Emerging Market Debt Indicator April 2021

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The fast view

Market Background

• The JP Morgan GBI-EM Global Diversified Unhedged Index produced a total return of 2.3% in US dollar terms, while the JP Morgan EM Bond Index returned 2.2%.
• Sentiment improved during the month helped by strong economic data in the US on retail sales and employment and a sharp rise in US and European consumer confidence.

Africa

• In Egypt, FX reserves recovered to US$40.3 billion as continuing portfolio flows and strong remittances helped offset the impact of lower tourism revenue.
• In Zambia, April’s PMI rose above 50 for the first time in 2 years, reflecting new orders and rising business confidence.

Asia

• The region continued to benefit from the global demand for goods and the concurrent shortage in semiconductors, themes in play since the beginning of the year.
• More negatively, there has been a surge in COVID-19 cases, particularly in India, the Philippines, Thailand and Malaysia.

Latin America

• This region is battling a surge in COVID-19, with cases increasing in Colombia and Argentina. Despite impressive vaccination rates, infections in Chile remain high.
• In Ecuador, market friendly candidate Guillermo Lasso won the presidential election, which helped hard currency bonds rebound strongly over the month.

CEE

• Regional sentiment improved as a result of more encouraging business and consumer data.
• Retail sales are also recovering as the high levels of household savings built up during the pandemic are filtering through to consumer purchases.

Rest of EMEA

• In Turkey, pressure on President Recep Tayyip Erdogan has increased following news that the central bank has burned through US$165 billion of reserves in two years.
• The vaccine rollout across EMEA, particularly in South Africa and Russia, continues to underperform the rest of the world.