Emerging Market Debt Indicator July 2023

After the recent market rally, Thys Louw reflects on the importance of reforms and the trend towards ‘green’ funding in frontier markets. The wider EM Debt team also provides an update across the rest of the universe.

7 Aug 2023

16 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Focus article: Frontier markets – charting a more sustainable course as the global storm abates
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in July and outline what’s taken place in the EM corporate credit market.

Download PDF

The fast view

Market background

July was a positive month for risk assets. While resilient US labour market data initially weighed on hopes of an imminent end to tight monetary policy, sentiment subsequently improved. The US Federal Reserve hiked the policy rate by 25 basis points (in line with expectations), but its less hawkish tone caused investors to forecast that the end of the hiking cycle could be near.


In Egypt, the Gulf Cooperation Council (GCC) started to step-up support, with the UAE providing US$400 million for wheat imports and the Arab Monetary Fund providing US$600 million for financial sector reforms. In Ghana, an improved budget deficit provided a positive sign of progress being made on the fiscal side.


Manufacturing activity softened across the region, while inflation continued its downward trend. The People’s Bank of China (PBoC) kept its policy rate unchanged, despite signs of a stalling economic recovery, meanwhile in India, despite manufacturing activity softening in June, the PMI remained relatively high.

Latin America

In Brazil, inflation continued to show signs of easing, with producer prices falling below market expectations. The Central Bank of Chile lowered its benchmark interest rate by 100bps, contrary to economists’ consensus, while in Colombia, speculation that the central bank could cut rates by up to 200bps before the end of the year lifted local bonds.

Central and Eastern Europe

The growth outlook in CEE remains negative overall, and PMIs are at multi-year lows, especially in the Czech Republic. However, the disinflationary trends in the region continued, but with no major surprises versus market expectations. In terms of monetary policy, Hungary continued with its rate-cutting cycle, reducing its policy rate to 15% and signalling continued cuts ahead. The Polish central bank is also paving the way for interest rate cuts ahead of the election.

Rest of Europe, Middle East and Africa (EMEA)

In Turkey, the central bank hiked its key policy rate by 250 basis points, which was much less than expected. Meanwhile, the Bank of Israel ended its hiking cycle, with the inflation outlook among the best in EMs. Turning to South Africa, with inflation well-behaved and pressure on the rand subsiding, the market moved to quickly price out any further hikes in the local bond yield curve.

EM corporate debt highlights

EM corporate debt had a positive month, overcoming the move higher in US Treasury yields as spreads tightened across both high-yield and investment-grade issuers. However, high-yield bonds outperformed investment-grade, with the former benefiting from a more aggressive tightening in spreads.

General risks. 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. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.

Specific risks. Emerging market: 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.

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. © 2024 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