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Emerging Markets Outlook - May 2020

EMD, EME, and Emerging Market Economies

Recently it was announced that Brazil's daily death toll from the novel coronavirus has surpassed that of the United States. However, not all emerging market countries or EM economies are similarly afflicted. The following group of papers aims to provide updates on the outlook for emerging markets, focusing in on EM debt, EM equity, and EM economies as a whole.

Will there be a debt jubilee or a sovereign debt swap for African countries, on top of recent IMF aid? Does increased exposure to technology companies offer a backstop to emerging market equity indices? And now that China isn’t in lockdown anymore, how have their markets fared as they’ve unlocked, re-opened, and entered recovery mode?

recovery mode

Fundamentals Return to the Forefront in EM Debt (Eaton Vance, May 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Eaton Vance, in Q&A format, discusses the outlook for EM debt, especially given the recent oil price drop and ongoing coronavirus concerns, sharing viewpoints on where some of the best opportunities may lie within this asset class.

Digging Deeper into Emerging Market Debt (Capital Group, May 2020)

For compliance reasons, this paper is only accessible in certain geographies

James Blair, Fixed Income Director at Capital Group, covers a lot of ground in this Q&A session on emerging market debt, including topics such as real yields, US dollar depreciation, commodity prices, and sectors within the EMD market.

What Explains Emerging Markets’ Relatively Low COVID-19 Fatality Rate? (LGIM blog, May 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

LGIM's Erik Leuth looks at emerging market fatalities since the onset of COVID-19, finding that in many cases there have been significantly less deaths than in developed markets. Could this be because of demographics?

Emerging Market Fixed Income: Characteristics (FTSE Russell blog, May 2020)

FTSE Russell uses a data set going back to the 1980s to discuss the evolution of emerging market bonds over the years, as well as some of their core characteristics.

Emerging Market Corporates (Invesco, May 2020)

For compliance reasons, this paper is only accessible in certain geographies

Invesco explains that coronavirus-led volatility has caused the spread on corporate bonds in emerging markets to widen to levels not seen since the GFC in 2008-9, leading to some incredible investment opportunities.

EM Debt Remains Attractive Despite Uncertainty (Franklin Templeton, May 2020)

For compliance reasons, this paper is only accessible in certain geographies

Do opportunities in emerging market debt remain for investors in the wake of the COVID-19 epidemic? With lockdown periods being slowly curtailed, investors may be looking towards risk assets once again.

GCC/MENA Bond Market Update (Franklin Templeton, Apr 2020)

For compliance reasons, this paper is only accessible in the EMEA region

Franklin Templeton details recent economic and market-related activity in Gulf Cooperation Council / MENA countries, including information pertaining to sovereign debt issuance, economic indicators, and the oil market.

China Fixed Income: A safe haven despite uncertainty? (Manulife IM, Apr 2020)

For compliance reasons, this paper is only accessible in certain geographies

Manulife provides updates on Chinese bond market activity both during and after the COVID-19 sell-off. Could the Chinese bond market be considered a safe-haven, despite today's prevailing uncertainty?

Africa Lobbies for Debt Swap to Avoid Sovereign Defaults (EXX Africa, May 2020)

Despite the resistance from ratings agencies (and in addition to recent IMF aid), many African countries continue to lobby for an all-out debt swap in order to avoid a sovereign default.

China: Consumers and technology recovering (Franklin Templeton, May 2020)

For compliance reasons, this paper is only accessible in certain geographies

China's equity markets are back near their 12-month highs, but the economy is not yet firing on all cylinders. Specifically, discretionary spending has remained relatively low. Experts from Franklin Templeton discuss the outlook for China A-shares and the Chinese economy.

Asia tech: Local solutions for local markets (Wellington, May 2020)

Wellington Management profiles the growth of Asia tech solutions for local markets, a promising trend that they believe continues to thrive amidst both the coronavirus and the US-China trade war.

5 Things to Know About Chinese and Emerging Market Stocks (Invesco, May 2020)

For compliance reasons, this paper is only accessible in certain geographies

Talley Leger, Senior Investment Strategist at Invesco, puts together five graphs related to COVID-19 cases, business activity, foreign exchange, and other opportunities in Chinese and EM stocks.

Indian Outlook: Compelling, despite challenges (Manulife IM, Apr 2020)

For compliance reasons, this paper is only accessible in certain geographies

India's structural reforms, plus its relatively prudent fiscal and monetary policy ought to help the country to navigate the current environment better than some of its EM peers. Manulife explains further in this country-specific outlook.

Podcast: EM equities show resilience to corona crisis (NN IP, Apr 2020)

Due to greater exposure to technology companies within EM equity indices than developed market indices, emerging market equities may be relatively attractive at present.

Emerging Markets: Market dislocation creating opportunities (Amundi, May 2020)

For compliance reasons, this paper is NOT accessible in the United States

Both Covid-19 and the dynamics of the oil market have significantly affected emerging market economies over the past several months. But the dislocations in markets that they cause can also lead to opportunities for discerning investors.

Reopen vs Reactivate: Lessons from China's experience (UBS AM blog, May 2020)

The 'reactivation' of the global economy is just as important as its 'reopening' after COVID-19 lockdowns and shutdowns in the Western world. What lessons can other countries learn from China's experience?

The Impact of Venture Capital & Private Equity in South Africa (SAVCA, 2020)

SAVCA evaluates some of the measurable effects of venture capital and private equity investments upon the South African companies receiving these funds.

COVID-19 and responses in Sub-Saharan Africa (World Bank Group, Apr 2020)

The Coronavirus epidemic has spread rapidly across sub-Saharan Africa in recent weeks, and is projected to significantly affect GDP in the region - igniting the first regional recession in 25 years.

China: Out of lockdown - Into recovery? (UBS AM, Apr 2020)

China's economy was in lockdown first, but as it unlocks, reopens, and enters recovery mode, what will the remainder of 2020 and 2021 hold in store? Additionally, how will Chinese bonds and Chinese equities perform?

The Latin American and Caribbean Economies In a Time of COVID-19 (World Bank, Apr 2020)

Severe adverse shocks are not new to the economies of Latin American and Caribbean countries, but the present epidemic could be compounded in this region by a supply shock.