Emerging perspectives

Emerging Market Debt Indicator April 2022

In this edition, our regional specialists highlight the key takeaways from this year’s IMF-World Bank Spring Meetings. The team also summarises the latest market developments across the EM debt universe and reflects on the outlook for the asset class.

May 11, 2022

20 minutes

EMD Team
In this edition, our regional specialists highlight the key takeaways from this year’s IMF-World Bank Spring Meetings. The team also summarises the latest market developments across the EM debt universe and reflects on the outlook for the asset class.

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: Navigating geopolitics and taming inflation: takeaways from the IMF-World Bank Spring Meetings
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in April and outline what’s taken place in the EM corporate credit market.

Download the PDF

The fast view

Market background
Inflationary pressure, continued COVID lockdowns in China, and uncertainty due to the ongoing war in Ukraine all drove sentiment across financial markets; this backdrop was especially challenging for EM fixed income markets. The yield on US Treasuries saw another sharp rise and the dollar strengthened.

Inflation and growth rates rose for much of the region. In Egypt, Suez Canal revenues rose to a record high, and the IMF outlined key areas for reform. In Zambia, China agreed to co-chair an official creditor committee, the formation of which has held up the country’s IMF program and debt restructuring.

Countries that continue to remove COVID restrictions saw increases in domestic consumption and inflation. In contrast, ongoing lockdowns in China and lower domestic growth expectations are weighing on the region. The People’s Bank of China remains accommodative, cutting the reserve requirement ratio.

Latin America
We began to see some social discontent across certain markets, including Peru, Chile, Argentina and Brazil. There were tentative signs that inflation in Brazil is approaching its peak. In a positive sign for future policy direction in Mexico, congress voted against the president’s electricity reform bill.

Central and Eastern Europe
Inflation remains high across the region, with central banks raising rates to try to tame it, although Poland’s central bank was an outlier with a smaller-than-expected hike. Household consumption in Hungary remains quite robust, but in the Czech Republic, forward-looking indicators point to a slowdown.

Rest of Europe, Middle East and Africa (EMEA)
The war in Ukraine became more localised in the east of the country, but wider regional implications were felt when Russia cut its gas exports to Poland and tensions rose in Moldova. In Turkey, the lira remained relatively stable, at the cost of the continued intervention from the central bank.

EM corporate debt highlights
Despite a highly volatile global backdrop, credit spreads were broadly flat over the month, both in investment grade and high yield markets, but the sharp underlying move in US rates drove negative total returns.

Authored by

EMD Team

Important Information

The information may discuss general market activity or industry trends and is not intended to be relied upon as a forecast, research or investment advice. The economic and market views presented herein reflect Ninety One’s judgment as at the date shown and are subject to change without notice. There is no guarantee that views and opinions expressed will be correct and may not reflect those of Ninety One as a whole, different views may be expressed based on different investment objectives. Although we believe any information obtained from external sources to be reliable, we have not independently verified it, and we cannot guarantee its accuracy or completeness. Ninety One’s internal data may not be audited. Ninety One does not provide legal or tax advice. Prospective investors should consult their tax advisors before making tax-related investment decisions.

This communication is provided for general information only and is not an invitation to make an investment nor does it constitute an offer for sale. Investment involves risks. This is not a recommendation to buy, sell or hold a particular security. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. The securities or investment products mentioned in this document may not have been registered in any jurisdiction.

In Hong Kong, this communication is issued by Ninety One Hong Kong Limited and has not been reviewed by the Securities and Futures Commission (SFC).

Except as otherwise authorised, this information may not be shown, copied, transmitted, or otherwise given to any third party without Ninety One’s prior written consent. © 2022 Ninety One. All rights reserved.

Past performance figures shown are not indicative of future performance. Investors are reminded that investment involves risk. Investors should refer to the offering documents for details, including risk factors. This website has not been reviewed by the SFC. 

By clicking on the hyperlink of Investor relations below, you are leaving this website with information specific for retail investors in Hong Kong and entering the global website.

Please note that the global website is not intended to target Hong Kong investors. It has not been reviewed by the Hong Kong Securities and Futures Commission (“SFC”). The website may contain information on funds and other investments products that are not authorised by the SFC and therefore are not available to retail investors in Hong Kong. The website may also contain information on investment services / strategies that are purported to be carried out by a Ninety One group company outside of Hong Kong.

Any product documents and information contained in this website are for reference only and for those persons or entities in any jurisdictions or country where the information and use thereof is not contrary to local law or regulation.

Issuer: Ninety One Hong Kong Limited
Email: [email protected] 
Telephone: (852) 2861 6888 
Fax: (852) 2861 6861