Emerging Markets Debt:
Real Growth, Real Yield, Real Opportunity?
Following the U.S. Election result, we believe that the outlook for Emerging Markets remains conditional on a series of external drivers. These include global central bank policy continuity and credibility, the outlook for U.S. monetary and fiscal policy and the health and stability of the European economy (and its associated political infrastructure).
The Trump victory may reflect in greater levels of uncertainty and higher volatility, particularly in places like Mexico. While, on the other hand, Russia could trade slightly better given the improved potential for a removal of sanctions.
As we stand today, the combined Emerging Markets balance sheet is stable, though this predicates on the continuity of current rates to some degree. The effect of the strong technical support the asset class has seen in recent months has been to enable weaker issuers to restructure through new issuance. We continue to see solid margins across credit in aggregate, and therefore remain positive on the outlook for selected sovereigns and credits.
Emerging Markets Debt, an Underinvested Story
In our view, Emerging Markets are drawing attention for these reasons:
- Appealing growth prospects from long-terms drivers such as:
- economic diversification
- governance improvements
- EM yields remain strong ... and well-supported
Market Outlook Q2 2016
Emerging Markets: The Worst May be Over
What's in store for Emerging Markets? Mauro Ratto, Head of Emerging Markets, talks about Emerging Market Debt, China's growth perspectives and his thoughts on the outlook for this year.