1. Newsroom
  2. The current search for yield is working in favour of emerging bond markets
Menu
UBP in the press 23.11.2016

The current search for yield is working in favour of emerging bond markets

The current search for yield is working in favour of emerging bond markets

institutional-money.com - Bond yields in developed countries are still under serious downward pressure, and so emerging debt is once again an attractive diversification option.


Emerging economies have suffered in recent years but have now entered a phase of greater long-term stability, and their bonds are already pricing in the main risk factors.

We can expect developed-country bond yields to continue falling. Renewed economic and political uncertainty is prompting the main central banks to keep rates under pressure. In the eurozone, the ECB is maintaining high levels of liquidity through its asset purchase programme, which is continuing to push down bond yields to the extent that the sovereign German 10-year yields are now negative. Similarly, the current level of US Treasury yields no longer reflects the country's economic situation, which is now showing a degree of inflation and fairly consistent growth.

"Dwindling yields in developed markets mean that alternatives are needed more than ever. Given today's circumstances, investment flows are starting to shift back to emerging-market debt, which is becoming more attractive after several quarters of uncertainty," according to Denis Girault, Head of Emerging Markets Fixed Income at UBP. From the macroeconomic point of view, emerging markets have entered a phase of greater long-term stability, with many countries balancing their current accounts in the last few months. Another positive factor is that commodity prices have stabilised. "These trends are helpful for emerging bond markets. Although the asset class has already rallied in the last few months, we still see scope for spreads to narrow, and therefore for prices to rise," he adds.

Selective investment approach

Although risk has recently shifted towards Europe, there are still some concerns regarding emerging markets. The main risk relates to weak solvency levels in the Chinese banking sector. "Unexpected newsflow from China could cause stress in the market. However, we believe that most of the risks have already been identified and priced into emerging-market bonds." Investment managers can mitigate risk in several ways, such as diversifying positions globally and taking a selective investment approach. UBP's team uses an active, unconstrained "bond-picking" strategy. "We analyse and select securities, issuer by issuer, based on their fundamentals and valuation," says Denis Girault.

Read the original article


GIRAULT Denis.jpg

Denis Girault
Head of Fixed Income

 

Small and mid caps

A fertile hunting ground for active managers

Learn more about our expertise on small and mid caps

Watch the video

Le news più lette

Comunicati stampa 18.01.2018

UBP: l’utile netto sale a 220,4 milioni di CHF (+25% a/a)

Lʼutile netto dell’esercizio 2017 si attesta a 220,4 milioni di CHF, in aumento del 25% e di 44 milioni di CHF rispetto al dato di fine 2016 pari a 176,4 milioni di CHF. Il cost/income ratio, a dimostrazione dei solidi risultati del Gruppo, si è ridotto a quota 64,1%, in miglioramento rispetto al 67,9% riportato a fine 2016. Il patrimonio in gestione sale a 125,3 miliardi di CHF, riportando una crescita del 5,9% rispetto ai 118,3 miliardi di CHF di fine 2016.

Altro da leggere

Comunicati stampa 18.01.2018

UBP: l’utile netto sale a 220,4 milioni di CHF (+25% a/a)

Lʼutile netto dell’esercizio 2017 si attesta a 220,4 milioni di CHF, in aumento del 25% e di 44 milioni di CHF rispetto al dato di fine 2016 pari a 176,4 milioni di CHF. Il cost/income ratio, a dimostrazione dei solidi risultati del Gruppo, si è ridotto a quota 64,1%, in miglioramento rispetto al 67,9% riportato a fine 2016. Il patrimonio in gestione sale a 125,3 miliardi di CHF, riportando una crescita del 5,9% rispetto ai 118,3 miliardi di CHF di fine 2016.

Comunicati stampa 26.10.2017

UBP potenzia la sua offerta sui mercati emergenti

UBP ha annunciato l’ulteriore ampliamento della sua offerta nell’ambito dei mercati emergenti con il lancio di una strategia incentrata sul debito sovrano emergente (Emerging Market Sovereign Bond).