“75% of the corporates that issue in dollars from the emerging markets are investment grade. This is a defensive place for investors that are looking to get some incremental pick-up in a low yield environment for credit.”
Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking Group, predicts that in 2013 “the emerging economies will continue to outperform, growing by close to 5.7% from 5.2% in 2012.” Whilst in contrast“the advanced economies will remain the laggards, with annual growth on average of around 1.3%”, as stated in the latest Clear Path Analysis report.
Emerging markets (EM) are smartening up to prudent fiscal policy and closing the gap between them and traditional ‘safe havens’. Investors are anticipating the greatest growth in Asia, but with Mexican and Brazilian currencies performing well, the opportunities for lifting investment returns appear endless.
The Investing in Emerging Market Currencies and Debt 2013 report, published by Clear Path Analysis, explores institutional investors’ strategic shift to EM debt and currency exposure and their departure from the European bond market. With contribution fromLazard Asset Management, Aberdeen Asset Management, First State Investments, Pioneer Investments and institutional investors includingRailpen Investments and Second Swedish National Pension Fund, it questions whether dollar-denominated or local currency best protect returns.