M&G's Riddell: Why I am still bearish on EMD

ON BONDS

I have held a bearish view on emerging market bonds for some time now and continue to do so.

I am not only anticipating a structural economic slowdown in China, whose commodity demand has been the growth engine for emerging markets in the past decade, but also some negative knock-on effects for emerging markets from a strong US recovery. I would emphasise that investors in emerging market bonds currently face two specific major risks. Firstly, borrowing costs for emerging market sovereigns and companies are at historical lows due to a chase for yield from the developed world and, more importantly, because of ultra-low yield levels on US treasuries. Emerging market bonds denom...