Rising rate risks erode global interest in emerging markets’ infrastructure: survey
- Joint report points to dip in enthusiasm for investing in the sector but China still among the developing countries with the most potential
Global investors are less interested in expanding their infrastructure investments in emerging markets, including China, as rising interest rates and foreign-exchange rates increase risks, according to a new report.
A survey of 300 infrastructure owners and asset managers found that only 42 per cent wanted to “somewhat” increase their investments in emerging markets this year, down from 73 per cent in 2017.
Another 10 per cent said they expected investments to “increase a lot”, while 25 per cent said they anticipated they would stay the same, according to the survey published by the Global Infrastructure Hub, an organisation launched by the Group of 20, and the EDHEC Infrastructure Institute in Singapore.
“We note a slight decrease of enthusiasm on the part of investors when it comes to investing in [emerging markets’] infrastructure,” the report said.
“Among the risks that may be limiting infrastructure investors’ ambitions and investment intentions in EM are two major forms of macro risk that impact investments across the portfolio: interest-rate risk and foreign-exchange risk.”
The investors said that after India, China was among the emerging markets with the most potential for infrastructure investment in the next five years. Others included Brazil, Indonesia, and Vietnam.