AdviserVoiceAlexander Kozhemiakin - Standish Mellon Asset Management Company Archives - AdviserVoice https://www.adviservoice.com.au/source/alexander-kozhemiakin-director-of-emerging-market-strategies-standish-mellon-asset-management-company/ Financial planner information & financial planner education/CPD - AdviserVoice Thu, 04 Jun 2026 21:30:42 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 Emerging markets local currency debt: Capitalising on improved sovereign fundamentals https://www.adviservoice.com.au/2009/10/emerging-markets-local-currency-debt-capitalising-on-improved-sovereign-fundamentals/ https://www.adviservoice.com.au/2009/10/emerging-markets-local-currency-debt-capitalising-on-improved-sovereign-fundamentals/#respond Thu, 01 Oct 2009 11:10:49 +0000 https://adviservoice.com.au/?p=1603 Emerging markets local currency-denominated debt is a relatively large and liquid asset class that represents some of the most creditworthy emerging market sovereigns, offers two distinct sources of return (currency and local bond yields), and provides the potential to generate equity-like returns without taking on direct equity risk. We expect the sizeable growth differentials between emerging market countries and the developed world to continue serving as a magnet for capital flows into emerging markets. These capital inflows should augment appreciation pressures on many emerging market currencies, especially in the context of a global economic recovery. Reflecting the persistently positive term premium of local yield curves, emerging market government bonds have provided a better way to get emerging market currency exposure than currency forwards. Bond managers, however, may selectively use currency forwards in those situations where the currency is attractive but not prospective duration returns.

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]]> Emerging markets local currency-denominated debt is a relatively large and liquid asset class that represents some of the most creditworthy emerging market sovereigns, offers two distinct sources of return (currency and local bond yields), and provides the potential to generate equity-like returns without taking on direct equity risk. We expect the sizeable growth differentials between emerging market countries and the developed world to continue serving as a magnet for capital flows into emerging markets. These capital inflows should augment appreciation pressures on many emerging market currencies, especially in the context of a global economic recovery. Reflecting the persistently positive term premium of local yield curves, emerging market government bonds have provided a better way to get emerging market currency exposure than currency forwards. Bond managers, however, may selectively use currency forwards in those situations where the currency is attractive but not prospective duration returns.

Click here to download this document (pdf)

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