Displaying items by tag: emerging markets

Monday, 04 March 2024 07:35

Where to Find Value in Fixed Income

The rise in bond yields presents an opportunity for fixed income investors to find value according to Penter Bentley, the co-manager of the BNY Mellon Global Credit Fund. He notes that bond yields are close to their highest levels since the financial crisis and that conditions have been improving for investment-grade debt. 

 

Due to these developments, he anticipates healthy returns for global and regional investment-grade credit. A key factor is borrowers have strong balance sheets with lower leverage than before the pandemic. In fact, Bentley believes that certain segments within fixed income could perform better than equities. He identifies ‘fallen angels’, short-duration high yield bonds, and emerging market corporate debt as having the most potential for outperformance this year. 

 

Some uncertainties that could cloud this outlook including the election in November, the Fed’s ability to cut rates, and a tense geopolitical situation with Russia-Ukraine and the Middle East.  Thus, investors should expect volatility to persist all year which means more opportunities for active managers to outperform. 

 

Another place that fixed income investors can find value is with global credit. Historically, global credit has delivered better returns when markets are emerging from a downturn. In terms of global credit, Bentley sees opportunities in European credit markets and emerging market debt.   


Finsum: Peter Bentley, the co-manager of the BNY Global Credit Fund, believes that investors can find value in fixed income. He sees the potential for strong returns in global credit, short-duration high yield debt, and ‘fallen angels’. 

 

Published in Bonds: Total Market

Some of the biggest names in finance are benefitting from a lack of reliable ESG data in emerging markets. Federated Hermes is one firm that has spent considerable time over the past year building its ESG exposure to emerging markets. The company says “artificially low” environmental, social and governance ratings have created opportunities for investors. Martin Todd, a portfolio manager at Federated Hermes told Bloomberg that “the mainstream ESG ratings firms often give emerging-market stocks a lower ranking because of fewer disclosures relative to companies listed in the developed markets. That’s created some really interesting valuation opportunities.” In emerging markets, ESG regulations are less advanced than in developed markets and ratings aren’t as established. In fact, ESG ratings for emerging market companies are artificially low due to a lack of disclosure, not because of any particular concern. While that creates an extra layer of risk for some investors, for firms with deep pockets, it provides an opportunity to beat the market.


Finsum:Fund managers are generating alpha in emerging market ESG stocks due to a lack of disclosure and artificially low ratings.

Published in Wealth Management

The U.S. had two consecutive quarters of negative growth meeting the technical requirements of a recession, and for the first time in over 40 years that coincided with very high inflation. Tasked with generating high returns in a stagflation environment investors are turning to an odd place, emerging markets. While some EM has suffered as a result of a stronger dollar and Fed tightening, pockets are promising to bring big returns in higher growth environments abroad. Countries relying on exports will have a difficult time, but countries like India, Malaysia, and Indonesia all have fairly robust domestic consumer demand and are quick-growing economies. The last country is an oddball but China has continued to deliver stimulus throughout the pandemic and may put itself in a good position to capture investor attention.


Finsum: Equities abroad are ultra-low, finding the right countries with domestic consumer support could be very profitable.

Published in Eq: EMs
Tuesday, 09 August 2022 02:45

Tech Stocks Driving Asia-Pac Down

Tech stocks are suffering and pushing the Hong Kong broad market index lower early this week. Companies like Alibaba and JD.com were driving this slump. Overall, economic data has been positive for China though. The latest report showed that dollar-based exports grew by almost 20% in July. The region as a whole is experiencing diverging patterns in equity performance as South Korea and China excluding Hong Kong both grew. Still with currency risk higher than usual as a direct result of Fed tightening and higher inflation emerging market investors are having a difficult time finding North in the current environment.


Finsum: If covid is starting to slow as a result of the climate it could be great for countries relying on trade. 

Published in Eq: Asia
Tuesday, 22 February 2022 11:22

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Published in Bonds: Total Market
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