The emerging market debt sector’s troubles are not over, according to Luc D'Hooge (pictured), head of emerging market debt at Vontobel Asset Management and Citywire AA-rated manager of Vontobel’s Emerging Markets Debt fund.
The manager suggested that investors remain cautious as emerging market debt spreads widen. He said: ‘One of the most significant events was the approval of a $57 billion IMF rescue package for Argentina. Meanwhile, Ukraine has also secured a new comprehensive IMF loan program, and three Arab Gulf countries adopted a $10 billion bailout package for Bahrain.’
Turkish assets rallied as a result of the country’s role investigating the murder of Saudi journalist Jamal Khashoggi, D’Hooge said.
Despite the markets welcoming Bolsonaro’s election in Brazil, he said: ‘I do not agree with this, as his economic agenda has been poorly understood and he has not been active in economic policy so far.
‘From an investor’s point of view, I would say that the samba drums in Brazil have stopped. For the time being, the carnival is taking a break.’
However, China’s slowdown remains the macro event having the biggest impact on the markets, according to the manager. The G20 meeting next month will shed some light about whether the trade was tensions are about to end, D’Hooge suggested.