Emerging perspectives

Emerging Market Debt Indicator August 2021

This month, we share reflections on the investment case for South Africa from our expert on the ground, Peter Kent. Plus the usual regional developments and outlook for the EM debt universe.

Sep 8, 2021

23 minutes

EMD Team
This month, we share reflections on the investment case for South Africa from our expert on the ground, Peter Kent. Plus the usual regional developments and outlook for the EM debt universe.

This edition includes:

  • Market background
  • Top-down views and outlook
  • Insights from the team:
    Heading south or finding true north? South Africa embarks on the next leg of its journey.
    Investing in South African fixed income has been a journey of twists and turns over the past decade. We asked our expert on the ground, Peter Kent, to unpick the winding political and economic path of recent years.
  • Regional highlights:
    Our EM Debt experts summarise August’s market developments across the EM sovereign debt universe.

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The fast view

Market Background

  • The JP Morgan GBI-EM rose by 0.8%, driven by FX moves, while the JP Morgan EMBI and CEMBI rose by 1.0% and 0.7% respectively.
  • The rhetoric from the US Federal Reserve was more dovish at the Jackson Hole Symposium. Chair Powell also distinguished between the decision over when to start tapering/hiking rates, leading to market participants reducing their expectations regarding the latter.


  • Assets in Zambia outperformed significantly after the presidential election saw the opposition leader Hakainde Hichilema beat incumbent President Edgar Lungu.
  • Angola took a positive step forward on the reform front after the president enacted a bill that makes the central bank independent, among other things.


  • In China PMI data was disappointing but is likely to improve as government policy is turning more supportive. Noise and volatility around regulation crackdowns in a variety of sectors continued.
  • Indonesia’s bond market benefited from the central bank announcing another round of debt monetisation (buying government bonds to help finance the fiscal deficit).

Latin America

  • Inflation is still climbing across the region as a whole, with a large upside surprise in Chile. Central bank hiking is also becoming more generalised across the region.
  • Peru’s central bank started to hike rates earlier than expected to try to curb inflation expectations. President Castillo showed slight signs of moderation by appointing a respected foreign minister and received the vote of confidence from congress.

Central and Eastern Europe (CEE)

  • Headline inflation was much higher than expected in the Czech Republic and could lead to a fast-paced tightening of monetary policy. Separately, a shortage of components in the automotive industry will likely weigh on industrial output data.
  • The National Bank of Romania revised its inflation expectations sharply higher but took no action as it waits to get a better picture of the country’s fiscal stance.

Rest of Europe, Middle East and Africa (EMEA)

  • South Africa announced a cabinet reshuffle. The earlier than expected replacement of the Minister of Finance initially caught the market off guard before it recognised the investor-friendly credentials of his replacement.
  • Several Gulf economies released fiscal data for the first half of the year. Given the higher oil prices, deficits have generally been reduced significantly, and for Qatar, the fiscal surplus has widened.

Authored by

EMD Team

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