CrossBorder Capital brings a different perspective to understanding capital markets and economies by focusing on international capital flows and domestic liquidity movements. Knowing the size and direction of these international flows as well as changes in domestic liquidity conditions helps to pinpoint those asset classes, markets and industry groups that will under-perform and outperform.
Established in 1986, the Global Liquidity Indexes (GLI™) provide a consistent and dependable measure of financial conditions market-by-market. They provide an advance indicator of ‘financial stress’, and of what will happen to financial markets and the real economy.
By collecting some 2,500 data series reported by Central Banks, National Treasuries and private sector institutions across some 80 economies worldwide every month, the GLI™ represent the most comprehensive survey of liquidity and credit conditions available to professional investors and advisors. They highlight the contributions from different liquidity providers by tracking data on credit spreads, credit growth and leverage, available funding, cross-border flows and Central Bank interventions.
The indexes are published in a timely fashion, typically within 10 working days of each month-end and give a very early indication of business and credit conditions at that point in time.
The indices are homogeneous in both content and methodology. They are based on reported data or facts, and not on forecasts or opinions. They are expressed both as normalised data in local currency terms and in US dollar value terms, and thus offer unique cross-market comparisons. The database typically starts for most economies in 1980.
Key Features and Coverage on RIMES
Some of the indices hosted by RIMES (among the 30 or so available for each economy) include:
- Central Bank Liquidity Index (CBCPLI) which measures the size and composition of Central Bank balance sheets
- Private Sector Liquidity Index (CBCPSI) which measures funding from savings deposits and from wholesale markets
- Cross-border Flows Index (CBCXFI) which measures capital flows (banking, and portfolio equity and bond) into the given market
- Financing Risk Index (CBCLRI) which highlights short-falls in funding liquidity
- Forex Risk Index (CBCFRI) a measure of devaluation risk based the quality mix of liquidity (more private sector liquidity, lower devaluation risk; and vice versa)
- Risk Appetite (CBCRA) which distinguishes ‘Risk On’ from ‘Risk Off’ investing environments by measuring aggregate holdings of bonds and stocks