The benefits of investing in emerging markets and Asian fixed income
Projection of economic outlook between Asian countries and developed markets
Source: IMF as of October 2017, GDP based on PPP (purchasing power parity)
Historically investors have been more wary of emerging markets due to perceived instability and increased political risks. Now that developed markets are being impacted by increasing political instability such as Brexit and US administration issues, we believe there are opportunities for active investors to make substantial gains from emerging markets. Some emerging markets assets are presenting a similar level of risk to those of developed markets, while offering better coupons to debt investors (for example as at 31 January 2018, sharpe ratio's, a measure of risk-adjusted return, show Asia hard currency investment grade credit to be more attractive than US dollar investment grade credit). It is important to note emerging markets are not homogenous; different countries are subject to different risks.