The allure of emerging market local-currency bonds is waning, according to recent statements from HSBC Bank Plc and Goldman Sachs Group Inc (NYSE:GS). This development is attributed to the shrinking premium between local-currency debt and dollar bonds, a consequence of elevated Federal Reserve rates and oil prices.
Goldman's Caesar Maasry has pinpointed this trend, advising on relative-value trades. His recommendations include favoring Brazilian real and Colombian peso over Chinese yuan, Korean equities over Australia’s stocks, and emerging market stocks excluding China over Europe's. He also suggests a preference for the Middle East.
Despite the shifting dynamics, Pacific Investment Management Co. maintains an optimistic outlook. However, the details of their stance were not outlined in the context provided.
The changes in attractiveness of these bonds reflect the broader impacts of US interest rates and global oil prices on international markets. As these factors continue to evolve, investors and financial institutions like HSBC Bank Plc, Goldman Sachs Group Inc., and Pacific Investment Management Co. are closely monitoring their potential effects on various assets and regions.
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