Emerging markets in an upside down world : challenging perceptions in asset allocation and investment / Jerome Booth.

Includes bibliographical references (pages [245]-255 and index.

I.1.Upside down: perception vs reality -- I.2.The structure of the book -- 1.Globalisation and the Current Global Economy -- 1.1.What is globalisation? -- 1.2.Economic history and globalisation -- 1.2.1.The desire to control and its impact on trade -- 1.2.2.The influence of money -- 1.2.3.Trade and commodification -- 1.2.4.Nationalism -- 1.3.Recent globalisation -- 1.3.1.Bretton Woods -- 1.3.2.Ideological shifts -- 1.3.3.Participating in globalisation: living with volatility -- 2.Defining Emerging Markets -- 2.1.The great global rebalancing -- 2.1.1.Financing sovereigns -- 2.1.2.Catching up -- 2.1.3.The poorest can also emerge: aid and debt -- 2.1.4.From debt to transparency and legitimacy -- 2.2.Investing in emerging markets -- 2.3.Emerging market debt in the 20th century -- 2.3.1.Types of external sovereign debt -- 2.3.2.From Mexican crisis to Brady bonds -- 2.3.3.Market discipline -- 2.3.4.Eastern Europe -- 2.3.5.Mexico in crisis again -- 2.3.6.The Asian and Russian crises -- 2.3.7.Emerging markets grow up -- (a).The first change: country and contagion risks fall -- (b).The second change: the investor base -- 2.3.8.Testing robustness: Argentina defaults -- 2.3.9.The end of the self-fulfilling prophecy -- 2.4.The growth of local currency debt -- 2.5.Why invest in emerging markets? -- 3.The 2008 Credit Crunch and Aftermath -- 3.1.Bank regulation failure -- 3.1.1.Sub-prime -- 3.2.The 2008 crisis -- 3.3.Depression risk -- 3.3.1.Reducing the debt -- 3.3.2.Deleveraging is not an emerging market problem -- 3.4.Global central bank imbalances -- 4.Limitations of Economics and Finance Theory -- 4.1.Theoretical thought and limitations -- 4.2.Economics, a vehicle for the ruling ideology -- 4.3.Macroeconomics -- 4.4.Microeconomic foundations of macroeconomics -- 4.4.1.Efficient market hypothesis -- 4.4.2.Modern portfolio theory -- 4.4.3.Investment under uncertainty -- 4.5.Bounded decisions and behavioural finance -- 5.What is Risk? -- 5.1.Specific and systematic risk -- 5.2.Looking backwards -- 5.3.Uncertainty -- 5.4.Risk and volatility -- 5.5.Risk in emerging markets -- 5.6.Rating agencies -- 5.7.Capacity, willingness, trust -- 5.7.1.Rich countries default by other means -- 5.7.2.Two sets of risk in emerging markets -- 5.8.Sovereign risk: a three-layer approach -- 5.9.Prejudice, risk and markets -- 5.9.1.When you have a hammer, everything looks like a nail -- 6.Core/Periphery Disease -- 6.1.The core/periphery paradigm -- 6.1.1.Core breach? -- 6.1.2.Another core/periphery concept: decoupling -- 6.1.3.And another: spreads -- 6.2.Beyond core/periphery -- 6.2.1.Towards a relative theory of risk -- 6.2.2.GDP weighting -- 7.The Structure of Investment -- 7.1.Misaligned incentives -- 7.2.Confused incentives -- 7.3.Evolutionary dynamics, institutional forms -- 7.3.1.History matters -- 7.4.Network theory -- 7.5.Game theory -- 7.6.Investor structure and liquidity -- 7.7.Market segmentation -- 7.7.1.Warning signals -- 7.8.Investor base structure matters -- 8.Asset Allocation -- 8.1.Asset classes -- 8.1.1.Alternatives -- 8.2.How asset allocation occurs today -- 8.2.1.Investor types -- 8.2.2.Asset/liability management -- 8.3.From efficiency frontiers to revealed preferences -- 8.4.Asset allocation vs manager selection; active vs passive -- 8.5.Allocating at sea -- 9.Thinking Strategically in the Investment Process -- 9.1.Thinking strategically -- 9.1.1.Thinking strategically: appropriate discounting -- 9.2.Scenario planning -- 9.3.Global structural shifts ahead? -- 9.3.1.Asset allocation: some proposed new rules -- 9.4.Investment process in emerging debt -- 9.5.Conclusion -- 10.A New Way to Invest -- 10.1.Sense-checking assumptions -- 10.1.1.Risk, uncertainty and information asymmetry assumptions -- 10.1.2.Investor psychology and behaviour assumptions -- 10.1.3.Structure, market efficiency, equilibrium and market dynamics -- 10.1.4.Asset class definitions -- 10.2.Assessing liabilities -- 10.3.Your constraints -- 10.3.1.The decision chain -- 10.3.2.Institutional capabilities -- 10.3.3.Psychological constraints -- 10.4.Consider changing your constraints: agency issues -- 10.5.Building scenarios -- 10.6.Understanding market structure -- 10.7.Asset allocation -- 10.7.1.Route 1: Comprehensive -- 10.7.2.Route 2: Entrepreneurial -- 10.7.3.Asset allocation dynamics -- 10.8.Meta-allocation: toolset choice -- 10.9.Follow the skillset -- 10.10.Portfolio construction and monitoring -- 11.Regulation and Policy Lessons -- 11.1.Regulating financial institutions: new and old lessons -- 11.1.1.Fix the banks -- 11.1.2.Non-banks: who holds what? -- 11.1.3.Reduce agency problems: trustee incentives -- 11.1.4.Honour public service -- 11.1.5.Choice architecture -- 11.2.What to do about systemic risk? -- 11.2.1.Avoid regulation that amplifies risk -- 11.2.2.Beware market segmentation -- 11.2.3.Structure matters -- 11.2.4.Map perceptions of risk -- 11.2.5.Detect and stop asset bubbles -- 11.2.6.Preserve credibility -- 11.3.Wish list for emerging market policymakers -- 11.3.1.Allow markets to work -- 11.3.2.Proclaim and foster greater pricing power -- 11.3.3.Promote EM global banks, south-south linkages -- 11.3.4.Build capital markets -- 11.3.5.Fight core/periphery disease -- 11.4.Reserve management and the international monetary system -- 11.4.1.The dollar is your problem -- 11.4.2.Alternatives to the dollar -- 11.4.3.Too many reserves -- 11.5.What investors can expect from HIDC policymakers -- 11.5.1.Financial repression -- 11.5.2.Consequences of financial repression for banks -- 11.5.3.No early exit from quantitative easing? -- 11.5.4.Bond crash -- 11.5.5.Inflation -- 11.5.6.Appeals to foreign investors -- 11.5.7.Regulatory muddle-through -- 11.5.8.Pension reform -- 11.5.9.Pension regulatory conflict may only abate once EM investors exit -- 11.5.10.Rating agencies -- 11.5.11.Intellectual reassessment -- 11.6.What investors can expect from emerging market policymakers -- 12.Conclusion -- 12.1.A final list... -- 12.2....for an upside down world.