-
Published on Aug 26, 2016
26
August 2016: Emerging market debt and equities are still the place to
go if investors are looking for yield opportunities. Ursula Marchioni,
from iShares BlackRock says ‘there are three stages of the Emerging
Market debt rally. Stage one: Previous headwinds to emerging markets
become gentle breezes, e.g fears of a China hard landing, an oil crash
and dollar strength. Stage two: gentle breezes become tailwinds, for
example the 80% oil rally, and the improving fundamentals in many
emerging market economies. Stage three: structural inflows and the
global search for yield provides continued price support. She says we
are now in stage three.
In regards to emerging market equities, Ursula says earnings upgrades are coming through for the first time in five years, allowing companies to repay debt and the price to book is near historical lows, making equities attractive.
For emerging market debt specifically, Ursula says they are shifting from local currency towards hard currency, from a risk-adjusted income perspective. However she does say ‘local EMD offers greater potential for alpha generation, especially for investors that can stomach the additional volatility that comes with currencies.’
No comments:
Post a Comment