"There is an unprecedented opportunity in emerging country bonds"

In global markets, interest in emerging market bonds has been increasing recently. Positive comments on emerging market bonds follow one another. The latest comment came from GMO. According to GMO, emerging market bonds offer a “once-in-a-generation opportunity.” Despite investors’ poor start to the year, optimism about emerging market markets is increasing. According to Grantham Mayo Van Otterloo & Co (GMO), emerging market local currency bonds “offer a once-in-a-generation opportunity.” GMO Fund Manager Victoria Courmes commented, “Regardless of what the Fed does, cheap emerging market valuations, attractive yields and ongoing disinflation are making local currency emerging market bonds attractive. The Fed’s signal of the beginning of an easing cycle will also be a catalyst for a weaker dollar and emerging market bonds.” Previously, Neuberger Berman, Vontobel Asset Management and JPMorgan Chase had also stated that 2024 would be a significant turning point for emerging market assets. Still, emerging market currencies and bonds have lost more than 1% of their value this year due to uncertainty in China. That presents an attractive entry point for investors, according to GMO’s Courmes. Investors’ pessimistic positions in emerging market bonds are also decreasing. The ratio of pessimistic positions to the size of the $3 billion VanEck Morgan EM Local Currency Bond ETF is 0.69%, the lowest level since October 2019, according to S3 Partners data.