Posted inEmerging MarketsSOUTHERN EUROPEEquities

Italians falling in love with emerging market debt

A majority of fund buyers in the country say they will buy more emerging market government bonds in the coming 12 months, the latest EIE data reveal. Compared to last January, appetite has surged from 15% buyers to some 52%, about twice the European average.

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The difference with emerging markets corporate bonds is surprisingly big though. That asset class only has 29% buyers. The sentiment spike in emerging market debt might be explained by the fact that many fund selectors are now heavily underweight the asset class, having sold much of their allocation last year.

Kicking the tyres

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Anecdotally, our research department report that many fund selectors say they are testing the overall EM water by increasing their exposure to emerging market debt first. 

Italy is indeed the only country where emerging market debt is more popular than emerging markets equity. Nonetheless, they are still very positive on EM equity, with 35% of fund selectors buying more.

 

Part of the Bonhill Group.