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Investment Solutions Forum 2019 HK - Exclusive Insights - Donald Amstad

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1. What is the outlook for emerging market debt?

Video transcript

1. What is the outlook for emerging market debt?

The world is plagued by uncertainty at the moment. And the Central Bank response to that has been extraordinary. We've had over 50 central banks around the world cut interest rates this year, and the latest, last night, was the US federal reserve, which cut by another 25 basis points. The result of all this rate cutting is that there's over USD15 trillion worth of bonds around the world with negative yields. In fact, the only bond market left with any sort of yield is the US dollar bond market. Now, within the dollar bond market, the best value that we can find is in emerging market debt, particularly the bonds issued by companies. Emerging market companies have spent the last five years de-leveraging, whilst companies in America have spent the last five years re-leveraging. So, in terms of risk reward, we think that there's tremendous value in emerging market corporate bonds.