Investing in Emerging Local Currency Debt offers you two performance sources!
• Emerging local currency debt has been under strong pressure in the second half of 2008 in a rising risk aversion environment. However, emerging economies have undertaken the same monetary response as developed economies, with Central banks cutting rates aggressively and some countries implementing economic stimulus packages to help their domestic demand component to develop. • Since the beginning of 2009, some countries have seen their economic situation stabilise and even some signs of rebound are arising. The huge liquidation process in terms of local currencies has stopped and several currencies are appreciating again.• Flows are continuing to be very important in emerging debt as investors are looking for additional yield and diversification in their portfolio. This helps local markets and currencies to post positive returns and we expect this trend to continue in the coming months.
• On a domestic side, pensions funds are still growing at a sustained pace and need to invest primarily in their domestic markets, providing a natural demand and support even if some local rates are already at historically low levels.
• The 3-year anniversary of the launch of the PF(LUX)-Emerging Local Currency Debt fund is an opportune moment to step back and to reflect on developments in the asset class in general, in what has been a momentous period in financial market history.
Conclusion:
The main drivers for emerging local debt are currently the strong rebound in their growth perspectives coupled with the come back of foreign investors in local equity and bond markets, pushing currencies higher. A few countries have not ended their easing cycle yet and we expect most of the central banks to remain on hold as long as inflation threats are not surging. The past years reforms are showing their efficiency and the credit quality is still improving on average.
Technicals:
Eine Darstellung der 3-Jahres Geschichte des PF(LUX)-Emerging Local Currency Debt finden Sie als PDF-Download in unserem Info-Center!
