A hard look at hard currency

We examine the need for structural allocations in emerging markets for both hard currency sovereign and corporate debt.

2020 M11 27

5 minutes

Victoria Harling
Thys Louw
We examine the need for structural allocations in emerging markets for both hard currency sovereign and corporate debt.

The fast view

  • Increasingly, investors are accepting the need for structural allocations in emerging markets (EM) for both sovereign and corporate debt
  • EM hard currency offers a pick-up in yield and spread over developed market (DM) credit, often accompanied by superior fundamentals
  • Structural changes in EM hard currency sovereigns include an expansion of the frontier universe and Middle East issuers, and lower levels of non-local currency debt
  • For EM corporates, growth in Asia and China has led to a more diversified asset base
  • Elevated spread premia compared to pre-COVID levels suggests opportunities in both asset classes

 

Download PDF

 

EM Debt in Discussion – session 5

A hard look at hard currency

Specific risks
Emerging market (inc. China): 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.

All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results.

 

Authored by

Victoria Harling
Portfoliomanager
Thys Louw
Portfoliomanager

Wichtige Informationen

Diese Mitteilung dient lediglich der allgemeinen Information und ist nicht als Beratung zu verstehen.

Alle darin enthaltenen Informationen gelten als zuverlässig, können jedoch ungenau oder unvollständig sein. Die Ansichten sind die des Verfassers zum Zeitpunkt der Veröffentlichung und spiegeln nicht unbedingt die Ansichten von Ninety One wider.

Alle geäußerten Meinungen werden ehrlich vertreten. Diese sind jedoch nicht garantiert und somit sollte sich auf diese nicht verlassen werden