The annual US Thanksgiving holiday originated from the first festival held on US soil by the pilgrim settlers to celebrate a good harvest after local Native American tribes provided the settlers with domestic seeds and taught them new skills to get the most out of an unfamiliar territory. Likewise, those in the data industry have a few things to give thanks for-especially when it comes to navigating similarly unfamiliar territories.
If there are two trends starting to emerge from the hodge-podge of rushed or cancelled projects following the financial crisis – aside, of course, from regulation – they are the need to acquire data on emerging markets to satisfy the lure of better-performing economies, and the need for more granular information and new ways of interpreting it. There are examples of these all throughout this week's issue of IMD, even if they may seem unrelated.
A couple of weeks ago, I wrote how even as the Asia-Pacific region continues to ride a positive wave, other emerging markets are starting to attract attention, such as Africa, where last month index provider FTSE announced a new Kenya index series, developed with the Nairobi Securities Exchange to attract capital inflows from overseas, while pan-African commodity spot and multi-asset-class exchange Bourse Africa Limited announced it will go live next year. And last week, FTSE added data on the FTSE/Johannesburg Stock Exchange Top 40 index to its iPhone app, demonstrating demand for data from the region.
Interesting, yes, but these markets will need to demonstrate their ability to deliver returns over a sustained period-and Asia will have to lose its current luster-before market participants and vendors are likely to repeat the investment they've made in Asia-Pacific elsewhere. What could prompt investors to look elsewhere is if the very regulation some say is needed to open up markets and harmonize them across borders—such as enabling equal access to some datacenters to allow traders to arbitrage different venues—ultimately makes them less attractive to foreign investors seeking higher returns. Where might these investors look next? Perhaps Latin America, outside the booming Brazil, or even Eastern Europe, where ISI Emerging Markets is rolling out its BPR Benchmark credit risk data service in Poland.
Hence we come to the second trend, because you can't do business somewhere without having the data - and analysis tools - to support your operations, whether it's ISI's credit data on potential Polish counterparties, Markit making PMI index data available through new channels, or SunGard adding environmental, social and corporate governance risk data from Swiss ESG data provider RepRisk to its MarketMap terminal. And further afield, in the last week alone, Deutsche Börse and the Istanbul Stock Exchange announced an agreement to cooperate on market development, including joint indexes, while Direct Edge announced plans for a Brazilian stock exchange in Rio de Janeiro. Fidessa expanded the market data and market access available via its network to Mexico's Bolsa Mexicana de Valores via Grupo Financiero Banorte (a result of GFNorte's merger with IXE Grupo Financiero, which previously provided the services to Fidessa), and Thomson Reuters began calculating the world's first Islamic finance benchmark rate for short-term, sharia-compliant interbank funding, which will be based on contributed rates from a 16-member panel and published daily via the vendor's terminal products.
According to Market Rates Insight, US bank deposits now top more than $10 trillion - an increase of $577 billion since the start of 2011. If this is a sign that US investors are still uncomfortable with the returns on offer in their home market, emerging markets could prove more attractive than domestic investments, prompting a new wave of demand—retail, not just institutional—for new data and tools.
Bill Murphy, CTO of Blackstone, once again joins the podcast to discuss the private equity firm's new offices, designed to house its innovations team.Subscribe to Weekly Wrap emails