Templeton and PIMCO deny EM debt crisis despite major outflows

Two of the largest investors in emerging market debt have denied a liquidity crisis is on the horizon despite major outflows and a sell-off in recent weeks.

In the last issue of Investment Week, fund managers, some of whom invest solely in the asset class, warned of a systemic crisis in EMD as foreign investors  – who own one third of EM local currency debt markets – pulled their cash due to poor recent performance. M&G’s Michael Riddell, manager of the group’s Emerging Markets Bond fund, said EMD had been “annihilated” last week, with EMD global bond funds seeing their highest ever daily outflow of $630m on 26 September. Shares in Franklin Templeton have also dived 15.7% in the past month as investors worried negative performance on the ...