Emerging Market Debt: It's Time to Get Tactical

By Margè Karner - November 26, 2018

Emerging market (EM) debt—like equities—was the subject of much scrutiny in the third quarter. But I believe that too many investors were painting all EM debt with a very wide brush. Sure, a strengthening dollar and increasingly higher interest rates in the United States will weigh on EM countries generally, but not equally. Why? Because emerging market countries are not all the same. For example, some have more dollar-denominated debt than others.

And then there's this: the EM countries of today aren't like a generation ago. In the past, many of them had fixed exchange rates, and now most have floating rates. That allows for a natural adjustment that helps with the exchange rate and balance of payments.

In this quarter and for the foreseeable future, China is the issue that's keeping me up at night. The escalating trade war with the U.S. is causing turmoil not only in China, but throughout emerging markets as a whole.

Check out my latest video to learn about my EM debt outlook, and what I think about current valuations and how to pick your spots for exposure.

Margè Karner
Margè Karner

TRANSCRIPT

  • Related Articles
  • More From Author

Stocks Reverse Course after Rallying on Tentative Trade Agreement

U.S. stocks declined significantly as investors grew concerned about whether the recent "truce" would hold between the U.S. and China in their ongoing trade conflicts.

Emerging Market Debt: It's Time to Get Tactical

Emerging market debt was the subject of much scrutiny in the third quarter, but Sr. PM Margé Karner believes that too many investors were painting with a very wide brush. Hear her thoughts on current valuations and how to pick your spots for exposure in a Q4 2018 outlook video.

What the Brazilian Elections Means for Investors

The people have spoken: Jair Bolsonaro will be the new president of Brazil. Now CPM Nathan Chaudoin provides commentary on market reaction.

    Emerging Market Debt: It's Time to Get Tactical

    Emerging market debt was the subject of much scrutiny in the third quarter, but Sr. PM Margé Karner believes that too many investors were painting with a very wide brush. Hear her thoughts on current valuations and how to pick your spots for exposure in a Q4 2018 outlook video.

      International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.