Are Investors Ignoring Growing Warning Signs for Emerging Market Debt? (RBA)
The latest Insights newsletter from Richard Bernstein Advisors LLC argues that investors seem to be ignoring the following growing warning signs for emerging market debt:
- Emerging markets’ high rates of money growth
- Rising inflation
- Increasing political instability
- Currency instability
The RBA article goes on to note that emerging markets have had (for the last several years) the highest rates of money growth and the highest rates of inflation in the world. In fact, many of the major emerging markets now have inflation rates between 5% and 10%.
In addition, RBA explained why weakening emerging market currencies are not favorable for emerging market debt investing while the “coup count” is up to three (Egypt, Ukraine and Thailand), adding:
The high rates of inflation in some emerging markets have existed for so long that the standard of living is decreasing. The spreading civil unrest is a symptom of those falling standards of living. Yet, investors remain enamored with the emerging market consumer investment theme, and continue to ignore the deteriorating standard of living in a growing number of emerging market economies.
The RBA article concluded by saying they continue to prefer high yield municipal bonds and have sizeable positions in their portfolios.
To read the whole article, EM debt seems risky, go to the website of Richard Bernstein Advisors LLC.
Similar Posts:
- What’s the Right Exposure to Emerging Market Stocks? (USA Today)
- Emerging Market Companies & Governments Binge on US Dollar Debt (WSJ)
- Don’t Be Lured Back Into “Cheap” Emerging Market Funds (FE Trustnet)
- 2018 Emerging Markets Outlook (Nikko Asset Management)
- Emerging Market Debt Outlook 2018: A Global Rebalancing is Due (Vontobel)
- Emerging Markets in a World of Higher Long-Term U.S. Inflation (PGIM Fixed Income)
- Mixed Views on Emerging Markets (MarketWatch)
- The “Next 15″ Will Drive 80% of Emerging Market Growth by 2025 (Luxury Daily)
- Lazard Emerging Markets Fund Manager: Full-blown Financial Crisis in China is Unlikely (FE Trustnet)
- Capital Economics: History Says Rally in Emerging Market Stocks is no Dead Cat Bounce (FE Trustnet)
- Why Newly Listed Chinese Stocks Fall Below Their IPO Prices (Nikkei Asia)
- Latin America Faces a Third Shock as Global Financial Conditions Tighten (IMF)
- Election Results in Some Fragile Five Emerging Markets Calm Investors (Reuters)
- Fixed Income Asset Allocation Insights: Emerging Market Debt Looks Attractive Amid Recovery (PineBridge Investments)
- Mark Mobius’s Favorite Emerging Markets: Indonesia, Russia, Brazil, Vietnam and South Africa (WSJ)
Leave a Reply