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EM Equities vs Debt: Same, Same, but Different?

Evaluating the Lure of Emerging Markets

Nicolas Rabener
10 min read
20 Jul 2020

SUMMARY

  • Some EM asset classes are highly correlated, to the point they can almost be considered interchangeable
  • EM equities and hard-currency government debt are highly correlated to US equities and bonds
  • In crisis times, all EM exposure is sold off and fails to provide meaningful diversification benefits

INTRODUCTION

Dreaming of vacationing in Europe conjures images of towns and villages rich in architecture and history, delicious food and delicate wines, high mountains and sandy beaches, and an unparalleled depth in music and art. Some Europeans, notably the French, primarily stay in their own countries as they see little need to go elsewhere. For tourists across the globe, Europe is the best option for experiencing so much in a short amount of time.

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