What does this mean for investors?
With ~18% of global outstanding debt currently yielding in negative territory, investors are increasingly looking for yield-enhancing opportunities in higher risk Emerging Market assets. In this context, China has emerged as a big capital hook, given its resilient economy, stable currency and relatively liquid fixed income market.
In this context, and despite the initial outflows in March 2020, investors have continuously been shipping capital overseas, targeting Emerging Market (EM) assets, which due to their higher risk profile and ex-core currency denomination offer an interesting yield-enhancing opportunity.
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