In this world of ultra-low interest rates, the pull of emerging markets is huge, and capital inflows have rebounded in recent months, hitting record highs in November.
The world’s biggest asset manager BlackRock (NYSE:BLK) predicts healthy gains in Y 2021 for the sector.
QE (Quantitative easing), until recently a Key tool of advanced economies such as the United States, Japan and the EU, this year was adopted by 12 + emerging markets seeking to combat economic pain from the COVID-19 chaos.
Indonesia and Ghana launched straight into primary markets, buying up bonds as soon as they were issued, some others bought only government debt.
Emerging market analysts are very positive about the results because it has been a success in that it has reduced borrowing costs in local currency for many emerging markets, reduced illiquidity in bad times and helped cap yields too.
The coronavirus chaos market rout hit developing economies hard, with more than $100-B fleeing stock and bond markets, while currencies such as Indonesia’s rupiah or South Africa’s rand fell by between 15-21% in Q-1, as of now both have recouped losses, standing around 4% down on the year
This shows us that emerging market investors took into account macroeconomic conditions in countries that have be much less stable traditionally.
Have a healthy day, Keep the Faith!