FINSUM + Magnifi: This Sector Poised for Strong Yields
(October 2020)
Yields in the US are paltry, there is little other way to characterize it. Junk bonds even have weak yields, and the risk-return profile for many areas of US fixed income look quite poor. So where should investors look? According to UBS, the answer is emerging market debt. From Turkey to East Asia, yields are much stronger than in the US, and risks—especially in China—look lesser. According to Morgan Stanley, “China was the first country to enter the Covid-19 crisis and appears poised to be the first out. Resumption of economic activity during the second quarter should jump-start global growth, especially given huge government stimulus programs”. Yields on Chinese junk range from 7.7% to 8.4% across the sovereign and corporate spaces.
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