Ishr Jpm $ Emb Discussion Threads

[kiwi2007] 24/5/2010 22:42

Sorry Prairus - Misled you - I'm holding short dated US treasuries not shorting them :o)

[praipus] 21/5/2010 11:49

Tried to sell some IEMB yesterday and there was no bid...got a bit nervous. The bid reappeared this morning so I let them go...did the market favour.

Your brave shorting treasururies. Two futures systems I trade, occasionally, tell me to be long, I'm not for the same reasons I suspect your short.

Are you trading the future, CFD's or spreadbetting?

[kiwi2007] 21/5/2010 03:24

Hi Praipus,

HSBC, at least in NZ, seem extremely conservative - I have more confidence in them than any other UK or NZ bank with the exception of STAN - but one never knows what's going on underneath the surface of course!

I did sell half of my IEMB the other day and increased short US treasuries and UK£ cash. Will probably move some back when volatility reduces as I do like the monthly income :o)

[praipus] 18/5/2010 12:20

On one of the FT's videos yesterday Todd Rupert said in his opinion) the three elements of risk are Longevity, Inflation and Market Volatility.

[praipus] 17/5/2010 11:54

I look after an HSBC account for a club and the interest rate is zero unfortunately, but that may be because its stirling I'll check interesting thought.

Whats your view on HSBC in terms of counter party risk?

Are you out of IEMB/SEMB yet?

[kiwi2007] 17/5/2010 00:02

HSBC in NZ offer a few different currency accounts - which are Singapore, Canadian and US dollars plus Kiwi and GP£ - I suspect the first two are offered by HSBC because they are viewed as strong currencies and a good place to hold cash.

[praipus] 16/5/2010 20:34

Russia at 9.38% isnt inspiring either. Is anywhere safe?

[praipus] 15/5/2010 21:43

"The petroleum sector dominates Venezuela's mixed economy, accounting for roughly a third of GDP, around 80% of exports and more than half of government revenues. Gold, diamonds and iron ore are mined as well. Venezuela contains some of the largest oil and natural gas reserves in the world. It consistently ranks among the top ten crude oil producers in the world.[25]"

From wikipedia

[praipus] 15/5/2010 21:39

Venezuelian...27th largest GDP only slightly less than Saudi Arabia. Dont know their debt situation. But I suspect the UK's is worse.

Interesting angle. My view is UK£ will tank and actually I think it will help UK assets look attractive to foreign investors and products produced here look cheap.



Have you got any inflation-linked investments T13i etc?

[kiwi2007] 14/5/2010 22:38

Just a little concern for me regarding the 5.57% of the fund invested in Venezuelian debt?

That said bondwise I do have an awful lot of these - plus a mixture of short term US$ treasuries and US$ corporate debt.

I suspect that the UK£ is well undervalued - but timing a move back in will be tricky and possibly quite some time away?

[praipus] 14/5/2010 11:28

I like the tranquility.

[karesplat] 14/5/2010 10:57

Ever higher new highs on the sterling denominated sister to this share (SEMB).

In my view we are lucky that the never ending quest for yield has lead to emerging market debt like this being bid up to what is now well over par for something that is traditionally seen as a bit risky. It has been trading that way since just before March according to the graphs above.

From a UK investor's point of view thanks must also go to the new coalition government's fairly surprising apparent relaxing of fiscal stance based on the agreement between the two parties that was recently published. I think most expected a conservative win to result in instant tightening and a corresponding strengthening of the GBP. Well I did anyway. I don't doubt that come the planned emergency budget, what now looks like a bit of a give away will in fact turn into a neutral or even a take back. What remains to be seen is whether or not the emergency budget will have the clout to convince markets that the UK will be covering it's deficit or not.

As much as this share is a play on emerging market debt it is also a play on the USD vs. GBP, for me in the UK at least so I will be watching with hawk eyes for any news on the horizon including leaked emergency budget details that might lead to increased confidence in the government's ability to cover the deficit and thereby increase the strength of the Pound.

Personally I am making circa 8% per annum on dividends alone with this share after costs based on my initial investment. To say nothing of the stellar capital gains it has provided me. So even if the Pound were to strengthen suddenly it'd have quite a long way to go for me to consider selling out of this share with rates on offer elsewhere being extremely low right now.

Well that is my take on things. Just thought I'd post up some opinion on what has been a very quiet thread for quite some time now.

[kiwi2007] 12/3/2010 21:12

6.61% paid gross each month and one month in arrears (variable around the 0.50c level)

[badtime] 12/3/2010 20:57

Not wishing to appear lazy but wots current yield on these?

[kiwi2007] 08/3/2010 21:19

Came across (yes, yet another :o) positive FT article regarding these EM bonds. Bit dated (28/2) but may be worth a read if you've a significant holding.

Yield to risk ratio is still attractive

By Robert Cookson

Published: February 28 2010 07:56 | Last updated: February 28 2010 07:56

For an asset class once considered a snake pit of risk, emerging market sovereign bonds have become remarkably popular among investors. So popular, in fact, that even the most cautious of institutions have developed an appetite.

Indeed, US pension funds are poised to pour almost $100bn (£65m, €74m) into emerging market debt in the next five years, according to JPMorgan, potentially helping push yields relative to US Treasuries to a record low.

Already, spreads on emerging market bonds denominated in US dollars have narrowed to levels last seen before the collapse of Lehman Brothers. And as a result, many analysts say this part of the market is no longer particularly attractive.

"Dollar-denominated [emerging markets] debt now represents a lower-risk, lower-return asset class that, in contrast to its historical experience, is unlikely to deliver double-digit returns in the future," says Alexander Kozhemiakin, director of emerging market strategies at asset manager Standish.

In contrast, emerging market bonds denominated in local currencies, such as the Brazilian real, still present great opportunities, Mr Kozhemiakin argues.

He is not alone. Industry figures say local debt is attracting an increasing amount of attention from both retail and institutional investors looking for stronger returns and diversification away from dollar assets.

In addition, these people say, emerging market debt has been cast in a new light amid growing concerns about the creditworthiness of governments in the developed world.......more....

[karesplat] 03/3/2010 10:46

Hehe, Kiwi, I was going to post that exact same article but was delayed in doing so. Maybe I need to branch off and make my primary daily reading more than just the FT - seems we are all reading the same sources, bit of diversity can't harm.

[kiwi2007] 03/3/2010 10:36

FTAlphaville coverage today of EM Bonds...



....But in the past week, the FT has highlighted two striking trends in emerging markets that could augur well for some investment asset classes – including local currency bonds – and not so well for others.

Even as growing investor caution about possible big interest rate rises in EM economies fuels fears of a stock market sell-off, EM local currency bonds are gaining popularity among investors, the FT reported last week.

So popular, in fact, that "even the most cautious of institutions have developed an appetite", the report addded....Meanwhile, adds the FT, US pension funds are planning to pour almost $100bn into EM debt in the next five years, according to JPMorgan.

This potentially will help push yields relative to US Treasuries to a record low. But while spreads on dollar-denominated EM bonds have narrowed to levels last seen before the collapse of Lehman Brothers, local-currency denominated EM bonds, such as the Brazilian real, present investment opportunities, Alexander Kozhemiakin, director of emerging market strategies at asset manager Standish, told the FT.

For one thing, say Kozhemiakin and other EM watchers, local currency EM bonds appeal to both retail and institutional investors seeking stronger returns and diversification away from dollar assets.

On top of that is the somewhat ironic view, in light of the Greek debt crisis, that emerging markets present a more secure alternative amid concerns about the creditworthiness of governments in the developed world.

Michael Gomez, co-head of emerging markets and portfolio management at bond giant Pimco told the FT:

"More and more investors are looking to emerging market local bonds as an alternative to standard global bond allocations, as the problems in Greece and the European periphery highlight the credit risks of that market that have been long underpriced."

He cited the 7.2 per cent yield on the JPMorgan GBI EM Global Diversified Index in noting that yields on local currency EM bonds remain attractive.

On the EM downside, as highlighted in a separate FT analysis, the withdrawal of cheap central bank money in the industrialised world coupled with fallout in the eurozone over the Greek debt crisis could combine with sharp EM rate rises to dent overall investor confidence.

Significant rate increases are being forecast in Brazil, Turkey, Mexico and India, the FT adds. Brazilian forward markets are pricing in a 256bps rate increase to 11.50 per cent by the end of the year.

Turkish markets, meanwhile, are pricing in a 186bp rise to 9.05 per cent and Indian markets a 119bp increase to 4.66 per cent. Mexican markets are currently pricing in a 115bp rise to 5.81 per cent by the year-end.

In China, bank lending rates are not expected to rise sharply, although Beijing – grappling with the risk of an over-heating economy – is moving to tighten credit by raising capital reserve requirements for commercial banks, among other measures.

That comes on top of growing speculation about a revaluation (upwards) of the renminbi by as much as 5 per cent against the dollar by the end of the year.

All this is likely to take the edge off EM equities, which have rallied in the past year to strongly outperform the developed world – and possibly even drive a sharp correction.

That, in turn, could also weigh on EM dollar-denominated bond markets. But, any significant monetary tightening should also boost Asian EM currencies, which could well help the prospects for EM local-currency bonds.

Also on the downside, though, is the ever-present possibility that a fresh bout of risk aversion in global markets triggers a sharp sell-off in EM debt.

But Jerome Booth, head of research at Ashmore Investment Management, believes that currency appreciation will be the main source of return for local EM debt portfolios in the medium term, saying, as the FT reports:

"The only questions are when it starts and whether it happens fast or slow: with old world currency crashes or managed adjustment," he says.

Booth also argues that local bonds are the best insurance against a dollar crash, saying they are "much better than gold, which is a volatile non-yielding commodity and, like US Treasuries, with a homogeneous concentrated central bank investor base."

He sums up:

"Arguably, and especially in the worst-case environments in the US/Europe of depression – which despite some current complacency is still a significant risk – emerging market local currency debt is the safest asset class in the world."

[praipus] 11/2/2010 16:28

ETF for Canada no yeild but it may recover quicker as less debt according to Pimco

[praipus] 11/2/2010 15:38

Pimco's portfolio manager

[karesplat] 18/1/2010 11:34

A little late with this one dated Jan 14th but, if you haven't seen it yet:

"Emerging market bonds shed junk status in record start to year"

[karesplat] 10/1/2010 14:02

Good spotting Kiwi2007 - Thanks.

[kiwi2007] 10/1/2010 11:28

and Peter Temple in the FT..."...for the moment, I prefer to get my exposure to emerging markets through the dollar denominated iShare that tracks the JP Morgan Emerging Markets Bond index. This is invested in a diverse range of sovereign emerging market bonds. The yield is similar to the one foregone in the European high yield equities ETF that I sold at roughly the same time...."