Emerging Market Debt Indicator August 2023

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

13 Sept 2023

14 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook for the asset class
  • Regional highlights and corporate credit market review
    Our EM debt experts summarise market developments across the sovereign debt universe in August and outline what’s taken place in the EM corporate credit market.

Download PDF

The fast view

Market background

August was a volatile month for financial markets after minutes from the US Federal Reserve’s July meeting and a raft of stronger US economic data pointed to the potential need for further policy tightening. Given the moves in US yields and the resultant US dollar strengthening, EM fixed income and currencies weakened over August.


Ghana continued to make progress on its local debt restructuring, while the central bank in Zambia hiked rates by 50bps to 10%, as currency pressure is expected to continue to weigh on inflation. There was also political turmoil in Gabon, with a military coup taking control of the country and establishing a transitional government.


It was another China-centric month in Asia, with sentiment towards the country remaining weak overall and spilling over to weigh on many currencies in the region. However, post month-end, the announcement of nationwide support measures boosted sentiment somewhat. After months of uncertainty, a prime minister was finally appointed in Thailand.

Latin America

The Central Bank of Brazil started to cut rates (by 50bps), a slightly bigger cut than market expectations. In contrast, central banks in both Mexico and Colombia kept rates on hold. Brazil’s President Lula da Silva’s proposed fiscal framework was approved by the lower house. Argentina and the IMF reached a deal to devalue the currency to unlock the next tranche of IMF financing.

Central and Eastern Europe (CEE)

Economic activity data (mainly PMIs) remained at subdued levels in the region, with downside surprises notably in Poland. While economic data remains broadly weak, it is no longer surprising consistently to the downside. Similarly, falling inflation came as less of a surprise, and the narrative in the Czech Republic is shifting in the direction of rate cuts.

Rest of Europe, Middle East and Africa (EMEA)

Policymakers in Turkey continued to extend macroprudential measures. Moody’s suggested that if this orthodox policymaking path continues, it could lead to a “positive outlook” rating for the country. But inflation remains troublesome and growth weak. Elsewhere, an improving inflation picture increases the likelihood that the South African Reserve Bank has completed its hiking cycle.

EM corporate debt highlights

EM corporate bonds came under some pressure over August, with the JP Morgan CEMBI BD returning -0.4%. The asset class was impacted by both widening spreads and rising US Treasury yields, with high-yield issuers outperforming investment-grade, helped by its lower interest rate sensitivity.

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
Emerging Perspectives - latest insights

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.

All rights reserved. Issued by Ninety One.

For further information on indices, fund ratings, yields, targeted or projected performance returns, back-tested results, model return results, hypothetical performance returns, the investment team, our investment process, and specific portfolio names, please click here.