KO 대한민국
채권형

Monetary Policy’s Effect on EM Debt

2019년3월 - 3 분 읽기

Rate expectations have changed materially across emerging and developed markets in the first quarter of 2019. What does this mean for emerging markets debt? Barings’ Ricardo Adrogué weighs in.

The Changing Behavior of Central Banks and the Impact on Liquidity
While central bankers in the U.S. spent much of 2018 hiking rates, and their counterparts in Europe began reducing easing measures, 2019 has been a different story. The U.S. Federal Reserve and European Central Bank have hit the pause button—instead taking on a more dovish stance—and China, already one of the fastest growing economies, has also taken actions to ease monetary conditions and spur growth.

This should be a good thing for emerging markets debt investors, right? Well, yes and no. A year ago, we wondered if monetary conditions were really as easy as investors thought, pointing out that while central banks had been in easing mode, commercial banks had actually been doing the exact opposite—implementing tighter lending standards, and effectively draining liquidity from the system.

So as investors began to worry that the removal of the monetary policy “punch bowl” would represent a significant headwind for emerging markets debt in the years ahead, we hypothesized that 1) monetary conditions were never as easy as most perceived in the first place, and 2) commercial banks would likely return to their “animal spirits” after ten years of licking their financial crisis wounds, and act as a balance to tightening central bank policies.

In actuality, the reverse has occurred to some degree—as central bankers have tipped back into easing mode this year, commercial banks have not been as aggressive as expected. In fact, according to data from the Bank of International Settlements, global cross-border banking claims barely grew in the year through the third quarter of 2018. Growth in such claims reached 10% at the end of 2017 but dropped precipitously as 2018 rolled on1. Ironically, this has effectively resulted in broadly the same liquidity conditions that we predicted a year ago—but we took a different road to get there.

The ripple effects of these monetary policies can be felt throughout emerging markets.

What Does This Mean for Emerging Markets?
Generally speaking, emerging markets have done well during periods of higher global growth and lower interest rates. As such, investors may wonder if the more dovish stance of developed market central banks suggest that we are entering a Goldilocks scenario for emerging economies. In our view, it’s possible—but it may not be that simple. While these actions are not necessarily creating tailwinds, they are certainly dissipating headwinds to some extent—which presents a strong positive for emerging markets.

Additionally, with the IMF forecasting positive economic global growth numbers over the next two years—with advanced economies at 2%, and emerging and developed economies at 4.5% for 2019—it appears that the economic backdrop should be supportive of the bull case for emerging markets.  

That said, we are still in the midst of a very uncertain period—and there are remaining risks surrounding trade negotiations, interest rate moves, currency fluctuations and more.

Not All EM Assets Are Created Equal
Despite the positive environment, there are areas of emerging markets that remain a concern. For instance, local currency denominated investments currently appear less attractive, on a relative basis, than hard currency denominated corporate and sovereign bonds. To some degree, this is because emerging markets, or at least their central bankers, have become a victim of their own success. Over the last decade, emerging market policy makers have become increasingly skilled at using their local currencies as “shock absorbers,” purposefully allowing them to weaken—or at least failing to support them in the open market.

Additionally, inflation rates in emerging markets have gradually become disassociated with currency depreciation, and have remained low in markets like Indonesia, Malaysia and Chile. Without this correlation, and without runaway inflation, there is less need for central banks to prop up local currencies. This results in the country’s exports being more attractively priced on the global market, thereby bolstering economic growth. But it also means that investors allocating to local currency bonds lack the tailwind of potential currency appreciation.

Conversely, we view hard currency bonds as attractive in the current environment—benefiting from the lower rate expectations and still-strong economic growth, but with reduced currency risk. Although even among hard currency bonds, investors need to be selective. Specifically, investors will want to be mindful of duration risk. While market sentiment has become significantly more dovish with regard to rate expectations this year, we believe it may be reaching a turning point. Indeed if investors begin to price in even marginally higher rate expectations, shorter duration investments—particularly corporate bonds—may prove to be the most attractive place to be in emerging markets in 2019.

In summary, there is much to be optimistic about in the current backdrop for emerging markets, which has improved markedly since 2018. That said, careful security selection, active management and risk mitigation remain paramount.

  1. Bank of International Settlements. As of September 30, 2018.
해당 자료에 제시된 전망은 작성 시 시장에 대한 베어링자산운용의 견해를 바탕으로 작성되었습니다. 작성된 이후, 다양한 요인에 따라 사전통지 없이 내용이 변경될 수 있습니다. 또한 본 자료에서 언급된 투자 결과, 포트폴리오 구성 및 사례는 단순 참고용이며, 결코 미래 투자 성과 혹은 미래 포트폴리오 구성을 보장하지 않습니다. 투자에는 위험이 수반됩니다. 투자와 투자에서 발생하는 향후 소득 가치는 하락 또는 상승할 수 있으며, 투자 수익은 보장되지 않습니다. 과거성과는 현재 또는 미래성과를 보장하지 않습니다. 

더 읽어보기

또한 본 자료에서 언급된 투자 결과, 포트폴리오 구성 및 사례는 단순 참고용이며, 결코 미래 투자 성과 혹은 미래 포트폴리오 구성을 보장하지 않습니다. 실제 투자의 구성, 규모 및 위험은 본 자료에서 제시된 사례와 현저히 다를 수 있으며, 투자의 향후 수익 혹은 손실 여부에 대해 보증 및 보장하지 않습니다. 환율 변동은 투자가치에 영향을 미칠 수 있습니다. 잠재 투자자들은 본 자료에 언급된 펀드의 자세한 내용과 구체적인 위험요인에 관하여 투자설명서를 반드시 읽어 보시기 바랍니다.
베어링은 전 세계 베어링 계열사의 자산운용 및 관련 사업의 상표명입니다. Barings LLC, Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Barings Real Estate Advisers Europe Finance LLP, BREAE AIFM LLP, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, Baring Asset Management Korea Limited 등은 Barings LLC의 금융서비스 계열사로(단독으로는 “계열사”) “베어링”으로 통칭합니다.
본 자료는 정보 제공의 목적으로 작성된 것이며, 특정 상품이나 서비스의 매매를 제안하거나 권유하기 위한 것이 아닙니다. 본 자료의 내용은 독자의 투자목적, 재무상태 또는 구체적인 니즈를 고려하지 않고 작성되었습니다. 따라서, 본 자료는 투자자문, 권유, 리서치 또는 특정 증권, 상품, 투자, 투자전략 등의 적합성 또는 적절성에 대한 권고가 아니며 그러한 행위로 인식되어서도 안됩니다. 본 자료는 투자 전망 또는 예측으로 해석되어서는 안됩니다.
달리 명시되지 않는 한, 본 자료에 제시된 견해는 베어링의 것입니다. 작성 당시 알려진 사실을 바탕으로 신의 성실하게 작성 되었으며 사전통지 없이 변경될 수 있습니다. 개별 포트폴리오 운용팀은 본 자료에 제시된 것과 다른 견해를 가질 수 있으며 고객별로 다른 투자 결정을 내릴 수 있습니다. 본 자료의 일부 내용은 베어링이 신뢰할 만 하다고 판단하는 출처에서 획득한 정보를 근거로 작성되었습니다. 본 자료에 수록된 정보의 정확성을 확보하기 위해 최선의 노력을 기울였으나, 베어링은 정보의 정확성, 완전성 및 적절성을 명시적 또는 묵시적으로 보증하거나 보장하지 않습니다.
본 자료에 언급된 서비스, 증권, 투자 또는 상품은 잠재투자자에게 적합하지 않을 수 있으며 해당 관할권에서 제공되지 않을 수 있습니다. 본 자료의 저작권은 베어링에 있습니다. 본 자료에 제시된 정보는 개인용도로 사용될 수 있으나 베어링의 동의 없이 변형, 복제 또는 배포할 수 없습니다.

19-781811

X

베어링자산운용은 당사 웹사이트 사용자들에게 최적화된 웹 경험을 제공하고자 쿠키를 사용합니다.
베어링 웹사이트를 이용함으로써, 당사의 쿠키정책법적 & 개인정보고지사항에 동의하는 것으로 간주합니다.