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Emerging Markets Edition: December 2019

A Focus on Opportunities in Emerging Markets

Investing in Emerging Markets has always come with its own caveats, but with economic growth slowing and bond yields either declining or already negative across much of the Developed World, investors are more inclined to consider opportunities that lie further afield.

This collection of papers draws together opinions and views on a wide range of issues affecting various aspects of Emerging Market investing. Economic policies, megatrend influences and individual country analyses are among those featured.

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The tension between growth and social justice in emerging markets (Hermes IM blog, 2019)

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

Hermes investigates inequality in major emerging markets, which challenges both political stability and their potential for growth. The paper focuses on the friction that exists between fiscal policies designed to promote economic growth, and those that are designed to be more redistributive. In the face of slowing external demand for growth and services, is the right solution to tax wealth AND labour to alleviate poverty?

EM Debt: Determinants of sovereign bond quality and returns (Eaton Vance, 2019)

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

Eaton Vance investigates the main influences upon EM sovereign bond ratings, spread performance and default rates over an extended period, from 2000-2016. The results demonstrate that economic policy is the key determinant, but that other variables related to the real economy, such as the political orientation of the government and external sector all play a role.

Podcast: China A-shares and a diversified portfolio (BMO GAM, Nov 2019)

BMO GAM’s June Li discusses recent events in China and what actions investors might consider following the inclusion of China-A shares in both MSCI and FTSE Russell indices and with country weightings recently being revised.

African Capital Markets: Challenges and Opportunities (CFA Institute Research Foundation, 2019)

This collection of papers from the CFA Institute is produced in partnership with the African Securities Exchanges Association, (ASEA). With input and opinion from local contributors across ten markets, this publication offers investors a significant resource upon which to base further investigation into the prospects for both individual countries and the continent itself.

In a low-yield environment, income is key (Capital Group, Oct 2019)

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

Capital Group suggests that one potential solution for hard-pressed income seekers might lie in EM debt, which may be supported by the more accommodative stance being taken by central banks.

The Impact of ESG Investing in Emerging Market Equities (Candriam, 2019)

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

This report from Candriam seeks initially, to examine what, if any, impact adopting ESG principles has on EM equities. The report then explores the integration of ESG principles into the investment process and discusses the results obtained.

Capturing the Asian century: tapping into Asia’s growth (Manulife IM, Jun 2019)

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

In this paper by Manulife IM, they explore the economic foundations that underlie Asian growth prospects and then investigate some of the recent changes to fixed income markets in China that should encourage international investors to renew their interest in the asset class.

Think: Asia Pacific cities in tomorrow's world (Nuveen, 2019)

Nuveen outlines some of the structural megatrends that, over the next few decades, will tend to favour the Asia Pacific region. By 2030, more than 50% of the world's urban population growth and many of the world's top 50 global cities will be found in the region. They believe that these and other factors present a compelling case for a significant allocation in institutional real estate portfolios.

Global Limited Partners' Survey: focus on EM private equity (EMPEA, 2019)

EMPEA's Global Limited Partners Survey, now in its 15th year, sheds light on how LP's investing plans are developing, which issues are impacting decision-making, and the countries perceived as being attractive. The Survey also features manager selection and due diligence considerations, along with ESG policies and practices.

Emerging Trends in Real Estate: Asia Pacific 2020 (PwC/ULI)

This joint report from PwC and the Urban Land Institute investigates real estate investment and development trends in the Asia Pacific region, noting that investor strategies are becoming increasingly cautious as the end of the cycle approaches.

Institutional Investment in China's Infrastructure (Lincoln Institute, 2019)

The Lincoln Institute presents a detailed paper which outlines institutional investment in China. They explore a wide range of subject matter, including the investment environment, conflicting investor requirements and the opportunities that exist. The document also suggests how China might develop non-bank solutions in order to capture institutional investment interest.

Hard and local currency bonds provide different routes to returns (Capital Group, 2019)

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

In this paper from Capital Group, they explore the universe of Emerging Market bonds, which have now become a core holding for many investors, particularly with yields on many Developed Markets bonds now turning negative. They scrutinise the relative risks and attractions of both hard and local currency bonds, as each set of investments has its own distinctive set of characteristics.

Assessing Sub-Saharan Africa’s Long-Term Growth Upside (PGIM Fixed Income, 2019)

PGIM’s Fixed Income team explores the growth prospects for the region over the medium to long-term, identifying that growth is a critical factor in debt sustainability. Other aspects of Sub-Saharan African economies are assessed, including the region’s (over) dependence on commodity exports and other long-term structural issues which impact upon its prospects.

Emerging market country allocation matters (MSCI blog, 2019)

MSCI suggests that for an EM conviction investor, an approach using individual country, index-based investment vehicles may be one which would enable them to tilt portfolios to or away from particular investment themes. This paper reviews some of the implications of such an approach.

Investing in Emerging Market Equities, Europe 2019 (FTSE Russell)

FTSE Russell has sponsored this report which contains a comprehensive range of materials relating to investing in Emerging Markets. Roundtable discussions, white papers and interviews from notable contributors on three key topics enliven the debate about balancing risk and reward within the EM equity space.

EM Outlook: A tug of war between weaker growth and looser policies (Amundi AM, Nov 2019)

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

Amundi Asset Management presents their Q4 Emerging Markets paper in which they examine reasons for the decline in EM equities in the third quarter, whilst EM debt fared better as investors sought yield. Going forward, in the short term they remain cautious of EM assets, but are more optimistic in the medium term.  

 
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