Emerging perspectives

Emerging Market Debt Indicator July 2021

In this edition, we discuss the new paradigm in China and what it means for bond investors. As always, we also highlight recent regional developments and share our outlook for the EM debt universe.

9 Aug 2021

21 minutes

EMD Team

This edition includes:

  • Market background
  • Top-down views and outlook
  • Insights from the team
    • A new paradigm in China and what it means for bond investors.
      Portfolio Manager Alan Siow discusses key considerations that could help investors navigate the increasing news flow from China.
  • Regional highlights
    • Our EM Debt experts summarise July’s market developments across the EM sovereign debt universe.

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The fast view

Market Background

  • In a more subdued month, the JP Morgan EMBI rose by 0.4%, while the ongoing strength of the US dollar relative to EMFX weighed on the JP Morgan GBI-EM (overall index return: -0.4%).
  • US Treasury yields continued their decline, and concerns persisted around the economic impact of the spread of the Delta COVID variant.


  • Egypt’s fiscal data continues to be strong, with the government achieving a 1.4% primary surplus in FY20/21.
  • In Zambia, the trade balance remained in significant surplus as high copper prices continued to support exports. Foreign capital inflows into the local bond market, combined with expectations of higher reserves after the IMF SDR allocation, boosted FX.


  • PMI data across the region moderated from the previous month, and the COVID situation is weighing on some economies, particularly in ASEAN countries.
  • China’s activity data generally beat expectations, and GDP growth was in line with expectations. An unexpected cut in the reserve requirement ratio (RRR) signalled a loosening of monetary policy. But regulatory tightening in the tech, education and property sectors created some turmoil in markets.

Latin America

  • The COVID picture is generally improving, with cases falling rapidly, particularly in Brazil and Colombia.
  • The busy political agenda had mixed results. In the primary elections in Chile, the more moderate candidates from both the left and right wing parties won. But Peru’s political landscape is increasingly uncertain and complex.

Central and Eastern Europe (CEE)

  • Leading indicators continue to point to robust growth across the region as economies progress out of their respective COVID restrictions.
  • Poland and Hungary both made headlines over legal disputes with the EU.

Rest of Europe, Middle East and Africa (EMEA)

  • We continue to see monetary policy tightening across the region in general, with Ukraine, Russia and Kazakhstan raising interest rates.
  • On COVID, the Delta variant continues to drive case growth, particularly in Russia, Kazakhstan, and Turkey.


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.

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.

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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