BlackRock Says Join ‘Great Migration’ to Emerging-Market Debt
- Brexit confirms EM bonds is best haven in negative rate world
- Choose stable hard-currency debt over volatile local currency
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The world’s largest asset manager is green-lighting a shift of capital from developed nations where interest rates are low, or even negative, to pursue emerging-market bonds for better returns.
The U.K.’s vote to leave the European Union has accentuated the global scarcity of yield, which is the main driver behind the tightening risk premium in developing-nation bonds, BlackRock Inc. said in a research note Monday. The firm called the end of a three-year bear market for the asset class in February, citing a shift in U.S. dollar strength fueled by monetary policy divergence in developed markets and a stabilization of commodity prices and emerging currencies.