artwork from the cover of this publication
World Economic and Financial Surveys

Global Financial Stability Report

Market Developments and Issues
March 2003

©2003 International Monetary Fund
Ordering Information

The Global Financial Stability Report provides semiannual assessments of global financial markets and addresses emerging market financing in a global context.

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 Contents   
 
Preface
     
Chapter I.   Overview (216KB pdf file)
Key Developments in Major Financial Centers
Emerging Market Financing
Measures to Improve Market Confidence
Policy Issues in Developing Local Securities Markets
Chapter II.   Key Developments and Sources of Financial Risk in the Major Financial Centers (617KB pdf file)
Major Developments in the Mature Markets
Have Key Sectors Been Weakened Further or
   Strengthened?
Withdrawal from Risk Taking and Buildup of Cash
   Positions: Implications and Risks
References
Chapter III.   Emerging Market Developments and Financing Prospects (398KB pdf file)
Emerging Market Flows Remain Weak
Emerging Bond Markets Turn in Strong Performance
Emerging Equity Markets Finished Lower in 2002
Syndicated Lending Turns Up Modestly
Banking Sector Performance in Emerging Markets
Outlook
Appendix: A "Feast or Famine" Dynamic Prevails in
   Emerging Primary Markets
References
Chapter IV.   Local Securities and Derivatives Markets in Emerging Markets: Selected Policy Issues (203KB pdf file)
Local Markets as Self-Insurance Against Volatile Capital
   Flows
Extent of Securities Market Development as an
   Alternative Source of Funding
Common Practices in Emerging Local Securities Markets
Selected Policy Issues
Concluding Remarks
References
  
Glossary (76KB pdf file)
  
Annex: Concluding Remarks by the Acting Chair (86k pdf file)
  
Statistical Appendix (895KB pdf file)
  
Boxes
3.1  The Risk of War and Emerging Market Vulnerabilities
3.2  Emerging Market Contagion in 2002
3.3  Collective Action Clauses: Latest Developments
4.1  An International Solution for the Original Sin
 
Tables
1.1  Financial Market Data
2.1  United States: Household Sector Balance Sheet
2.2  Internationally Active Financial Institutions: Equity Prices
2.3  Global Financial Institutions: Ratings and Capital Ratios
3.1  Emerging Market Financing
3.2  EMBI+ Performance
3.3  Currency of Issuance
3.4  Equity Markets Performance, 2002
3.5  Valuation and Earnings Across Equity Markets
3.6  Emerging Market Countries: Financial Soundness Indicators
4.1  Reserves: Level and Ratio to GDP
4.2  Private Sector
4.3  Public Sector
4.4  Total of All Sectors
 
Figures
2.1  Stock Market Performance
2.2  Price/Earnings Ratios
2.3  Selected Spreads
2.4  Short- and Long-Term Interest Rates in Government
Securities
2.5  United States: Thirty-Year Mortgage Rate and Government Bond Yield
2.6  Selected Major Exchange Rates
2.7  United States: Net Portfolio Inflows and Net Total
Capital Flows
2.8  United States: Household Net Worth Position
2.9  United States: Non-Financial Corporate Sector--Ratio of Broad Liquid Assets to Short-Term Debt
2.10  Internationally Active Financial Institutions: Relative Stock Prices
2.11  U.S. Banks: Relative Stock Prices
2.12  Large Insurance Companies: Relative Stock Prices
2.13  United States: Household Portfolio Allocation, Total Deposits
2.14  United States: Household Balance Sheets, Selected Items
2.15  Europe: Houshold Portfolio Allocation
2.16  Japan: Personal Sector Portfolio Allocation, Total Deposits
2.17  United States: Wholesale Cash Instruments Relative to Total Financial Claims
3.1  Cumulative Gross Annual Issuance of Bonds, Loans, and Equity
3.2  Emerging Market Financing
3.3  Sovereign Spreads
3.4  Risk Appetite and Emerging Market Debt
3.5  Emerging Markets and High-Yield Fund Flows
3.6  Bond Issuance
3.7  Share of Bond Issues
3.8  Emerging Market Equities and U.S. Treasuries
3.9  Emerging Market Equity Volatility
3.10  Correlations of S&P 500 with Emerging Markets
3.11  Asian Emerging Market Equities and Semiconductor Chips
3.12  Returns and Total Risk, 2002:Q4
3.13  U.S.-Based Mutual Funds Flows into Emerging Market, Emerging Asian, and Latin American Equities
3.14  Cumulative Gross Annual Issuance of Equity
3.15  Equity Placements
3.16  S&P 500 Earnings per Share
3.17  Cumulative Gross Annual Loan Issuance
3.18  Syndicated Loan Commitments
3.19  Loan-Weighted Interest Margin
3.20  Market Valuation
3.21  Sovereign Spreads Versus Historical Lows
3.22  Risk Versus Return, January 1998–December 2002
3.23  EMBI+ with Periods of Opening and Closure
3.24  EMBI+ Volatility During Market Closures
3.25  VIX Index and Primary Market Closures, 1994–96
3.26  VIX Index and Primary Market Closures, 1997–2002
3.27  BBB-BB Spread Differentials and Primary Market Closures, 1994–96
3.28  BBB-BB Spread Differentials and Primary Market Closures, 1997–2002
4.1  Chile: Amount Outstanding of Private Nonfinancial Sector Bonds