Author profile

Claudia Calich

Years in the bond markets: 26

Specialist subjects: Emerging markets, Sovereign bonds

Likes: travelling, hiking, foreign languages, Asian food, Latin music, yoga

Heroes: Henri (my father), Raoul Wallenberg, Gandhi

Is China really a currency manipulator?

Last night, the US Treasury designated China as a currency manipulator. This has occurred a few times in the past, most recently in 1994. Though China has been on the Treasury’s watch list for some time (alongside several other countries), given that the most recent Treasury report published in May did not name China a manipulator, it begs the question, what has changed between then and now?

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Emerging Markets: 5 key issues to watch in 2019

Emerging Markets (EM) debt had a torrid 2018 as global macro risks (including general geopolitics and trade wars), softer EM growth and idiosyncratic stories (Argentina, Turkey), all repriced relatively expensive valuations at the beginning of the year. Are the new prices a better reflection of fundamentals? This will largely depend on the evolution of 5 key topics.

  1. China-US – upside surprise…

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Brazil’s election: What’s at stake?

Global investors are paying special attention to the forthcoming general election in Brazil, not only because the country is the world’s eighth-largest economy, ahead of Italy and Canada, but also because in these turbulent times for Emerging Markets (EMs), an unexpected or market-unfriendly outcome could bring more volatility to the entire asset class. After the recent sell-offs in Turkey and …

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Can Russia stomach new US sanctions?

After the summer break, the US Congress is scheduled to review various bills proposing additional sanctions on Russia. The proposals include additional restrictions on Russian imports and exports to the US, as well as on activities of Russian banks in the country. Under consideration there will also be a ban, for US citizens, to trade any newly-issued Russian sovereign debt with a maturity of m…

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How vulnerable are Emerging Markets to Trade Wars?

Emerging Markets Portfolio Manager Claudia Calich analyses the potential effects of an escalation of the US-China trade tensions on Emerging Markets. Despite the diplomatic rows and all the column inches written, Claudia discusses how popular products such as French wine and cheese will always find their way to the end consumer, no matter how many barriers along the way. Calich also explains wh…

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EM bonds YTD review and outlook

While emerging market bonds have notably underperformed in the year-to-date period, Fund Manager Claudia Calich believes the longer-term fundamental case for the asset class remains intact. The outlook for broad-based global economic growth is still in place, for example, which should help fiscal improvements and deleveraging in emerging countries. In this Bond Vigilantes video, Claudia also no…

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Bahrain: avoiding the first sovereign sukuk default?

Bahrain spreads have widened in recent months, despite the rise in oil prices. The market is focusing on the $750 million Bahrain Sukuk maturing on November 22, 2018. Given that the country’s international reserves are estimated at around $2.1 billion, the country will need additional funding to repay it.  The market consensus is that Bahrain will receive financial support from neighbouring Sau…

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An update on Argentina

Argentinian assets have been under material pressure in recent days.  I thought it would be useful to write my thoughts on the recent moves and implications for markets going forward.

Over the past two months, the Argentinian peso had become overvalued in real terms following large inflows from foreign investors in 2017. These capital flows caused the nominal exchange rate to depreciate by much…

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The Venezuelan cash crunch: exporting passports as a palliative?

Venezuela’s cash flow crisis has been well covered. The recent default on its sovereign debt and likely default on the debt issued by its state-owned company, Petroleos de Venezuela SA (PDVSA), combined with collapsing imports attest to its ongoing cash crunch and humanitarian crisis. ¹

A change of economic policy however, would alleviate the crisis and improve the patient’s health. This could …

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Emerging markets debt: 2017 post-mortem and 2018 outlook

Emerging markets debt posted strong returns in 2017, driven by the stabilisation of fundamentals, ongoing global and EM economic recovery, a small rebound in commodity prices and a geopolitical environment in which the usual suspects (Trump, North Korea, China) have behaved in a more benign fashion thus far. One had to struggle to find an asset that produced negative returns and the only two th…

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