Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

JPMorgan goes overweight on EM sovereigns, sees tighter spreads

08/05/2021 | 04:10pm EDT
FILE PHOTO: Workers are reflected in the windows of the Canary Wharf offices of JP Morgan in London

NEW YORK (Reuters) - JPMorgan has turned net bullish on hard currency emerging market sovereign and semi-sovereign debt by going overweight on the EMBI Global Diversified index, the Wall Street bank said in a sovereign credit strategy note.

"We see the risk backdrop as benign for EM sovereigns in a not too hot, not too cold scenario," that should benefit sovereigns, the note said.

Concerns over the impact of the COVID-19 Delta variant on economic activity will limit a rise in core rates, with "more stringent measures stopping short of complete lockdowns" setting up a Goldilocks scenario, JPMorgan said.

EMBIG spreads stood on Thursday at 356 basis points, according to Refinitiv data, which compares to a year-end target of 310 bps at JPMorgan. Spreads widened past 720 bps as financial markets reacted to the first pandemic-related lockdowns in March 2020 and tightened to 330 bps last June.

The overweight call translates to bullish bets on Egypt and Indonesia's state-owned electric utility Perusahaan Listrik Negara (PLN).

Those two join Qatar, the Philippines, Panama, Mozambique, Ghana, Ivory Coast and Colombia on the overweight column at JPMorgan.

"We have firm conviction on tighter spreads rather than strong returns in the next few months, as our base case remains higher (U.S. Treasury) yields, which will dent returns," JPMorgan said. "The confirmation of SDR allocations and cleaner technicals are also supportive of tighter spreads."

The International Monetary Fund said on Monday its largest-ever distribution of monetary reserves, $650 billion, will become effective on Aug. 23.

"Given that EMBIGD spreads are now marginally wider on the year after the widening in recent weeks, we see room for spreads to re-price SDR upside," JPMorgan said.

(Reporting by Rodrigo Campos; Editing by Paul Simao)

ę Reuters 2021
Latest news "Economy & Forex"
08:04aUK has 10 days to save Christmas, retail industry says
07:52aBLACKBERRY PREVENTS : BlackMatter Malware
07:44aChina energy body urges support for coal, oil firms to build clean power
07:44aDollar hovers above one-week low as Evergrande questions linger
07:44aFutures edge lower after Wall Street's two-day rally
07:43aLuxury group Kering to ditch fur completely
07:34aDreyfus, others shut soy crushing operations in China on power curbs
07:33aAnalysis-Evergrande woes to take toll on China property sale and drive M&A
07:24aOil heads for third week of gains as output stumbles
Latest news "Economy & Forex"