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Investment opportunities in Emerging Nation Debt

Tags: emerging debt


Relaxation of risk premiums in the periphery of the euro and the expectation of a new round of asset purchases by the Fed, have placed fixed income Emerging as one of the most profitable assets has harvested from late July .

Something that ultimately confirms the recovery of inflows in this investment category, which has accelerated markedly during August and could continue to give active support by the end of the year if (i) the management of the euro crisis continues to run successfully, and especially (ii) if the Fed starts a new round of quantitative easing . It should be remembered that the expansion programs of the Fed balance sheet, no change in its composition (Operation Twist ), have been over the last few years one of the support points in the price of emerging assets , particularly in sovereign debt (see chart).

USD denominated debt remains our main challenge for emerging debt by the end of year: there is scope for the EMBI Global (overall index includes sovereign spreads debt against USD) to break the barrier of 300bp and placed in 270-290pb fork with economies with better fundamentals (Asia and to a lesser extent, Latin America) concentrating the bulk of Afi positioning.

The gradual recovery of the global economic cycle, the impact of stimulus programs in emerging and new developments in unconventional monetary policy in the U.S., also provide opportunities in the segment of bonds denominated in local currency: RUB, BRL , INR and IDR, Afi bets in this category.


This post first appeared on Prediction Of Economic Crises, please read the originial post: here

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Investment opportunities in Emerging Nation Debt

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