Mathias Neidert


“There is tremendous potential for out-performance within emerging markets as it is such a diverse asset class.” Mathias Neidert, bfinance


It’s nice to go to emerging markets so that you don’t talk about Brexit but corporates are stockpiling for it.


Given the global trade backdrop, we will come to a situation where people think: “Well, we involve a dozen countries in building this product; maybe I should only have six or seven.” So they will want to sure up their supply chain, even if that means on-boarding a bit more cost. That is perhaps what the narrative is going to be towards the back-end of the year. A slowdown in global trade growth will start to impact everybody, not just emerging markets. Deltcheva: Hard and local currency yields are about 6%. If you think about the asset class’ drivers in terms of interest rate and credit risk, we don’t see many countries defaulting. Ultimately, on trade wars, we are hopeful that market corrections will limit the amount of sharp language on both sides. That’s the environment we expect to give us double-digit returns from hard currency. Hopefully, if global growth recovers, we will get something similar for local currency debt. Willsher: Nothing I have heard today has changed my stance, which is that I am happy holding a modest allocation to emerging market debt as a diversifier. Fundamentals and pricing helps, but they are not material drivers. It doesn’t feel like market disloca- tion is big enough to make a push for it right now. It just remains a sensible thing to have within a broader portfolio.


June–July 2019 portfolio institutional roundtable: Emerging market debt 21


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