Five charts to start your day

Emerging markets have seen a dramatic transformation in their economic fundamentals over the past few decades

This is a great chart from Amundi. I saw it in their latest emerging market debt paper that was published in March and I had to share it. Emerging market aren’t really emerging anymore – they are exploding with opportunities. For instance, it’s hard to look at a country like China and not think that they haven’t emerged already.

In short, emerging markets have seen a dramatic transformation in their economic fundamentals over the past few decades, driven by macroeconomic stabilisation programmes and structural reforms often conducted in collaboration with the IMF.

A shift towards floating exchange rates and a more domestic-demand-driven economic model have contributed to their robust growth prospects. Remarkably, since the year 2000, the EM share of global GDP has doubled, jumping from about 25 per cent to nearly 50 per cent.

Nonetheless, there's notable dispersion in economic conditions across EM countries, reflecting a range of vulnerabilities and strengths which you can see in this chart below. However, despite these differences, Amundi points out that the overall credit quality of EM external sovereigns has shown notable improvement, moving from an average “B” rating in the 1990s to predominantly investment-grade levels today, offering compelling options within the credit markets due to their longer duration and higher yields compared to US high-yield counterparts.

Liquidity across EM assets has improved as well, thanks to the deepening of local markets and an increase in investor engagement.

Source: Amundi Institute

Coming up:

• The top 10 largest crude oil producers

• What does the direction of the VIX and S&P 500 tell us?

• The simplest way to visualise the power of compounding

• The international bond market is more diversified than you think

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