Research & Insight

Returns for emerging market local currency sovereign bonds turned negative in May with the GBI EM Global Diversified benchmark losing 1.20% in US dollar unhedged terms. The losses can mainly be attributed to the problems surrounding debt sustainability in Europe and the contagion effects this had for emerging European countries. We have been underweight the region for some time which significantly helped performance this month.

All regions and most countries fell modestly over the month. In the absence of any major directional lead from developed markets attention concentrated upon the fall in oil and other commodity prices, the rally in the dollar and the prospects for global growth going forward.

MSCI Asia ex Japan fell 1.34% in May. All Asian countries fell modestly over the month except China, Hong Kong and Indonesia and all 3 of those rose less than 1% in USD terms.

This article looks at the growth of advisory type wrap accounts and the influence they have had (and are forecast to have) on the Korean equity market. The sale of advisory wrap accounts was approved in Korea in 2001, but it was just last year that the products were highlighted in the market, when ‘star fund managers’ set up their own advisory firms and started to influence the performance of stocks. Wrap accounts have been overweight certain sectors, namely auto and chemical/energy and as these sectors have generated strong returns (assisted by the liquidity generated by the wrap accounts but also from significant earnings growth) this has resulted in increased attention to the wrap account market.

We often hear about climate change, the impacts on the environment and the potential effect on future generations. But how does climate change impact emerging markets?