Frontier markets an unlikely haven as storms sweep local bonds
Investors in emerging market local currency bonds finding economies such as Russia and Turkey too volatile these days are seeking shelter in markets from Ghana to Egypt once considered far riskier.
Their smaller size and reduced exposure to flighty global capital flows are proving to be unexpected boons as recent gains in U.S. Treasury yields buffet some of their larger peers.
Emerging market local bond markets endured one of the worst starts to the year in recent memory. They delivered a negative total return of 8.5% in the first quarter as investors favored U.S. markets, where faster growth and a firming inflation outlook triggered a sharp sell-off in U.S. Treasuries and lifted the dollar.
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