Strategies for a new era of EMD

EMD

Yerlan Syzdykov, senior portfolio manager, emerging markets at Pioneer Investments, analyses the flows into emerging market debt in recent months and the impact of currency wars on the asset class.

The search for yield has prompted record flows into both sovereign and corporate emerging market debt. There have been several reasons behind these flows and not all of them are as speculative as carry trades, which exploit wide gaps between borrowed and invested money. Interest rates have been falling since last year in most emerging market countries and the conversion to growth-oriented policies was timely enough to prevent a serious downturn. As a result, foreign direct investment (FDI), which looks for good opportunities in the real economy, still appears to be flowing. Its suppor...