Insights by Colchester Global Investors

There Is Still Value in Emerging Fixed Income: These Are the Reasons


Pixabay CC0 Public DomainTodavía hay valor en renta fija emergente . Mapa de Asia
  1. Real exchange rate valuations of many of the major Emerging Markets have improved relative to those prevailing in 2013, as exchange rates have weakened materially in nominal and real terms since then.   With external vulnerabilities having significantly reduced since 2013, this puts many of the Emerging Markets in a much stronger position today to withstand tighter global financial conditions.
  2. Emerging Markets have certainly been negatively impacted by a series of negative shocks in recent years also, which have contributed to their relative underperformance. We continue to believe however that the undervaluation of EM exchange rates, combined with a credible policy framework in most instances, will act as “pull factors” for global capital.
  3. Vulnerability to crises was previously a feature of many Emerging Market economies, but today that vulnerability is lower, at least for the major issuers of local currency emerging market government bonds.