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Emerging market debt trading down 5% to $997 billion in second quarter
By Reshmi Basu
New York, Aug. 18 - Emerging market debt trading fell 5% to $997 billion in the second quarter from $1.046 trillion in the first quarter, according to a quarterly volume survey report released by industry trade association EMTA.
For the first half of the year, trading was 6% above 2003 levels at $2.043 trillion.
Trading volume was matched by a retreat in asset prices, according to Paulo Leme, managing director of Goldman Sachs.
"After rallying strongly in 2003 and the beginning of the first quarter, emerging markets debt sold off during the second quarter of 2004 because of the growing concerns about higher U.S. interest rates and higher oil prices," Leme said in a news release.
Brazilian debt instruments were most frequently traded with $325 billion of volume, a 9% increase from the first quarter.
Volume in Brazilian local instruments rose 197% to $126 billion from $43 billion in the first quarter.
The surge was due to "the continued search for higher carry trades in emerging local markets which allowed trading of Brazilian local debt instruments to rise while the volumes in hard currency debt declined," said Leme.
Mexican volumes declined 17% to $204 billion from $246 billion in the previous quarter, due in part to the decline in local instrument trading.
Russian volumes stood in third place at $73 billion, down 1% from the first quarter.
Eurobond volume was the second highest level ever reported by EMTA despite falling 5% to $463 billion. The Brazil bond due 2040 was the most frequently traded eurobond at $54 billion, followed by the Russia bond due 2030 at $43 billion.
Turkey's bond due 2030 was next at $20 billion and the Venezuelan bond due 2027 stood at $8 billion.
Local instrument trading was $426 billion compared with $430 billion in the second quarter. The sharp increase in Brazilian local instruments offset a decline on Mexican local instrument trading.
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