"Gemloc highlights the innovative way that official and private sector entities can, through independent operations and different comparative advantages, create a virtuous circle between policy reforms and investment flows."
Financial sector development in many emerging markets has been hampered by the absence of liquid, longer-term domestic investment instruments.
Institutional investors have been put off from investing in local currency debt in emerging markets by the lack of access, poor market infrastructure, and excessive red tape. While about 70% of all emerging markets debt is denominated in local currency, international institutional investors still hold a relatively low share of their emerging markets debt investments in local currency.
 Announcement
The Gemloc Advisory Board held its bi-annual meeting on April 24, 2009, in Washington, D.C. during the Spring Meetings of the World Bank and IMF. The Advisory Board, chaired by H.E. Dr. Mahmoud Mohieldin, Egyptian Minister of Investment, and Ms. Cynthia Steer, Managing Director and Chief Research Strategist at Rogers Casey, discussed the current status of Gemloc's investment, index, and advisory operations and prospects for future activities in light of the financial crisis.
The Advisory Board, whose members participate in their personal capacity and provide insights and advice to the World Bank Group on areas related to Gemloc's 3 pillars of operations, consists of 14 members, half from the official sector and half from private firms, primarily from the investment management industry.
T he Gemloc Program -- or Global Emerging Markets Local Currency Bond Program -- supports the development of local currency bond markets to increase their investability so that more institutional investment from local and global investors can flow into local currency bond markets in developing countries.
Stronger, more liquid local currency bond markets can lower the cost of borrowing and reduce financing and investment mismatches and the risks they create. They support development and enhance a country’s resilience to shocks. Institutional investors, both domestic and international, have expressed strong interest in investing in a diversified portfolio of local emerging market bonds as they offer diversification with low correlations and potential returns from an improving credit environment and currency appreciation.
The Gemloc Program has three separate but complementary parts:
, PIMCO, that develops and manages investment strategies to promote institutional investment in emerging market local currency bonds. PIMCO is a leading global fixed income investment manager. Â
, GEMX, that tracks emerging market local currency bonds that meet market size and investability criteria. The index was developed by Markit, a leading index provider, in cooperation with IFC. The investability indicators were developed by Crisil, the Indian-based affiliate of Standard & Poor’s, in cooperation with the World Bank. The investability indicators cover areas such as access to bond markets, taxation, liquidity, investor base, infrastructure, and regulations—aspects that influence the attractiveness of investing in a local bond market. The new index creates significant benefits as a global public good and as a benchmark for this asset class. Â
Advisory Services provided by the World Bank to strengthen local bond markets in emerging economies to help enhance their investability and attract new investments. Advisory Services (AS) will be provided through country-specific as well as peer-group programs complemented by cutting edge research on relevant topics.
RSS