In a year of headline-induced market volatility, driven by the ebb and flow of risks across the world’s major global markets, emerging market debt closed the year as the best-performing asset class in the world.
This was a remarkable, yet unsurprising development. As it became increasingly clear that global central banks were committed to keeping interest rates low, increased investor demand for higher-yielding emerging markets (EM) assets pushed record levels of capital into EM debt.
As we look ahead, this trend should continue in 2013. A key beneficiary will be emerging markets’ high yield – a rapidly-developing EM segment that includes high-yield corporate borrowers as well as lower-rated sovereigns and frontier markets.
Hello 2013: keep buying EM bonds but remember due diligence | beyondbrics
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