Understanding the Resiliency of Emerging Market Debt Amid Global Volatility

Capital Group
By May 21, 2023 16:14

Understanding the Resiliency of Emerging Market Debt Amid Global Volatility

Is the long-term case for emerging market debt still intact?

In this research paper, Kirstie Spence discusses the outlook for emerging market debt and how it has been impacted by the global economic backdrop. She emphasizes that despite the current volatility in the markets, long-term investors should find the starting yields of emerging market debt attractive. Spence recommends local currency bonds, especially in Latin America, due to their undervalued exchange rates and strong macroeconomic fundamentals. She also mentions the potential impact of tensions between the US and China on international investors committing to the Chinese market.

Dealing with Current Volatility in Markets

Spence acknowledges that emerging market debt is inherently risky but highlights that its diversified universe and various instruments available to investors can help mitigate risks. She believes that the relatively strong macroeconomic fundamentals in the major emerging market countries, combined with high starting yields, should provide a buffer to any further volatility. Spence also explains that the preference for local currency bonds is based on a 12 to 18 month-horizon and notes that Latin American countries, such as Brazil, Mexico, and Colombia, have raised interest rates early to keep inflation under control and support exchange rates.

Are you interested in learning more about the long-term case for emerging market debt? Click “Click report” to read the full research paper.

Asset Manager

Capital Group is one of the largest and most experienced investment management companies in the world

Capital Group is in 1931 opgericht in de Verenigde Staten en een van de grootste onafhankelijke vermogensbeheerders ter wereld met een actief beheerd vermogen van meer dan $2,1 biljoen. We doen alleen vermogensbeheer. Al 90 jaar is het ons primaire doel om een consistent en superieur resultaat te realiseren voor langetermijnbeleggers.


Feike Goudsmit
Managing Director, Institutional
Tel: +31 (0) 20 797 7575
E-mail: feike.goudsmit@capitalgroup.com

LinkedIn: capital-group-europe

Capital Group
By May 21, 2023 16:14