Investment strategy: NET inflow of funds to emerging bond market

Source: Internet
Author: User
Keywords Emerging markets capital flows bond funds fund markets
Liang Heng Stock market after the 2nd quarter rally, as the market worried that earlier gains may overreact to economic recovery expectations, many of the buying switch to more conservative. According to statistics, the Morgan Stanley emerging stock market index has adjusted about 10% from early June to Friday, but the Citi emerging debt index has benefited from a net inflow of funds, sustaining positive returns.   In the capital flow is still favorable, emerging bond market future performance can be optimistic. Fund market strategists say emerging-market countries have done well in their credit exposures since the G20 Summit was funded by the IMF, with the historical experience that the boom cycle is at a time when the recession is heading for recovery.   According to JPMorgan, overall emerging market bond spreads have shrunk to 4.46%, showing confidence in the market has increased significantly. For example, the Feng Yu Emerging market bond fund, which has been the top of the list for nearly three months, will mainly invest in the diversified portfolio of emerging market bonds with not less than three points and two assets to achieve medium and long-term capital appreciation. The Fund's performance in 2006, 2007 and 2008 was 10.92%, 7.92% and-45.89% respectively.   The asset percentage is 73.79% bonds, 23.09% cash, 3.11% other and 0.01% shares.   The fund's three major investments are 3.52% Petroleos De Venezuela Sa, 2.28% Ukraine issuance PLC and 1.99% Venezuela. According to the BIS, the amount of domestic currency bonds issued by emerging markets rose from $1.8 trillion trillion in 2001 to $7.2 trillion last year, compared with $1.2 trillion in emerging-market foreign-currency bonds last year.   An analysis has pointed out that expanding the issuance of domestic bonds will help the government to keep savings at home. The economic rebound is an advantage. While there is no clear answer to the economic recovery, there is ample evidence that emerging markets will be able to offer more attractive returns once the recovery begins.   The International Monetary Fund said last week that developing countries would have a 4.7% growth next year, well ahead of the developed countries that grew only 0.6% next year, giving emerging countries a better fiscal and debt position than developed countries. Although the main emerging markets this year are either a severe slowdown or a growth slump, the threat of a credit rating downgrade persists, but there are statistics that JPMorgan's emerging Bond index has risen nearly 15% per cent this year, outperforming Morgan Stanley's global index of about 10%, showing the attractiveness of the emerging bond market.
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