Tags: JPMorgan’s Chang Emerging-Market Debt in ‘Sweet Spot’

JPMorgan’s Chang: Emerging-Market Debt in ‘Sweet Spot’

Thursday, 27 Sep 2012 05:20 PM

Emerging-market corporate and sovereign debt is in a “sweet spot,” supported by the Federal Reserve’s bond purchases and “modest” borrowing in developing countries, according to JPMorgan Chase & Co.’s Joyce Chang.

The third round of quantitative easing by the Fed, known as QE3, is reducing bond supply and prompting investors to seek alternatives, Chang, the global head of emerging-market research at JPMorgan, said at a conference at Bloomberg’s headquarters in New York. Dollar-denominated government debt in developing countries have returned 14 percent this year while corporate securities advanced 12 percent, according to JPMorgan indexes. Treasuries gained 2.4 percent.

Emerging markets “are still in a sweet spot,” said Chang, whose emerging-market team was ranked the best by Institutional Investor. “It’s supported by QE3, but the fundamental standalone and financing needs have” also fueled gains.

Pacific Investment Management Co., which oversees the world’s largest bond fund, favors local-currency bonds in Brazil, Mexico and South Africa as slower economic growth allows the countries to keep interest rates low, according to Lupin Rahman, an executive vice president at the Newport Beach, California-based company.

“My favorite investment in the emerging-market space is really the local rate space, given the much weaker global economic environment we are seeing,” Rahman said at the event.

Commodity Currencies

JPMorgan’s Chang said she favors commodity-related currencies including the Russian ruble, Mexico’s peso and Brazil’s real.

Alberto Ades, head of emerging-market fixed-income strategy and global economics at Bank of America Corp., also likes the currencies as the Fed’s QE3 weakens the dollar.

Developing countries’ equities are in the middle of a “bear market” as the credit expansion in countries such as Brazil and China starts to reverse, according to Michael Shaoul, chairman of Marketfield Asset Management.

“Emerging-market equities should be avoided in general,” Shaoul said at the event.

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
StreetTalk
Emerging-market corporate and sovereign debt is in a 'sweet spot,' supported by the Federal Reserve's bond purchases and modest borrowing in developing countries, according to JPMorgan Chase's Joyce Chang.
JPMorgan’s Chang Emerging-Market Debt in ‘Sweet Spot’
297
2012-20-27
Thursday, 27 Sep 2012 05:20 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved