Rising inflation will lead to a flurry of new convertibles

ON SPECIALIST MARKETS

M&G's Leonard Vinville believes demand for convertibles will spiral in current market conditions.

In the first two weeks of the March 2010, when violence erupted in Libya and Japan was struck by an earthquake, global equity prices dropped 5.7%. By contrast, the UBS Global Convertibles index fell 1.9%, with the constituent members being supported by their bond values. Later in the month, share prices staged a rally, rising 6.1%, and convertibles followed their underlying equities, improving by 2.9%. Over the month, convertibles delivered a positive return of 0.9%, ahead of the FTSE World index, which was up 0.1%, but with less volatility. This pattern of performance is typical of conv...