New hope for EMs debt

Investment flows in the emerging markets debt have remained remarkably resilient despite asset class volatility, according to Eaton Vance.

However, the biggest challenge for the sector’s 2019 performance would be whether  investors would continue to remain enthusiastic, the firm said.

Through the first week of February, there was USD $21.1 billion of inflows into EM fixed income and this included USD $10.9 billion into hard-currency bonds, USD $3.7 billion into local-currency EM bonds and USD$6.5 billion into EM bond ETFs – their second-highest inflow on record.

Related News:

“Sentiment for EM actually began to turn positive last November, and looking at the trailing three-month performance shows the depth of the rebound – the EMBI returned 5.37 per cent, the CEMBI 3.29 per cent and the GBI-EM 9.83 per cent,” the firm said in the press release.

Additionally, valuations are more attractive than they were in quite a while and, according to Eaton Vance, the flows were expected to stay supportive.

At the same time, fundamentals remained a concern in some key countries and global macro risks such as slower growth, ongoing trade wars and renewed Fed rate hikes could reassert themselves.

“The need for country-specific due diligence and careful evaluation of risk factors is as important as ever,” the firm said.




Related Content

The ‘indispensable’ way investors can challenge companies

Proxy voting is an ‘indispensable’ way investors can influence companies and industries on environmental, social and governance (ESG) practices, a...Read more

Fact check: JP Morgan Emerging Markets Opportunities

Emerging markets have been an asset class that’s difficult to succeed in, but JP Morgan’s Emerging Markets Opportunities fund has broken the mould...Read more

EMs to outshine US equities in 2019

While the US ruled over other global markets in 2018, 2019 will see emerging markets, Chinese equities and Japanese equities dethrone their US equity ...Read more

Author

Comments

Add new comment