skip navigation

Emerging Markets: What Forces Are at Work?

Robert O. Abad
Portfolio Manager/Research Analyst


Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: Investor opinion on emerging markets (EM) appears to be mixed with economic, political and social risks flaring up in various parts of the world. Why do you see EM as a compelling investment option at this time given heightened market risk?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: With risks in EM growing in complexity, should investors be concerned about risk or valuation models having the unintended effect of amplifying market volatility?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: To what extent has “herding behavior” impacted risk differentiation in EM?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: What role did exchange-traded funds (ETFs) play in last year’s EM market volatility?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: Does the current composition of EM benchmark indices represent another potential source of market volatility?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: Russia, China, Brazil and Mexico have the largest country weights in JP Morgan’s CEMBI Broad High-Yield Index. What are your views on each and how is Western Asset currently positioned in its EM High Yield strategy?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Q: Have you observed any new trends developing in the EM debt space?

Recently, the increased risk in Emerging Markets (EM) has led to questions about what forces are at work and where the opportunities may be going forward. In this Q&A, Portfolio Manager Robert Abad offers insight into what may be influencing the behavior of EM and how this could be built into investment considerations.

Endnotes

  1. “Fragile Five” refers to Brazil, India, Indonesia, South Africa and Turkey
  2. Emerging Markets Perspectives: Time to Embrace Volatility,” Western Asset, July 2013.
  3. Principles of Investment Risk Management,” Western Asset, October 2010.
  4. Empirical Model-Building and Response Surfaces Box, George E. P.; Norman R. Draper (1987)
  5. Emerging Markets – Maintaining Perspective,” Western Asset, September 2012.
  6. Refers to a four decade pattern of macroeconomic shocks in Mexico occurring either in the last year of the outgoing, or in the first year of the incoming presidential term
  7. Emerging Market High Yield: Understanding an Evolving Asset Class,” Western Asset, April 2012.
© Western Asset Management Company, LLC 2021. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.