Is Emerging Market Exposure Still a Smart Move?
The demand for emerging market bonds improved when fear of rate hikes abated in 2016. Fundamentals are still favorable for emerging debt markets.
A strengthening dollar impacts the emerging bond market’s performance. Uncertainty started revolving around the performance of emerging market debt.
Donald Trump’s surprise presidential win and the rising dollar called for a sell-off in most emerging market currencies like Mexico and Turkey.
In the emerging market bond space (PCY) (EMLC), high-yield bonds and local currency bonds outperformed hard currency sovereign bonds.
Trump’s unexpected presidential victory caused short-term uncertainty about markets and policies. His win reinforced a reflationary theme in global markets.
So far in this series, we’ve discussed how demographic changes are transforming emerging markets.
As smartphone penetration in emerging markets rapidly intensifies, business is increasingly taking place through online platforms.
As the middle class expands and discretionary incomes rise, emerging markets are feeling more strongly the impact of the web and mobile technologies.
In recent years, emerging markets have experienced rapid economic growth compared to developed markets.
In the previous articles of this series, we discussed population and economic growth as the two major drivers leading to a rise in emerging markets (EMQQ).
Achieving higher returns amid the rising market volatility, record-low interest rates, and global uncertainties is a huge challenge for investors.
EDL Capital is bullish on the US dollar compared to the euro and the yen. Langlade says the yen could fall 125 to 130 to a dollar in the first 100 days of the Trump administration.
With Trump’s perceived warmth toward Russian President Vladimir Putin, the possibility of Russian economic sanctions being removed has emerged.
Investors looking for opportunities in fallen angel bonds can look at the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL).
Hungary’s credit upgrades to “investment-grade” (FLTR) opened doors for investors tracking low-risk benchmarks.
Although Hungary and Turkey credit spreads were at similar levels and generally moved together through 2014, these spreads began to diverge in early 2015.
The Turkish lira plunged to record lows against the dollar following its downgrade by Moody’s and S&P, who cited increased political instability as well as geopolitical stresses and turbulence.
In recent years, emerging market (EMLC) (HYEM) ratings have improved considerably due to the strengthening macroeconomic framework as well as years of reforms.
Banks saw a rise in term deposit accounts since the demonetization. As a result, commercial banks sharply reduced their deposit rates.
Due to the expected fall in inflation, the RBI will likely undertake more cuts in the repo rate. These rate cuts will aim to boost consumption.