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Emerging markets

Tourism drop in CEE and CIS – many losers but also some beneficiaries?

Summer has arrived, and so should the main tourist season in Europe in a normal year. However, as we know, this year has been anything but normal. With lockdown endings in sight across the majority of countries in the region, most are preparing to welcome tourists back. Some have already opened their borders for EU visitors, while many prepare to open them for everyone from late June or early …

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Navigating the crisis in frontier Asia: does a debt suspension make sense?

Sri Lanka, Pakistan and Mongolia have each been severely impacted by COVID-19, albeit in different ways. These frontier economies each straddle two worlds. They’re emerging markets in the sense they’ve had access to global debt markets, with their eurobonds included in JP Morgan’s emerging market bond index. But their credit ratings are far below those of investment grade sovereigns, such as I…

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Africa’s Covid-19 response: official financing and calls for debt relief

To date, there have been several packages announced by multilateral financiers that will support African countries with their Covid-19 responses. These packages are urgently needed: first, to finance the health response and, second, to cushion the economic impact.

The IMF has announced $1 trillion of firepower to help the global response to the health, humanitarian and economic impacts of …

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Emerging market bonds in the time of coronavirus

Emerging markets have recently seen other impacts than the tragic ones of COVID-19 outbreaks on their societies and economies, with spreads widening considerably. Three factors have been at play. First, was a rapid sell-off in global stock markets that followed the realisation that the global economy is heading for a recession. Second, investors shifted to intense risk aversion and the demand …

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Lower oil prices for longer? The impact on emerging market oil producers

By Claudia Calich, Gregory Smith and Eldar Vakhitov

Market expectations of global oil prices have shifted several times already in 2020. The year started with short-lived scenarios of potentially higher prices, as tensions between the USA and Iran dominated the headlines. However, as COVID-19 tragically spread, the virus put a clear dent into expectations about global growth. Curfews and ef…

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The 2020 geopolitical risks that matter for emerging markets

Last year was very eventful in emerging markets with its share of US tariffs/sanctions, regime changes in many countries, mass protests across the board and Carlos Ghosn escaping Japan to soon-to-default Lebanon on the very last day of the year! 2020 promises many geopolitical risks. We have compiled some of the key risks below for developing economies, including “the biggest crisis no one is…

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Eskom, Pemex: two distinct stories but a similar root of problem

Fully government-owned corporate bond issuers (or quasi sovereigns) are one of the most interesting areas of emerging market debt investing, due to the hybrid nature of their credit risk: partly corporate credit, partly sovereign risk. Venezuela’s national oil company PDVSA is an example of what can go wrong, as it is in default. Bond investors are therefore currently spending more time looking…

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Should investors care about GDP data revisions in emerging markets? A Benin case study

Statistical data represents only an approximation of reality, and sometimes not a very good one. Generally, the less economically developed a country is, the worse the quality of the data provided by the government authorities. This increases the likelihood of later revisions, as new facts are uncovered or the methodology adjusted to better reflect the changing reality. Investors in emerging ma…

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Bond indices are shifting their attention to China – so should you

It is widely recognized that China is globally well-integrated from a trade perspective (it accounted for 13% of total world exports in 2017 according to the WTO). Yet in comparison, its financial markets remain in relative isolation. Indeed, despite having the 2nd largest equity and 3rd largest bond markets in the world (currently around $13 trillion), foreign participation in these markets re…

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Bond Vigilantes Weekly: 2016 all over again?

Global bond markets rallied after the US Federal Reserve (Fed) signalled on Wednesday what financial markets had been pricing in for months: the central bank will most likely retract from its rate hiking plans this year, given the global economic slowdown, lower oil prices and generally muted domestic inflation. The Fed also indicated its balance sheet may not shrink as much as expected as it n…

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