Emerging Market Debt Indicator September 2024

Our EM Debt team provides an update across the investment universe and shares the latest outlook and current top-down positioning.

Oct 9, 2024

12 minutes

EMD Team

Chapters

01
Market background
02
Top-down views and outlook
03
Africa
04
Asia
05
Latin America
06
Central and Eastern Europe, Middle East and South Africa
07
EM corporate highlights
01

Market background

Close-up of dark green leaves
In another positive month for the asset class, all areas of emerging market (EM) fixed income posted gains. The Federal Reserve’s first rate cut in over four years, together with improved sentiment around the global economic outlook, provided a supportive backdrop

September was a strong month for EM fixed income assets, across local and hard currency markets.

The global market backdrop was supportive, with developed market bond yields falling as the European Central Bank and the US Federal Reserve (Fed) both cut rates over the month – by 25bps and 50bps respectively. This marked the first rate cut in over four years in the US, where the inflation picture has continued to improve. The Fed’s decision, combined with some more encouraging data on the US economy, boosted risk assets across the globe.

Across emerging markets, several central banks in Latin America continued to ease monetary policy, boosting local bond markets; the exception was Brazil, where a resurgence of inflation prompted a rate hike. Many countries are also battling a severe drought, which is impacting energy production and causing wildfires. In Asia, Chinese policymakers announced a raft of stimulus measures aimed at boosting confidence and supporting the equity market, while Asian currencies benefited from US dollar weakness caused by the fall in US bond yields. In Central and Eastern Europe, growth data remained on the weak side, and several markets were impacted by significant floods.

The local bond market (JP Morgan GBI-EM) returned 3.4% in September, with local bond markets and currencies appreciating. Among hard currency assets, the sovereign debt market (JP Morgan EMBI GD) gained 1.8%, while the corporate market (JP Morgan CEMBI BD) returned 1.2%, with high-yield and investment-grade market segments contributing positively to the latter.

General risks. The value of investments, and any income generated from them, can fall as well as rise. Where charges are taken from capital, this may constrain future growth. Past performance is not a reliable indicator of future results. If any currency differs from the investor's home currency, returns may increase or decrease as a result of currency fluctuations. Investment objectives and performance targets are subject to change and may not necessarily be achieved, losses may be made. 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 (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.

Authored by

EMD Team

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

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Investment Process
Any description or information regarding investment process is provided for illustrative purposes only, may not be fully indicative of any present or future investments and may be changed at the discretion of the manager without notice. References to specific investments, strategies or investment vehicles are for illustrative purposes only and should not be relied upon as a recommendation to purchase or sell such investments or to engage in any particular Strategy. Portfolio data is expected to change and there is no assurance that the actual portfolio will remain as described herein. There is no assurance that the investments presented will be available in the future at the levels presented, with the same characteristics or be available at all. Past performance is no guarantee of future results and has no bearing upon the ability of Manager to construct the illustrative portfolio and implement its investment strategy or investment objective.