93 4.36 2.38
55.23
38.26
28.3432.46
21.7628.19
79.02
9.69
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
%
2009 Returns
Cash ILBs Core FI Dev FI Unhdgd Dev FI Hdgd
High Yield Global REITs U.S. Equity Dev EQ Unhdgd Dev EQ Hdgd
EMD EME NDHF
Source: Bank of America- Merrill Lynch, Barclays Capital, Citigroup, FTSE, HFRI, J.P. Morgan, MSCI, Russell
5 5
2010 YTD Asset Class Returns
0.04
2.943.71
-4.92
2.32 2.87
-2.34
-0.32
-12.08
-5.79
2.28
-5.07
0.90
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
%
2010 YTD Returns
Cash ILBs Core FI Dev FI Unhdgd Dev FI Hdgd
High Yield Global REITs U.S. Equity Dev EQ Unhdgd Dev EQ Hdgd
EMD EME Hedge Funds
Source: Bank of America- Merrill Lynch, Barclays Capital, Citigroup, FTSE, HFRI, J.P. Morgan, MSCI, Russell
6 6
2009 Themes vs. 2010 Themes
2009 2010
Company Re-Rating Country Re-Ranking/Sovereign Risk
De-Risk vs. Re-Risk: Currency (Risk Assessment & Diversification into Non-Dollar Stores of Value)
• Liquidity Planning vs. Inflation/Deflation(Role of Real Assets including Commodities, Farmland, Timber, Infrastructure, Frontier Mkts)
• Opportunistic Investing (Credit/Distressed, Inflation-Linked Assets, Quality, Emerging Assets)
Company Re-Rating
Country Re-Ranking / Sovereign Risk Active Management / Strategies to Capture Macroeconomic Uncertainty (e.g. hedge funds)
Inflation/Deflation Fixed Income Perils: Benchmarks, Rising Rates
Currency Risk Stimulus Withdrawal
7 7
The Flight to Junk
5.9
-3.6
55.2
28.2
4.411.4
28.3
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
BC Aggregate
BC U.S. Treasury
Citigroup High Yield
JPM EMBI Global
Citigroup Non-U.S.
WGBI (unhedged)
BC U.S. TIPS
Russell 3000
2009 Returns
Source: Barclays Capital, Citigroup, JPMorgan, Russell
In a complete reversal from 2008, investors clamored for risky assets with lower quality instruments performing the strongest.
8 8
Emerging Market Debt Timeline
Latin Defaults
1980s
1982
Development of secondary market for sovereign EMD
loans
1990
1994
Tequila Crisis - Mexican peso devaluation
Asian Crisis
1997
1998
Russian defaults
2003
Mexico first country to retire
Brady Bonds
Argentina Defaults
2001
Russia upgraded to investment grade - by year end, 45% of the
universe is investment grade
2003
Brady Bonds issued - further accelerated growth of debt
markets
2003 - 2007
Philippines, Colombia, Brazil, and Venezuela
retire Brady debt
1996
80% of EMD index is classified as below investment grade
Market DebtEmerging
2008
The prospect of defaults by Greece and Dubai World raised concerns regarding
global sovereign creditworthiness
2009
Brazil upgraded to investment grade
9 9
Sovereign Yields Changes
0.4
-0.2
0.3
-0.4
0.4
1.6
0.1
1.0
0.40.2
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
U.S. Japan U.K. Germany France
%
2-Year versus 10-Year Yield ChangesMajor Components of the Global Bond Market
Change in 2-Year Yield Change in 10-Year Yield
Source: Bloomberg
10 10
Country Re-Ranking
Iceland, Greece, Spain, and Portugal have all been downgraded by S&P, but remain investment grade.
S&P cut Latvia and Romania’s credit rating to junk status.
Brazil was upgraded to investment grade in April, 2008. China, Lebanon, and Peru have also been upgraded.
Source: The New York Times, 2 February 2010
Standard and Poors Ratings:
11 11
Country Re-Ranking – Recent S&P Rating Changes
Estonia’s credit rating was upgraded from A- to A as the former Soviet Union state will become a member of the eurozone in January 2011.
Georgia’s credit rating was upgraded from B to B+ in April 2010.
Greece’s credit rating was downgraded to junk status from BBB+ to BB+.
Indonesia’s credit rating was upgraded from BB- to BB in March 2010, after the central bank boosted the country’s economic growth forecasts.
Jamaica’s credit rating was upgraded from selective default to B-, following a successful domestic debt restructuring.
Portugal’s credit rating was downgraded by two notches, to A- from A+ due to concern’s of Greece’s financial crisis contagion spreading through the euro region.
Spain’s credit rating was downgraded by a notch to AA from AA+.
Turkey’s credit rating was upgraded to BB from BB- due to improvements in debt burden.
Ukraine’s credit rating was upgraded to B from CCC+ based on improvements in the country’s policy coordination and a Russian gas subsidy agreement that boosted the government’s debt outlook.
12 12
Geographic DiversityJPM EMBI Global Countries by Rating
Brazil Mexico Russia Turkey The Philippines Venezuela
Indonesia Colombia Malaysia Lebanon Peru Panama
Poland China Uruguay Kazakhstan South Africa Ukraine
Chile Argentina El Salvador Lithuania Hungary Vietnam
Croatia Bulgaria Pakistan Egypt Sri Lanka Serbia
Gabon Ghana Tunisia Dominican Republic Ecuador Georgia
Jamaica Belize
Investment Grade
A- and Higher
BBB+, BBB, BBB-
Below Investment Grade
BB+ BB, BB-
B+, B, B-
CCC+ and Lower
S&P Long-Term Foreign Currency
Debt Rating
13 13
EMD More Resilient than High Yield Throughout the Crisis
0.0000
500.0000
1000.0000
1500.0000
2000.0000
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
OAS
(bp
s)
BC Emerging Markets (U.S. Dollar) Index BC U.S. Corporate High Yield Index
Source: Barclays Capital
14 14
EMD Maintained More Normal Volatility Characteristics Compared to Other Fixed Income Asset Classes
Developments in Systemic Asset ClassesIMF Risk Assessment based on the Volatility and
Level of Spreads
16 16
Mathematics in modeling informs client decision- making. Modeling must incorporate a wider range of outcomes and scenarios to improve clients’ ability to analyze and manage risk.
Governance ensures effective decision-making and implementation. Conversations on portfolio positioning must be more dynamic and governance must be more nimble.
Economics links changes in the real economy to changes in the financial assets in our portfolios. A forward-looking view that captures the potential outcomes of shifts in macroeconomic realities is key.
With the idea that staff and Boards will be more dynamic and critical in their thinking, we have sought to provide dynamic tools, not solutions, to facilitate critical thinking and comprehensive decision-making in the current environment. The tools strive to use models (mathematics) to capture economic realities or potentialities (economics) to frame asset allocation decisions for governance bodies (governance). These tools strive to help investors reorient their portfolios under evolving market conditions.
The Three-Legged Stool of Asset Allocation
17 17
2010 Assumptions vs. Actual History
Disclosure:All numbers represent Rogerscasey’s forward-looking asset class assumptions, and as such, reflect estimates as of a certain date. These assumptions are not a guarantee of future performance, do reflect high levels of uncertainty, and are subject to change without notice.
2007 2008 2009Avg.
ReturnStd.Dev
Cmpd Ret
Cash 4.9% 2.1% 0.2% 3.8% 2.4% 3.7%
Inflation Linked Bonds 11.6% -2.3% 13.9% 5.3% 6.5% 5.1%
Core Fixed Income 7.0% 5.2% 7.6% 5.1% 8.5% 4.8%
Dev. Mkts. Fixed Income (Unhedged) 11.5% 10.1% 10.7% 5.2% 11.0% 4.6%
Dev. Mkts. FI (Hedged) 4.9% 8.0% 2.9% 4.8% 6.0% 4.6%
Real Estate (unlevered) 15.8% -6.5% -16.8% 7.0% 13.0% 6.2%
High Yield 1.8% -26.0% 50.2% 6.8% 15.0% 5.7%
Global REITs -7.0% -47.7% 33.4% 8.1% 19.0% 6.4%
US Equity 5.1% -37.3% 24.8% 9.2% 19.3% 7.5%
Developed Equity (Unhedged) 11.6% -43.1% 30.6% 9.7% 22.0% 7.5%
Developed Equity (Hedged) 2.9% -41.7% 15.8% 9.2% 19.3% 7.5%
Global Equity (Unhdgd) 9.6% -40.3% 28.4% 9.4% 20.5% 7.5%
Global Equity (Hdgd) 3.7% -39.9% 19.2% 9.2% 19.3% 7.5%
Emerging Markets Debt (50% LC) 12.4% -8.8% 23.7% 8.4% 14.5% 7.4%
Emerging Markets Equity 40.3% -53.7% 73.4% 12.5% 27.0% 9.2%
Private Equity 19.3% -7.1% 14.6% 28.0% 11.1%
Non-Directional Hedge Funds 7.7% -19.0% 9.8% 7.5% 7.0% 7.3%
Actual Returns
Asset Class
2010 Assumptions
18 18
Historical Perspective on Asset Allocation
0
10
20
30
40
50
60
1990 1995 2000 2010Alternatives Hedge Funds EM Equity Global Fixed Income Int'l Dev Fixed Income Int'l Dev Equity
Sub-allocation within Int’l EQ
EM EQ, EMD – sub-asset class to EM EQ infrastructure
EMD, EQ Derivatives, Distressed Debt
All asset classes, including domestic equity and debt
Emerging
None Developed Developed Developed
EM Exposure
Currencies
Diversification and emerging markets: more asset classes and strategies now incorporate EM, but we should start with bonds.
19 19
Strong Underlying Fundamentals:GDP Estimates & Forecasts
IMF World Economic OutlookGDP Estimates and Forecasts 2008 2009 2010
Global 3.1 -1.4 2.5
Developed Economies 0.8 -3.8 0.6
EM and Developing Economies 6.0 1.5 4.7
Africa 5.2 1.8 4.1
Source: IMF
20 20
0
20
40
60
80
100
120
140
160
180
0
200
400
600
800
1,000
1,200
Dec-
06
Mar
-07
Jun-
07
Sep-
07
Dec-
07
Mar
-08
Jun-
08
Sep-
08
Dec-
08
Mar
-09
Jun-
09
Sep-
09
Dec-
09
Cum
ulat
ive
Purc
hase
s ($
Bill
ions
)
Cumulative Purchases MBS - OASSource: Federal Reserve Board, Barclays Capital, PIMCO
Mortgage Spread vs. Federal Reserve Board MBS Purchases
MBS O
AS (bps)
Quantitative Easing – the Fed’s Massive $1.75 Trillion Security Purchase Program
The Federal Reserve Board initiated a $1.75 trillion quantitative easing program, whereby it purchased longer-dated MBS, agencies, and treasuries in order to keep interest rates low and provide support to the housing market.
As a result, MBS spreads tightened dramatically in 2009.
The Fed expects to halt and ultimately wind down the quantitative easing program beginning in March 2010. The wind-down may cause mortgage rates to rise and home prices to suffer from price deterioration.
21 21
Central Banks Cut Rates Sharply
Source: Economy.com
Country Central Bank Target Rates (12/31/09)
1 Year
Change
United States 0.00%-0.25% -
Eurozone 1.00% -150 bps
United Kingdom 0.50% -150 bps
Japan 0.10% -
Australia 3.75% -50 bps
Canada 0.25% -125 bps
South Korea 2.00% -100 bps
Thailand 1.25% -150 bps
Brazil 8.75% -500 bps
22 22
“Non Traditional” Policy Tools Have Made Life More Complex
$0
$500
$1,000
$1,500
$2,000
$2,500
1/2/2008 5/21/2008 10/8/2008 2/25/2009 7/15/2009 12/2/2009
Asset Composition of the Fed’s Balance SheetCurrency outstanding
SDRs (Special Drawing Rights)
Gold stock
Liquidity Swaps
Other
Maiden Lane LLC (Bear Stearns)
CPFF
Other credit extensions
TALF
AIG
ABCP
Broker-dealer credit
Primary/Secondary Credit
Term auction credit
Repos
MBS
Agencies
Treasuries
The Fed wound down some of its emergency credit facilities as liquidity returned to markets, but the Fed’s balance sheet did not shrink substantially as the Fed expanded its purchases of agency, mortgage, and treasury securities in the open market.
Source: Federal Reserve Board
23 23
Unemployment Rates on the Rise with Structural Issues
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09
Eurozone U.S. Japan U.K. Source: Economy.com
24 24
Deflation vs. Inflation in Global Markets
9.1%
4.8% 4.8%
12.8%
5.7%
2.9%
7.2%
10.1%
3.7%
1.0%2.7%
-1.3%-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Arge
ntin
a
Braz
il
Mex
ico
Egyp
t
Hun
gary
Pola
nd
Russ
ia
Turk
ey
Thai
land
Euro
zone
U.S
.
Japa
n
Year-over-Year Change in CPIfor the Year Ending February, 2010
Source: Bloomberg
25 25
Strong Underlying Fundamentals:Positive Trade Balances
4.4%
-1.3% -1.2%
-3.0%
3.6%
-1.9%
3.4%4.9%
7.8%
0.9%
-0.7%
-2.6%
1.9%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Arg
enti
na
Bra
zil
Mex
ico
Hun
gary
Russ
ia
Turk
ey
Sout
h Ko
rea
Tha
iland
Chi
na
Indon
esia
Euro
zone
U.S
.
Japan
Current Account Surplus as a % of GDP
Source: Bloomberg
26 26
Emerging Market Currency Appreciation
-40.0%
-20.0%
0.0%
20.0%
40.0%20
02
2003
2004
2005
2006
2007
2008
2009
Q1
2009
Q2
FX Rates (Change in Units Per U.S. Dollar)
Brazil Mexico Korea Thailand Russia South Africa
Source: IMF
27 27
EMD & Equity Experience Positive Net Flows in 2009
-$111,056
-$43,886
-$43,657
-$7,913
-$3,266
-$3,185
$9
$22
$128
$6,885
$31,191
$60,190
$139,530
-$200,000 -$100,000 $0 $100,000 $200,000
U.S. Equity
Global Equity
EAFE Equity
U.S. & Global Alternatives
Global Real Estate
EAFE Fixed Income
U.S. Real Estate
Global Hedge Funds
U.S. Hedge Funds
Emerging Markets Fixed Income
Emerging Markets Equity
Global Fixed Income
U.S. Fixed Income
Estimated 2009 Net Flows by Asset Class (in Millions)
Source: pionline.com, eVestment Alliance
29 29
The Emerging Markets Universe Continues to Expand
A new frontier of smaller countries will provide new opportunities in dollar-denominated and local currency issuance.
Flows will continue but will broaden by currency, by structure, by duration, and by asset class.
The combination of liquid and illiquid investments will be the norm.
Emerging markets will likely continue to migrate towards investment grade ratings and provide a driver for global growth as well as a viable option for diversification in the midst of further global financial turmoil.
The evolution of emerging markets debt by instrument will continue as structured products, corporate credit, derivatives, and complex money markets will continue to develop.
30 30
Emerging Market External Bond Issuance by Sector & Rating
0
40
80
120
16020
06 (
Jan-
Jun)
2006
(Ju
l-D
ec)
2007
(Ja
n-Ju
n)
2007
(Ju
l-D
ec)
2008
(Ja
n-Ju
n)
2008
(Ju
l-D
ec)
2009
(Ja
n-Ju
n)
Billi
ons
of D
olla
rs
Corporate/ Banks Investment Grade Corporate/ Banks Subinvestment Grade
Sovereign/Agencies Investment Grade Sovereign/Agencies Subinvestment Grade
Source: IMF
31 31
The Case for Local Currency EMD:Attractive Risk/Return Profile
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
8.0% 9.0% 10.0% 11.0% 12.0%
Risk/Return for EMD Indices 1/2002 – 5/2010
JPM EMBI+ JPM GBI-EM Global 50% JPM EMBI+ / 50% JPM GBI-EM Global
Source: J.P. Morgan
32 32
EMD Offers an Attractive Risk/Return Profile
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
0.0% 4.0% 8.0% 12.0% 16.0% 20.0%
Risk/Return for EMD vs. Other AssetsThree Years ending February, 2010
JPM EMBI+ JPM GBI-EM Global
Barclays Capital U.S. Aggregate Barclays Capital U.S. Treasury: U.S. TIPS
Citigroup High-Yield Market Barclays Capital Global Aggregate
MSCI World
Source: Barclays Capital, Citigroup, J.P. Morgan, MSCI
33 33
The Emerging Markets Universe Continues to Expand
Market Value($millions)
# of Bonds Yield Mod. Duration
JPMorgan EMBI Global (Hard Currency) $356,680 226 6.61 6.92
JPMorgan GBI-EM (Local Currency) Broad Div $1,195,000 289 6.68 4.46
JPMorgan CEMBI Broad (EM Corporate Credit) $245,343 390 6.63 5.02
Barclays EM GovernmentInflation Linked Index
$259,147 59 5.56 5.95
Bank Loans
Brady Bonds
Eurobonds / Yankees
Global Bonds
EM Corporate Derivatives Local
Markets
Longer Duration
Local Markets
1980s 1990s 2000s
Source: JPMorgan, Barclays Capital
34 34
3.0%
3.1%
3.6%
6.4%
6.7%
7.4%
10.0%
10.4%
12.0%
12.2%
0.0% 5.0% 10.0% 15.0%
Lebanon
Malaysia
Colombia
Indonesia
Venezuela
The Phillipines
Turkey
Russia
Mexico
Brazil
Top Ten Country Exposures
Dollar-Denominated EMD Investable Universe
JP Morgan EMBI Global Index
Average Credit Quality: BB+
Average Yield = 6.6%
Average Duration = 6.9 years
Average Life: 11.9 years Source: J.P. Morgan
Africa, 2.6%
Asia, 19.7%
Europe, 28.9%
Latin America,
45.2%
Middle East, 3.6%
Regional Composition
35 35
2.3%
4.9%
5.3%
6.2%
7.1%
8.5%
10.1%
13.0%
15.8%
23.4%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Colombia
Hungary
Indonesia
Turkey
Thailand
South Africa
Malaysia
Mexico
Poland
Brazil
Top Ten Country Exposures
Local Currency EMD Investable Universe
JP Morgan GBI-EM Global Index
Average Credit Quality: A-
Average Yield = 7.3%
Average Duration = 4.0 years
Average Life: 5.8 years Source: J.P. Morgan
MiddleEast Africa, 8.7%
Asia, 22.4%
Europe, 29.1%
Latin America,
39.8%
Regional Composition
36 36
2.4%
3.9%
4.2%
5.2%
5.5%
6.1%
9.5%
11.4%
17.1%
18.7%
0.0% 5.0% 10.0% 15.0% 20.0%
China
India
Qatar
Singapore
Mexico
UAE
Korea
Hong Kong
Russia
Brazil
Top Ten Country Exposures
Corporate EMD Investable Universe
JP Morgan CEMBI Broad Index
Average Credit Quality: BBB
Average Yield = 6.6%
Average Duration = 5.0 years
Average Life: 8.1 years Source : J.P. Morgan
MiddleEast Africa, 13.7%
Asia, 36.8%
Europe, 19.3%
Latin America,
30.1%
Regional Composition
37 37
Emerging Markets Inflation-Linked Bonds
5.3
55.7
3.2 3.20.7
11.6
1.4
7.8
11.2
5
12
16
6
1
9
14 5
0
10
20
30
40
50
60
Argentina Brazil Chile Columbia South Korea
Mexico Poland South Africa
Turkey
Barclays Emerging Markets Government Inflation-Linked Bond Index
Percentage of Index # of Bonds
Emerging countries have issued a healthy level of inflation-linked bonds; diversification by country and issue continues to evolve.
Source: Barclays Capital
39 39
Favorable Forward-Looking View of Emerging Market Debt Along the Risk vs. Reward Spectrum
Cash
ILB's USFI
Hdgd Dev FI
RE
HY REITs
USEQUnh Dev EQ
Emrg FI
Emrg EQ Priv EQ
NDHF
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Nom
inal
Ret
urn
(%)
Std. Dev. of Nominal Return (%)
40 40
EMD: A Mainstay in Portfolios
A positive forward-looking view for EMD is reflected in a 5-10% allocation at the portfolio level.
Ranges Ranges
Diversified Cash / Gold (currency) 20.0% 15%-25% 14.0% 5%-20%
ILB's 15.0% 10%-20% 9.0% 6%-12%
Global Fixed Income / Muni's 22.0% 15%-30% 8.0% 5%-12%
Real Estate / Infrastructure 10.0% 5%-15% 4.0% 2%-8%
High Yield / High Yield Bank Loans 0.0% 0%-5% 3.0% 0%-5%
Global REITs 0.0% 0.0% 3.0% 2%-7%
Emerging Mkt. Debt 5.0% 3%-10% 7.0% 3%-10%
Emerging Mkt. Equity 8.0% 5%-12% 12.0% 5%-15%
Private Equity / Commodities 3.0% 0%-5% 10.0% 5%-15%
NDHF 5.0% 0%-8% 10.0% 5%-15%Global Equity (unhdgd) 12.0% 9%-20% 20.0% 10%-30%
Total 100.0% 100.0%
Post Modern Portfolio
Allocation
Capital Preservation
Allocation
41 41
Summary: Opportunities Within the Broadened EMD Universe
The attraction of emerging markets and EMD as an investment class has deepened materially since the mid-nineties.
Today, investors must simply put more assets to work in emerging markets, creating a conundrum.
Within investment programs, the evolution of EMD is morphing from simply opportunistic core plus allocations or segregated dollar mandates to strategic allocations to local currency, corporate credit, private equity, direct lending, real estate, and beyond.
However, many investors are not balancing allocations but primarily focusing on emerging market equity - possibly creating bubble conditions.
Flows to the emerging markets must continue in both investment and non-investment grade, but should also broaden by currency, by structure, by duration, and by asset class.
In addition, derivative capabilities must deepen in order to accommodate long-short strategies.
42 42
Summary: Opportunities Within the Broadened EMD Universe
The combination of benchmark-sensitive and benchmark-aware mandates will be prevalent. In addition, significant flows will go to liquid and illiquid strategies.
For the aging populations of the developed nations, liability-driven investing cannot be successfully executed without emerging market long-duration nominals and inflation-linked bonds (linkers).
Frontier markets will become a more accepted part of investment portfolios as developing countries provide the driver for global growth in the coming years.
In short, domestic, global fixed income, and traditional emerging market debt will separate into investment and non-investment grade over the next decade.
That being said, investors need to adjust to assessing country by country, from custodian relationships to stock selection to possible capital controls.