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May 2020 / VIDEO

Three Lessons We’ve Learned in Emerging Markets So Far

Central bank support and re-entering EM early are essential

The early 2020 volatility taught us that bad news can become good news for emerging markets (EM) corporate bonds. Understanding central banks’ ability to provide market liquidity can help investors make informed decisions about re-entering EM. We believe it is important to be early following downturns and that security selection will be essential.

Key Insights

  • The early 2020 volatility revealed that we should not underestimate central banks’ ability to help ensure market liquidity, which is a positive for emerging markets.
  • We believe emerging market corporate bonds offer attractive long-term opportunities and that it is important to be early into the asset class following downturns.
  • Ongoing volatility is expected. However, we anticipate greater discrepancy between strong and weak credits in EM, meaning security selection will be essential.

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