Measuring EM Stocks’ Undervaluation
What is the degree of Emerging Markets (EM) stocks’ undervaluation relative to United States (US) equities?
Opportunities In Local Currency Assets After The Sharp Dollar Move
The Fed meeting last week led to higher asset price volatility across asset classes.
US Inflation Unlikely to Pose a Serious Threat to EM
Inflation is likely to remain high in 2021. The primary source of price pressures is the rebound in commodity prices after their sharp collapse last year.
Seven Policy Proposals to Meet the Paris Agreement Objectives
The 2015 Paris Agreement introduced the legally binding goal of maintaining the average global temperature below the pre-industrial revolution average plus 2o Celsius in order to avoid severe stress on natural and socioeconomic systems.
EM Is No Longer a Commodity Play
The Emerging Markets (EM) asset class is often labelled a commodity play for investment purposes. The argument is simple and directional; EM countries export commodities, so rising commodity prices are good for the asset class, whereas falling commodity prices hurt EM countries.
Equity Outlook 2021: Emerging Markets
2020 will live long in memory, and so it should. EM have navigated, and in some cases excelled, during the most challenging stress test in recent history. The crisis will ultimately prove temporary, in our opinion, and 2021 is well placed to be a year of recovery.
2021 Outlook: Seven Themes for a Post-Vaccine World
Science is winning the battle against the covid-19 coronavirus. The advance in therapies has already contributed to a significant reduction in hospitalisation and fatality rates vis-à-vis the number of cases, while the multiple of approved and soon to be approved vaccines puts the livelihoods of billions of people on track to normalise in 2021.
US Elections and EM
Noise levels are likely to remain elevated in the run-up to – and possibly in the immediate aftermath of the upcoming US presidential election, but the post-election outlook should prove positive for EM assets by ushering in a period of more positive risk-sentiment, a long period of low US rates and a lower Dollar.
The Case for EM Investment Grade USD Bonds
Overall, EM IG bonds represent a great opportunity for investors seeking to monetise the EM risk premium with moderate volatility in a world, where higher yielding IG-rated securities are increasingly difficult to come by.
The EM Fixed Income Universe
Welcome to the 9th annual review of the Emerging Markets (EM) fixed income asset class. Using new data from the Bank of International Settlements and other sources, we establish that the EM bond market has expanded by 12% in Dollar terms in the past twelve months to a size of USD 29.6trn, or 25% of the global fixed income universe as of the end of 2019.
Is 9 Times More Yield Enough for You?
Does 9 times higher yield in EM than in US bonds make for an attractive investment proposition? We lay out the arguments.
The China Witch Hunt
The common characterization of US-China relations as a new Cold War is wrong. Instead, the most recent spike in tensions between the two countries – the second time this has happened since US President Donald Trump took office in 2016 – is primarily motivated by political considerations ahead of the November US presidential election.
Status Update: Coronavirus and EM Fixed Income in 2020 and Beyond
As of 27 April 2020, eighteen times more people have died from coronavirus per million of the population in developed countries (DMs) than in Emerging Markets (EM). This is partly due to measurement problems, but there may also be genuine structural reasons for expecting slower spread, less overall incidence, and lower mortality rates in EM countries than in DMs.
The Triple Shock and EM Equities: First-In First-Out?
Global stock markets have been struck by a triple shock; global pandemic, energy price war and market rout from full valuation levels in developed markets. Each of these types of shocks has been seen, and recovered from, previously.
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.