Autor: Christian Gaier, Head of Fixed Income Rates, Sovereigns & FX, Erste AM
I would like to share my impressions from my latest investor conference in London that I attended on 16th January 2017. The conference was organized by Banco Bilbao Vizcaya Argentaria (BBVA), a leading global financial group with a strong franchise in 35 countries and a leading position in the Spanish market and in Mexico. For us, a perfect partner when it comes to research on countries and companies in Latin America (LATAM). Read more
Author: Felix Dornaus, Senior Fund Manager Emerging Markets Bonds
Brazil tactically overweighted at the moment
Most of the fundamental economic data are currently not good. In 2016, the country is in recession; for 2017, a minor growth rate of +0.7% is expected. The nominal budget deficit of 2016 is about -10%, with a primary deficit of -2.7%. This comes as a surprise, given that investors had been used to primary surpluses from Brazil. The current account is also slightly in deficit. The only silver lining is the low foreign government debt of less than 20% of GDP, accompanied by high foreign exchange reserves. We therefore do not expect any issues for bondholders with regard to the payments they are due.
Author: Dieter Kerschbaum, Communications Specialist Austria
Interest rates are at record lows in the euro area, as a result of which investors can feel a great deal of pressure to achieve acceptable yields. This situation shifts their focus back to the countries of Central and Eastern Europe (CEE). Central and Eastern Europe currently comes with more positive aspects than one might think. There are factors at play that might drive investor attention to this region in the foreseeable future. The risks are largely of a political nature, as the tensions with Western Europe with respect to migration, the Ukraine conflict, and the re-emergence of nationalistic economic policies suggest.
The bond purchase programme of the European Central Bank has caused a drought on the bond markets. As a result, investors now have to take into account the liquidity risk on top of the interest rate risk and the default risk.