Emerging local currency debt: A clear agenda for change
With a busy electoral calendar now behind us, Peter reflects on the next chapter in emerging market debt.
- An end to US monetary policy tightening removed a key headwind in 2019 and paves the way for further growth stimulus in emerging markets.
- Most elections are now behind us, giving emerging market governments the breathing space to carry on with the important work of reforming and strengthening, while reducing the risk of negative headlines.
- Domestic and intra-emerging market driving forces should continue to rise in prominence in this evolving and strengthening universe.
- Just as in 2019, there will be winners and losers – selectivity remains key.
EM Corporate Debt: In good company
Emerging market corporate bond issuers proved their mettle in 2019. Will 2020 be different? Victoria discusses one of the investment world’s best kept secrets.
- We expect interest in the emerging market corporate debt asset class to continue to grow as the ongoing lower rates environment helps more investors discover what it has to offer.
- Our defensive stance reflects in our current preference for longer duration, higher credit quality corporate bonds.
- In high-yield markets we will continue to seek out investments that much of the broader market is overlooking, and that can take us far and wide.
- The relative strength of many emerging market companies compared to their developed market peers should become even starker.
China Bond - A pivotal year
Wilfred reflects on what looks set to be another pivotal year for Chinese bonds in their journey to the investment mainstream.
- Flagship index inclusion from February means the move to the mainstream of Chinese bonds looks set to continue in 2020.
- Persistent low rates in most developed markets are likely to make Chinese bonds increasingly hard for investors to ignore.
- We think investors’ awareness of the portfolio diversification benefits of this distinctive asset class will only rise in 2020.
- While its growth continues to moderate, China’s reaction to both this and US trade tensions speaks of a long-term vision for sustainable growth.
- We’ll continue to take a selective approach, exploring the broadening and deepening opportunity set.
Emerging market: These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.
The value of investments, and any income generated from them, can fall as well as rise.