Local investor appetite for equities in EM

Forward dividend yield minus real interest rate

This measure is an indication of the attraction of locally-listed equities for local funds. High inflation, if accompanied by low policy rates (ie negative real interest rates), can push local investors to treat equities as a hedge.

For foreign funds, FX rate and FX convertibility risks (ie avoiding "trapped capital") matter more.

* Denotes trailing dividend yield (aggregate consensus forecast not available).
Data set excludes Lebanon (below negative 200%, due to hyperinflation).
Chart: Hasnain Malik Source: Bloomberg (30 January 2022), Tellimer Research Get the data