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PORTFOLIO PERSPECTIVES | – 2 Min

Talking heads – Emerging market debt: Don’t look the other way

In this article:

    In a contrarian call, our emerging market debt team sees appealing opportunities in EM bonds. Specifically in those markets where inflation is likely to peak ahead of developed markets in which investors are having to adjust to the prospect of higher real yields. EM segments that were oversold late last year also represent areas worth investor attention as a recovery takes hold.  

    On the hard currency side, frontier markets and EM corporate bonds appear promising, while local currency bonds – for example, in the Chinese high-yield property sector – look set to benefit from eventual central bank easing and currency appreciation.

    Listen to Jean-Charles Sambor, head of EM fixed income, and Alaa Bushehri, head of EM corporates, as they explain the reasons for their out-of-consensus views in this podcast with Daniel Morris, chief market strategist.

    Formerly known as ‘Market weekly’, Talking heads brings investors the in-depth insights on topics that really matter to them, analysis of the world and markets through the lens of sustainability and more great conversations with investment experts.

    Disclaimer

    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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