Global investors searching for income opportunities may find the current climate particularly challenging, given a growing pool of negative-yielding debt. Franklin Templeton Multi-Asset Solutions’ Subash Pillai outlines why he thinks yield-seeking investors might take notice of emerging markets.
正在寻找获得收入机会的全球投资者可能会发现，当前的环境尤其具有挑战性，因为负收益债券不断增多。富兰克林邓普顿多元资产方案团队的 Subash Pillai 以专业眼光概述了他认为追求收益的投资者可能会关注新兴市场的原因。
With developed market fixed income yields at or near record lows, we think many yield-seeking investors may need to look outside the box to satisfy their income requirements. For example, these investors may be asking themselves whether now is a good time to buy more German or Japanese long-term sovereign debt—both of which are at negative yields.
We believe there’s a strong case for income investing in emerging markets, which we see as the main driver of global growth over the next century.
Investors might consider allocating more capital to bonds in places like India, Indonesia, Mexico or Brazil, where sovereign debt yields are hovering around the 6% to 7% range.1
投资者可能会考虑将更多资本配置到印度、印尼、墨西哥或巴西等地的债券上，这些国家/地区的国债收益率徘徊在 6% 至 7% 之间。
A Story of Transformation
As the name implies, emerging markets are a story of transformation. In the past few decades, we have witnessed dramatic economic shifts, driven in part by changing demographics, the rise of consumerism and the embrace of new technological innovations. For these and other reasons, emerging market equities also represent a compelling investment opportunity in our view. The shift from old economy to new economy in emerging markets is well-entrenched, as is the shift from foreign to domestic revenues.
However, many investors remain stuck in the past when it comes to how they think about emerging markets—failing to recognize the new opportunities now in front of them. We think it’s important to think about not only today’s opportunities, but position for the future as well.
China is a shining example of an emerging market that rose from an agrarian society to a global superpower in just a few decades. But it’s not the only emerging economy on the rise. Emerging markets today represent more than 50% of the global economy, based on gross domestic product (GDP).2 Emerging markets overall have been growing faster than developed markets overall for the past decade, with projected 2019 and 2020 GDP growth more than double that of advanced economies, according to the International Monetary Fund.3
Opportunity Set Has Been Expanding
Within fixed income, investors have seen an expanding opportunity set, including government (sovereign) bonds as well as corporate credit. These can be issued in local or “hard” currencies—such as the US dollar, yen or euro. The emerging market fixed income universe has grown from US$0.3 trillion in 1995 to US$21.5 trillion in 2019.4
投资者在固定收益领域看到不断扩大的机会，包括政府（主/权）债券和企业信贷。这些债券能够以当地货币或“硬通货”发行，比如美元、日元或欧元。新兴市场固定收益规模已从一九九五年的 0.3 万亿美元增长到二零一九年的 21.5 万亿美元。
From a global fixed income perspective, a number of factors are currently shaping financial markets today, including geopolitical risks and trade tensions, populism and political polarization. In addition, markets are grappling with unrestrained deficit spending in the developed world, low interest rates and underappreciated inflation risks, as well as overvaluations in many risk assets. As investors search for yield, emerging-market fixed income can look compelling—although certainly not without some risks.
Within equities, emerging markets represent slightly more than 17% of the world’s market cap of $80.9 trillion.5 More opportunities continue to open up to foreign investors in these dynamic markets, with increasing weights in major benchmark indexes. Domestic Chinese equities now have a greater presence in both the MSCI and FTSE Emerging Markets Indexes—with more shares still to be added. Meanwhile, Argentina and Saudi Arabia also saw status upgrades from index providers.
股票方面，新兴市场占全球 80.9 万亿美元市值的 17% 多一点。 在这些充满活力的市场中，随着主要基准指数权重不断增加，更多的机会继续向外国投资者开放。现在，中国国内股票在摩根士丹利资本国际和富时新兴市场指数中的权重都有所提高，仍有更多股票会入市。同时，指数提供商也上调了阿根廷和沙特阿拉伯的评级。
Given higher growth prospects with generally lower valuations compared to developed markets—to us, this makes a compelling investment case.
Emerging market equities have fluctuated in recent months, driven primarily by uncertainties around US-China trade negotiations and US monetary policy. Despite the uncertainties, we believe improving fundamentals generally support the asset class. These fundamentals include a combination of flexible exchange rate systems, greater fiscal discipline and stronger sovereign balance sheets. Overall, we consider equities’ structural drivers to be largely intact, including the rise of consumerism and technology. We seek to invest in companies that demonstrate sustainable earnings power and potential resilience against market uncertainty.
Lessons of the Past
Past crises have taught emerging market economies to minimize external borrowing and focus on their own domestic markets, improving their resilience to external shocks. As a result, we’ve generally seen higher-than-average credit quality for local currency issuances. The average debt-to-GDP ratio for emerging market countries has dropped despite rapid growth in local currency debt issuance.
新兴市场经济体从过去的危机中学会尽量减少外部借贷，并专注于本国市场，这提高了新兴市场经济体抗外部冲击的能力。因此，我们往往发现本币发行的信贷质量高于平均水平。尽管本币债券发行迅速增长，但新兴市场国家/地区的平均债务与 GDP 比率有所下降。
Local currency bonds also tend to be more liquid than hard currency bonds as domestic investors step in to buy just as foreign investors are fleeing.
We favor select currency positions in countries we view as having healthy or improving fundamentals, along with attractive risk-adjusted returns. For example, in Indonesia, we expect continued emphasis on prudent, stable economic management as part of President Joko Widodo’s administration. The country has benefitted from greater policy coherence and increasing transparency in recent years. Ongoing reforms have sought to balance the country’s growth drivers and potentially accelerate domestic development.
Brazil has certainly faced some recent headwinds, but we note its central bank is independent, which is an orthodox policy approach. And, the country’s finance minister seems committed to appropriate policies. Reforms underway in Brazil represent a major structural shift that we think should unlock the economy’s domestic growth drivers.
These are just a couple of examples. Our long experience of emerging market investing tells us that an active allocation approach—applying top-down as well as bottom-up perspective—to decide the weightings of asset classes across a portfolio may help illuminate risks in aggregate. This approach may also help investors make decisions around their expectations.
Taking a dynamic approach ourselves allows us to maintain a long-term view while remaining on the ball about macroeconomic changes—dialing up or down our exposure across asset classes as we deem appropriate based on factors such as economic and inflation forecasts, valuation measures and historical risk premia.
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想要从富兰克林邓普顿(Franklin Templeton)的邮件中了解更多信息，请订阅“新兴市场的投资冒险”(Investment Adventures in Emerging Markets)博客。
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What Are the Risks?
All investments involve risks, including the possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds adjust to a rise in interest rates, the share price may decline. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets.
2. Source: International Monetary Fund DataMapper, April 2019 World Economic Outlook, data from 2008-2018. GDP based on purchasing power parity, share of world.
资料来源：国际货币基金组织 DataMapper，2019 年 4 月《世界经济展望》，2008-2018 年数据。GDP 基于购买力平价，全球份额。
3. Source: International Monetary Fund, April 2019 Economic Outlook database. There is no assurance that any estimate, forecast or projection will be realized.
资料来源：国际货币基金组织，2019 年 4 月《经济展望》数据库。无法保证任何估计、预测或预计将会实现。
4. Sources: Bank for International Settlements, Institute of International Finance. Data from December 1, 1995, through March 31, 2019. Past performance is not an indicator or guarantee of future results.
资料来源：国际清算银行，国际金融协会。1995 年 12 月 1 日至 2019 年 3 月 31 日的数据。过往业绩不代表、也不保证将来的表现。
5. Source: MSCI via Bloomberg. Emerging markets are represented by the MSCI Emerging Markets Index. Developed markets are represented by the MSCI World Index. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. See www.franklintempletondatasources.com for additional data provider information.