In this episode, we speak with Thomas Haugaard, Portfolio Manager for Emerging Market Debt at Janus Henderson Investors. Haugaard, a former economist, talks passionately about why emerging markets form such an interesting investment universe, the influence of geopolitics on debt securities and the risks from climate change. Please enjoy the show!
Overview of podcast with Thomas Haugaard:
01:00 My investment journey started with an academic interest
03:00 I shared an apartment with one of the authors of the Goldman Sachs report ‘Dreaming with BRICs’
04:30 Emerging markets is where as an economist you see many interesting things: new economic policy, diverse markets and a lot of growth potential
05:30 I actually don’t really appreciated the ‘EM’ term; all countries are developing
06:30 Where do the returns in emerging market debt come from?
09:30 What is the best environment for EMD hard currency?
13:30 Inflation is the wedge in between fundamentals and financial conditions; when inflation goes up the conditions for EM are not necessarily improving
18:00 Travelling in Venezuela seeing electric good being confiscated by the army because of the perception that prices were too high
19:30 We have been investing in Benin, Senegal and Ivory Coast for many years as policies are changing for the better
21:00 It is hard to mention an EM country where there isn’t a lot of very interesting things taking place
22:00 Dispersion between EM countries has gone up significantly. Remember that we’ve had three years of unprecedented shocks.
26:00 There is a systematic relationship between how a market is trading a country’s sovereign credit risk and its rating
32:00 High inequality means less space for policy change due to potential for social unrest
33:30 Climate change and extreme weather events are impacting a lot EM countries
36:00 Hard currency is the entry point for EM countries, because they might lack institutional credibility or even a central bank
39:30 In hard currency, there is a component of the risk premium that you can model and predict
41:30 Uzbekistan is a zero to hero story
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