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AM Watch interviews Jetro Siekkinen about frontier market debt in local currency
The Nordic trade publication AM Watch asked Jetro Siekkinen, Partner at LGT Capital Partners, for his views on frontier market debt in local currency. He points out that the asset class can be an attractive alternative to investing in large international financial markets as it is largely unaffected by global political and economic uncertainty.
Jetro’s team invests in emerging and frontier markets in hard and local currency. He explains that the two areas have very different risk characteristics: frontier market debt in local currency has historically been less volatile and less risky than emerging market debt in hard currency.
According to Jetro, these differences result from the fact that bonds from these markets denominated in US dollars are mostly owned by foreign investors, whereas bonds in local currency are primarily owned by local investors. While developments in the US will have an impact on all markets where US dollars are used, local investors tend not to resort to panic sales in response to disruptive events around the globe.
Financial markets in frontier countries are isolated from what happens in other countries because they are driven by country-specific idiosyncratic factors such as domestic monetary policy, fiscal policy, growth and inflation.
Find out more here (article behind paywall).