Foreigners' Record Holdings of EMEA Debt Raise Risk of a Taper-Tantrum
- Overseas buyers piling into region as bond returns accelerate
- Overall foreign emerging-market holdings beneath 2015 peak
Johannesburg, South Africa.
Photographer: Waldo Swiegers/BloombergThis article is for subscribers only.
Foreigners are holding a record amount of local-currency debt from developing nations in Europe, the Middle East and Africa, putting markets there at risk of a sudden exodus if U.S. and euro-area officials tighten monetary policy more than analysts expect.
Overseas investors now own 27.8 percent of the region’s bonds, led by South Africa, the Czech Republic and Russia. The bet has paid off this year, with government notes from EMEA up 15 percent in dollar terms, beating the 9.2 percent average return for all emerging markets, according to Bloomberg indexes.