Fixed-income investors are pulling out of emerging market debt, especially from higher-yielding countries where governments have adopted loose fiscal policies. Timothy Ash, senior emerging markets sovereign strategist at BlueBay, joins us to share his views on emerging markets.
Looking back over the past five years, Ash notes that “there wasn’t any good news from individual countries.” But he now sees promising opportunities in several emerging markets, with countries such as Argentina, Pakistan, Turkey and Egypt emerging as attractive candidates for emerging market debt. Ash emphasizes the breadth of these opportunities, saying, “The list is pretty long, and the story goes on,” before adding, “There’s some really good news, which is encouraging.”
As for China, whose growth rate is slowing, Ash recalls hopes that China would overtake the United States and become an “economic cash hedge.” But Ash says “China is really making mistakes,” with various sectors of the economy under pressure. Despite efforts to stimulate the Chinese economy, Ash notes that the country “is not seeing any major stimulus.” He concludes with a cautious outlook, saying, “I don’t think China is a particularly positive, constructive story.”
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