With rising U.S. Treasury yields posing a threat to emerging debt. JP Morgan is now advising investors to cut holdings of sovereign dollar bonds to marketweight from overweight. And it suggests doing that by reducing exposure to the riskiest (and usually the highest-yielding) emerging markets, listed on its NEXGEM sub-index.
These bonds, with high yields and low credit ratings, basked in the glow of investor appetite last year when U.S. and German bonds were yielding next to zero and the euro zone looked in danger of falling apart. Emerging debt issuance last year topped $300 billion while junk credits such as Zambia and Guatemala saw massive demand for their debut bond sales. (Sales of junk-rated corporate bonds likewise boomed in the yield-seeking frenzy).
March 13 (Reuters) – India’s stubbornly high inflation must
come down to a 4 to 6 percent range, the country’s central bank
chief said on Wednesday, noting full implementation of this
year’s budget will have a “softening impact” on price growth.
“The Reserve Bank has to ensure that inflation is brought
down to the threshold level and is maintained there,” Duvvuri
Subbarao, the Governor of the Reserve Bank of India (RBI)told
students in London.
LONDON, March 12 (Reuters) – Kenya’s peaceful election has
given investors an added impetus to buy assets in East Africa’s
biggest economy, but a legal challenge to the result and the
possible international trial of the winner could dampen
Kenya, like many other frontier markets, is enjoying strong
growth, with its rising consumer class and high bond yields
attracting international investors.
LONDON, March 11 (Reuters) – Smaller emerging markets
companies are drawing interest from investors wary of wilder
frontier economies but willing to delve deeper into familiar
territory in pursuit of returns.
Buying shares in firms with market capitalisations of less
than $3 billion offers a way to tap into economies in which
demand from a rising middle-class for consumer brands, telecoms
and financial services is driving rapid growth.
LONDON (Reuters) – Sub-Saharan Africa is likely to show robust 5.8 percent growth this year, with domestic demand playing a key role, but business must do more to promote a more inclusive society, the African Development Bank said on Monday.
“We are looking at growth of around 5.8 percent this year in sub-Saharan Africa, excluding South Africa it would be 6.2 percent,” AfDB president Donald Kaberuka told Reuters in an interview on the sidelines of a business briefing.
Emerging market issuers have been busy this year, but investors aren’t getting much of a return, as rising Treasury yields steal their lunch.
Joyce Chang, head of emerging markets research at JP Morgan, told the Emerging Market Traders’ Association yesterday that:
LONDON, Feb 25 (Reuters) – Turmoil in Tunisia? Conflict in
Mali? Fraught elections in Kenya? Investment in Africa is
African investment funds have grown nearly five times in
value in the past six years and are attracting new forms of
capital, from local pension money to sovereign wealth funds.
Turkey took another step in the currency battle this week, cutting two of its three main interest rates to prevent speculative flows, yet also raising reserve requirements to cool domestic loan growth.
Policymakers in both the emerging and the developed worlds have been keeping monetary policy loose to stop their currencies rising to uncompetitive levels, even though G20 finance ministers last weekend said there would be no currency war, and made a commitment to refrain from competitive devaluations. The mood does appear to be softening, with the Fed’s minutes yesterday showing a number of officials think the central bank might have to slow or stop buying bonds.
LONDON, Feb 13 (Reuters) – A Bank of England pledge to help
London become a global trading centre for China’s yuan has
stirred talk of a revival in the city’s fortunes, similar to the
explosion of the U.S. dollar market in the 1960s and 70s.
In what many bankers saw as a pivotal move, the British
central bank said last month it was ready “in principle” to
adopt a currency swap line with the People’s Bank of China,
providing a two-way pipe to the City as the still-unconvertible
yuan starts to emerge as a world reserve
Mobile phone bills and beer consumption patterns are used by investors to assess how fast bank accounts are likely to grow in Africa, but what did investors count to gauge trends before there were mobile phones?
The answer? Cattle, bicycles, radios, founder of Zimbabwean telecoms company Econet Wireless Strive Masiyiwa told an Economist conference on Africa this afternoon. Masiyiwa said he researched ownership of these status items to assess the five-year demand for mobile phones in Botswana when he successfully bid for a mobile phone contract from Botswana’s government.