Don't stop 'til you get enough

November 12, 2019

Don’t stop ‘til you get enough
 

The composition of global gross domestic product (GDP) has changed markedly since China’s accession to the World Trade Organization in 2001. In nominal US dollar terms, emerging markets (EM) economies’ share of global GDP has risen from 20% to 43% or from 40% to 60% on a purchasing power parity (PPP) basis.1

Double-digit growth for much of the last two decades has propelled China’s economy to second largest in the world in nominal US dollar terms (US$14trn).2 However, this is not just a China-centric story. At US$22trn3, the economic heft of EM excluding China exceeds that of the US and UK combined. India and Brazil both feature alongside China on the list of the world’s ten largest economies, with a further six EM economies listed within the top twenty.4

In line with EM’s growing economic clout, the EM debt asset class has experienced considerable growth over the past two decades. Back in 2000, EM debt represented just 2% of the global bond universe whereas today it is closer to 25%.5 Yet despite today being such a significant part of the global outstanding debt stock, EM debt remains considerably underrepresented in global bond indices with of a weighting of just 7% in the Bloomberg Barclays Global Aggregate Bond Index6, for example. This misalignment is in the process of being remedied, with China’s accession to a number of global bond indices.

Colm McDonagh, head of emerging market fixed income at Insight Investment

Source:IMF, Insight, August 2019
Tradingeconomics.com, World Bank, January 2019
Source: IMF, Insight, August 2019
Investopedia.com, Top 20 largest economies in the world June 7, 2019
BIS summary of debt securities outstanding as at Q4 2018 June 17, 2019
A broad-base, market capitalization-weighted bond index representing intermediate term investment grade bonds traded in the US.

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Charts are provided for illustrative purposes and are not indicative of the past or future performance of any BNY Mellon Investment Management product. 

Investment advisory services in North America are provided through two different investment advisers registered with the Securities and Exchange Commission (SEC), using the brand Insight Investment: Insight North America LLC (INA) and Insight Investment International Limited (IIIL). The North American investment advisers are associated with other global investment managers that also (individually and collectively) use the corporate brand Insight Investment and may be referred to as “Insight” or “Insight Investment.”

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Views expressed are those of the manager stated and do not reflect views of the other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. This information should not be construed as investment advice or recommendations for any particular investment. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Management, Insight Investment and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon.

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