Emerging Market portfolios attracted $313 billion in investments inflows in 2020, down 13 per cent compared to the previous year as global markets were rattled by the coronavirus pandemic, according to the Institute of International Finance (IIF).
However, the inflows recovered in December, making the fourth quarter the strongest for EM securities as economies bounced back and rollout of Covid-19 vaccines buoyed investor confidence.
Emerging market securities attracted $45.9bn last month of which $29.3bn went to equities. Chinese equities alone attracted $13.2bn in inflows.
Bonds and other debt securities recorded $16.6bn of inflows from non-residents last month, the IIF said in its latest report released on Thursday.
“An impressive reading [in December] considering that the Covid-19 shock meant one of the deepest and most violent outflow episodes on record,” the IIF said. “The main driver for this recovery is the impressive performance of China debt flows, along with the recovery of all other asset classes.”
China was the first country to report the coronavirus in December 2019. However, strict movement restrictions introduced by Beijing helped contain the outbreak in the country and the subsequent easing of lockdown measures further accelerated its economic recovery.
The International Monetary Fund sees China's economy expanding 8.2 per cent in 2021 after slowing to about 1.9 per cent last year. The country is also expected to overtake the US to become the world's biggest economy in 2028 as it recovers faster from the pandemic, according to the Centre for Economics and Business Research.
“Overall, the exodus of capital from emerging markets is now firmly in the rearview mirror and robust inflows look set to continue,” the IIF said.
In December, EM Asia saw inflows of $21.9bn, followed by Latin America at $11.9bn and Africa-Middle East at $7bn. Emerging markets in Europe attracted $5.2bn in investment last month.
The global economy is set to expand 5.2 per cent in 2021 after contracting 4.4 per cent last year, according to IMF projections.
In November, the IIF said the emerging markets were witnessing the “strongest pace” of capital flows on positive news related to the development of a Covid-19 vaccine.
Scores
Rajasthan Royals 160-8 (20 ov)
Kolkata Knight Riders 163-3 (18.5 ov)
UNSC Elections 2022-23
Seats open:
- Two for Africa Group
- One for Asia-Pacific Group (traditionally Arab state or Tunisia)
- One for Latin America and Caribbean Group
- One for Eastern Europe Group
Countries so far running:
ARGENTINA SQUAD
Goalkeepers: Franco Armani, Agustin Marchesin, Esteban Andrada
Defenders: Juan Foyth, Nicolas Otamendi, German Pezzella, Nicolas Tagliafico, Ramiro Funes Mori, Renzo Saravia, Marcos Acuna, Milton Casco
Midfielders: Leandro Paredes, Guido Rodriguez, Giovani Lo Celso, Exequiel Palacios, Roberto Pereyra, Rodrigo De Paul, Angel Di Maria
Forwards: Lionel Messi, Sergio Aguero, Lautaro Martinez, Paulo Dybala, Matias Suarez
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Company profile
Name: Tratok Portal
Founded: 2017
Based: UAE
Sector: Travel & tourism
Size: 36 employees
Funding: Privately funded
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
