Emerging Markets

China’s ambitions being challenged is creating significant uncertainty. Alongside this, MSCI and FTSE appear to be stumbling over each other to add China weight to their indices. The potential to reshape the benchmarks has significance – for both active and passive investors. Is the herd being led down a dark alley?

Emerging Market (EM) bonds have had a good year so far. While they are not at the very top of the performance table, the hard currency CEMBI (Corporate Emerging Markets Bond Index) is up 5.69% in $ since the start of the year, and the EMBI (Sovereigns) is up 6.32%; not bad at all.

A growing emerging markets middle class and increased domestic demand may reduce poverty across the planet, and also provide fertile ground for investors. Companies that can consistently deliver to increasingly wealthy EM consumers stand to profit.

In this Viewpoints paper, Gary Thompson, Head of Trading, explains how overseas investors can get exposure to Chinese A-shares and Chinese Depositary Receipts (CDR).

Brazil has sold off as the market fears the country is in trouble. If the huge pension program is not reformed, it will add expense to a budget already in deficit – and reform has proven extremely difficult. On top of this, there will be a new President elected in October. The race is so open and full of new and anti-establishment candidates, there is a fear that reform may languish along with the country’s finances.