Ashmore Group

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Commentary

It is here again – the VIX spike!

The VIX index has spiked. Over more than twenty years, VIX spikes have been excellent guides to when to put money to work in EM fixed income and equities. Investors have, on average, generated 262bps of excess return in EM fixed income and 234bps of excess return in EM equities by putting money to work during VIX spikes relative to a ‘timing agnostic’ investment strategy.

Commentary

The Power of Carry

Quantitative Easing (QE) policies in developed countries triggered a flight from yield in EM as investors pursued capital gains in developed markets instead. As the capital gains in developed markets fade and with yield nowhere to be found, a search for yield in EM has finally begun.

Commentary

The 2020-2024 EM Fixed Income Outlook

Following another year of strong returns, Emerging Markets (EM) fixed income has outperformed developed bond markets by a significant margin over the past four years. The outperformance is likely to continue in 2020, because EM fixed income remains attractively priced both in absolute terms and relative to bonds in developed markets as well as under-owned and well-supported by an improving fundamental backdrop.

Commentary

The Missing Point in the Global Growth Debate

Global growth is decelerating. Policy-makers in developed economies are gearing up for yet more fiscal spending. While fiscal spending may support growth for a short time, and for longer if very carefully applied, it will not change the growth outlook fundamentally.

Commentary

The Power of Top Down: 7 Implications for Em Equity Investors

Welcome to Emerging Markets! A huge array of economies all at various stages of development and maturity with different capital market structures. Add in as many different currencies, political frameworks and policy stances and the result is a complex, diverse, evolving and inefficient market universe.

Commentary

The EM Fixed Income Universe Version 8.0

Welcome to the 8th annual review of the Emerging Markets (EM) fixed income asset class. Using new data from Bank of International Settlements and other sources, we establish that the EM bond market had grown to a size of USD 26.5trn, or 23% of global fixed income at the end of 2018.

Commentary

The Path to Averting a Default in Argentina

Investors are suddenly much more concerned about the political transition in Argentina. The country’s stock of debt is large but not unmanageable, with a path to avoid default and to boost growth in sight.

Commentary

The Case for EM Local Currency Debt

The establishment of local bond markets has been the single most important structural change in Emerging Markets (EM) in the past quarter of a century. Many investors still fear local markets due to FX volatility, but EM local bonds have performed better overall than US Treasuries and US stocks.

Commentary

Passive Investing in Em Equity: The Most Active Investment Decision That You Will Make

Passive investment funds have grown in popularity and offer one key benefit, immediate market beta. However, investors beware! A passive approach to investing in emerging markets equity has several explicit and implicit ramifications. We consider seven here.

Commentary

The Case for EM External Debt

The case for Emerging Markets external debt is solid. The long-term risk-reward has been and remains compelling. The outlook over the medium-term also favours the asset class as the unwinding of distortions in global bond markets attributable to Quantitative Easing strongly favour EM over developed markets.

Commentary

Beware of Big Fiscal

Demand stimulus has been in fashion in developed countries since the 2008/2009 financial crisis. Monetary policy in particular has been popular with zero interest rate policies and Quantitative Easing (QE) forming the backbone of macroeconomic policies in the UK, Japan, Europe and the United States. This may now be changing.

Commentary

EM Versus DM Growth (2019-2023): How Global Is ‘Global’ Growth Really?

IMF recently lowered its growth rate forecast for the global economy. We expect growth to command a premium as it becomes scarcer, while growth laggards will be penalised. It is therefore important to unpack IMF’s global growth forecast to determine who is growing and who is slowing.

Commentary

The 2019-2023 EM Fixed Income Outlook

EM fixed income should deliver compounded returns ranging from 30% and 60% in Dollar terms over the 2019-2023 investment horizon as markets revert to unwinding the so-called ‘QE trades’ after a temporary US election related interruption in 2018. As for 2019 returns, they may be marginally stronger than the five-year average due to the pullback in 2018.