Which Emerging Market Bond Funds Survived the China Storm?

Will China manage its economic adjustment gently or should we be braced for a ‘hard landing’ with dramatically shrinking growth creating problems for the US and Asia?

Mara Dobrescu 9 September, 2015 | 10:49AM

This article is part of Morningstar’s Guide to Your Financial Education, providing our readers with the tools they need to become a successful private investor.

While the Greek sovereign crisis has been one of the biggest concerns for global fixed-income markets since the beginning of the year, the news coming out of several emerging markets also provided ample fodder for speculation. Primary among them was China, where economic data has continued to point to slowing growth, with official statistics revealing a drop in property prices. The question on the forefront of many investors’ minds is whether the adjustment will occur gently or take the form of a ‘hard landing’ with dramatically shrinking growth creating a trade shock for China’s major trading partners like the US and many Asian countries.

In other areas of the market, Venezuela and Russia, two countries which saw their debt sell off dramatically in 2014, posted significant gains in the first half of 2015 as government measures to curb inflation seemed to meet with some success. Meanwhile, the price of debt issued by Ukraine has continued to slide as the country attempts to renegotiate its outstanding obligations. More generally, fixed-income investors in both developed and emerging markets have continued to keep a close eye on central bank involvement in the debt markets worldwide.

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About Author

Mara Dobrescu

Mara Dobrescu  is a fund analyst at Morningstar France.

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