EV Forward: Emerging Markets

Timely insights from portfolio managers and industry experts on key financial, economic and political issues.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

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      By Michael A. Cirami, CFACo-Director of Global Income, Eaton Vance Management

      Boston - We remain bullish on emerging markets debt (EMD), despite the strong year-to-date performance; improving fundamentals in a number of countries, still-attractive valuations in many spots and a benign macro environment have all combined to support our thesis.

      After a bumpy third quarter characterized by the broadly stronger U.S. dollar, concerns over slowing global growth and a surprise result in the Argentinian primary election, markets have stabilized in recent weeks, and we expect that to continue.

      The combination of ongoing dovishness from the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) with investors' never-ending appetite for yield has created a healthy backdrop.

      As always, we are selective when investing in EMD, which is a collection of unique and varied economies: Many countries are improving through our lens — including Vietnam, Indonesia, Brazil and Ukraine; but there are others — such as South Africa, Lebanon and Argentina — that we believe to be deteriorating.

      Risks to our thesis include the unpredictability of the Trump administration, the trade war and rising tensions in the Middle East, yet we remain constructive on EMD, with the view that compensation for risk ranks as one of the most appealing across global capital markets.