GADFLY: Emerging markets are relatively calm amid the turmoil
Junk bonds may offer protection as US bond yields continue to rise, writes Shuli Ren, but what is happening to China’s yuan?
Hong Kong — Worried about rising US bond yields? Emerging markets and junk bonds are usually among the first to sell off when global risk aversion strikes. They may provide more protection this time around. Emerging markets are looking relatively calm amid the current turmoil. As of Friday afternoon, the benchmark MSCI emerging markets index was still hanging on to a slight gain for the year, even after the S&P 500 sank 3.8% on Thursday to enter a correction. The US gauge is down 3.5% in 2018. Look at what happened this decade. Until 2017, the US had outperformed the faster-growing economies for years, underlining just how complacent investors in the world’s favourite bull run had become. It’s only to be expected that, now trouble has finally arrived, the strongest rallies are suffering the sharpest reversals. After all, there’s little reason to be concerned about the economy. Few are warning of a global recession. All of Wall Street seems to be saying that the economy is fine; it’s...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.