Positive outlook for emerging markets


The outlook for emerging markets remains positive, despite some significant headwinds experienced over recent months, according to Neuberger Bergman specialist, Gorky Urquieta.
In an analysis issued this week, Urquieta claimed the near-term outlook for emerging debt markets was cautious but added that his company believed the asset class had hit an inflection point of market adjustments with the potential ‘beginning of the end' of ultra-easy global monetary conditions.
"Despite recent ‘noise' to the contrary, emerging market economies are generally expected to improve and remain stronger than their developing market counterparts," he said.
"The financing needs of sovereign and corporate issuers are relatively moderate, potentially limiting supply and supporting credit fundamentals and spreads."
"In general, we believe that, recently, investors have made too much of slowing growth in emerging markets and we expect some economic resurgence, supported by global recovery, which should partially offset China's slowdown, even as emerging market policymakers gradually scale back monetary support.
"We believe that slow, steady economic improvement could provide a modestly positive backdrop for emerging market debt, particularly in comparison to other sectors within fixed income."
Urquieta said that emerging market debt should also continue to benefit from the long-term trend of inflows, as investors within fixed income add exposure to emerging markets, which are structurally underrepresented in their portfolios.
Originally published on SMSF Essentials.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.