* Emerging market debt trading rises year-over-year in 2016
* Trading lower in Q4 than Q3 last year
* Mexico, Brazil, India had most traded instruments
(Adds data, analyst quote)
By Dion Rabouin
NEW YORK, March 29 Trading volume for emerging
market debt rose 9 percent last year to $5.167 trillion,
according to a survey of 45 leading investment and commercial
banks in 90 emerging market countries.
The survey from EMTA, the emerging markets debt trading and
investment industry trade association, found that debt trading
volume fell in the fourth quarter of 2016 to $1.132 trillion.
That number was down 18 percent from trading during the
third quarter of 2016 and 2 percent lower than trading in the
fourth quarter of 2015.
EMTA said that emerging markets debt trading volume in 2015
was the lowest recorded since 2009.
The growth in 2016 was the result of "strong inflows,
volatility related to global political events (Brexit, U.S.
elections), and idiosyncratic market developments within
emerging markets," Hongtao Jiang, head of emerging market credit
strategy at Deutsche Bank, said in a statement accompanying the
He also noted that India and Argentina were the largest
contributors to idiosyncratic country risk.
"However, this masks a multiyear declining trend in trading
volumes as 2016 total turnover remains substantially lower than
2013 and 2014 levels," he said, "reflecting the impact of
tighter regulation across banks on their ability in providing
Local bond trading declined in 2016, with turnover in local
markets instruments falling 10 percent to $664 billion in the
fourth quarter from $740 billion in the fourth quarter of 2015.
Local bond trading also decreased from the third quarter when
volumes were 24 percent higher at $878 billion.
Local bonds made up 59 percent of total reported volume.
Mexican instruments were the most frequently traded, followed by
Brazil and India.
Mexico, Brazil and India also had the most traded
instruments overall in emerging markets due to the substantial
political upheavals facing each country during the year,
"That level of volume, especially in Latin America, would be
explained primarily based on the political moving pieces last
year," said Juan Perez, currency strategist at Tempus Inc in
Perez pointed to the scandal that ultimately led to the
impeachment of Brazilian President Dilma Rousseff, Indian Prime
Minister Narendra Modi's surprise ban on high-value currency
notes and the U.S. presidential election during which the
Mexican peso became tied to Donald Trump's election chances.
Securities from China and Poland were also heavily traded.
(Reporting by Dion Rabouin; Editing by Grant McCool and