Emerging markets are back in positive territory after a sour start to the year, as investors bet that central banks will support the global economy for an extended period.
The MSCI Emerging Markets index, dominated by stocks in China, South Korea and Taiwan, is up 4.6 cent this year. Demand for government bonds issued by developing economies has pushed up prices and pulled the yield on JPMorgan’s dollar-denominated index down to a six-month low of 5.89 per cent.
“There is some confidence that global growth is not going into a black hole,” said James Barrineau, co-head of emerging market debt at Schroders.
The recent rally in emerging markets represents a sharp turnround from the first month of the year, when China’s economic slowdown, falling oil prices and a rise in US interest rates in December drove investors to remove money from emerging markets at a record pace.
The Federal Reserve’s markedly cautious view of the global economy last week has cemented expectations there will not be an aggressive schedule of interest rate rises in the US this year.
“One of the most important drivers is the Fed’s dovishness,’’ said Mr Barrineau. ‘’That has stopped the rally in the US dollar and been beneficial to EM currencies.”
Some of the countries regarded as being most exposed to rising US rates are Brazil and South Africa, which rely on international capital to service budget deficits. In January, both the Brazilian real and South African rand touched multiyear lows against the US dollar while the average cost of borrowing across emerging markets reached a five-year high of 6.78 per cent.
In credit markets, investors say talk is now about how long the calm in emerging markets can last. Policy officials in the US refuse to rule out more than two rate rises this year, Brazil remains tangled in a corruption scandal, Russia is still subject to western sanctions and Turkey has endured a string of terrorist attacks, meaning many of investors’ concerns remain a threat.
Bhanu Baweja, emerging market strategist at UBS, says changes in global risk appetite seem to be occurring more frequently, so that rallies can quickly become downturns.
“The improvement in risk appetite since its worst point in January has been rapid,” he cautions. “?.?.?.?upward momentum is nearing an advanced stage, in our view cautioning against chasing EM assets aggressively.”
Around $9tn in capital flowed into emerging markets between 2005 and 2015, fuelled in part by central bank-enabled easy money, raising concerns that developing countries could face a credit crisis once the US tightened monetary policy.
As the US economy has showed signs of improvement and the Fed made plans to raise rates for the first time since the financial crisis, emerging market currencies endured one of their worst years on record in 2015, falling 15 per cent against the US dollar, according to JPMorgan’s index.
今年迄今，以中国大陆、韩国和台湾的股票为主的MSCI明晟新兴市场指数(MSCI Emerging Markets index)上涨了4.6%。新兴经济体发行的政府债券受到热捧，推高了价格，把摩根大通(JPMorgan)以美元计价的新兴市场政府债券指数的收益率拉低至5.89%的6个月低点。