To many, a brutal new year’s sell-off in emerging
market assets seemed to entrench a view that the biggest risk
to financial stability now sits in the emerging world
— including Latin America.
COVER STORY: Finding fortune
Latin America’s capital markets are facing a sell-off in emerging markets as indiscriminate as the bull phase it succeeded. But as returns dwindle, asset buyers will have to become more discerning.
By Dominic O’Neill
Average yields in JPMorgan’s benchmark index of
emerging market local currency government bonds reached 7.2% at
the end of January, up from 5.2% in April last year, and
compared to yields on 10-year US Treasuries still less than 3%.
Within the region, Argentina was forced to a 23% devaluation of
the peso in January, its biggest since 2002.
By the end of February, average yields in the emerging
markets bond index had returned to below 7%. Currencies
rallied: the South African rand and the Turkish lira, as well
as the Brazilian real, one of the currencies that has been most
vulnerable. But to some, the rebound remained a dubious
The recovery is unlikely...
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