PI Partnership – Jupiter Asset Management


ALEJANDRO DI BERNARDO, EM CREDIT ANALYST – LATIN AMERICA


Winners Mexico – Higher oil prices aid public finances via higher tax collections from state-owned PEMEX. We remain over- weight on selected utilities and names that can benefit from economic reopening. Brazil – We stay tactically overweight on blue chip export- ers, able to pass-through cost increases in the chemicals and metals & mining sectors. We see value also in some producers of fertilizers. Corporates are preferred to sover- eign debt.


Losers Chile – We see limited room for the government to stimu- late the economy, which is grappling with high oil prices. We are underweight across our portfolios, preferring expo- sure to high-yield names in the telecoms sector given attractive valuations. Peru – High copper prices might not produce expected improvements in the fiscal position of the country given inconsistent spending targets. We stay neutral to under- weight, preferring exposure to select miners and agricul- tural commodities exporters.


REZA KARIM, FUND MANAGER – EMEA COVERAGE


Winners South Africa – Monetary policy is credible and inflation is well managed. Commodity exporters look particularly attractive. African oil exporters Nigeria/Angola – Angola is expected to benefit from high oil prices and is also almost self-suffi- cient in food. To a lesser extent Nigeria also benefits from high prices.


Losers Turkey – High oil prices are hurting its trade balance and disruption to tourism from geopolitical events makes mat- ters worse. We remain underweight, but watchful. Ghana – Its access to foreign capital markets is effectively closed. Inflation is high and so is its deficit. Without credi- ble and strong macro-prudential policy, it is hard to see stability anytime soon.


Conclusion History tells us that yields at these levels are not sustainable for the longer term in emerging market debt, and investors should consider returning to the asset class or increasing exposure. At the same time, the consequences of higher inflation are crucial to the relative prospects of emerging market countries and companies. Accordingly, an active, selective approach is likely to deliver materially better performance.


Important Information


This communication is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors. This document is for informatio- nal purposes only and is not investment advice. The views expressed are those of the Fund Managers at the time of writing and are not necessarily those of Jupiter as a whole and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Holding examples are for illustrative purposes on- ly and are not a recommendation to buy or sell. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given.


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September 2022 portfolio institutional roundtable: Emerging market debt 21


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