Flight to Safety Amid Yield-Curve Panic: EM Insight

The video discusses the challenges facing emerging markets amid global economic risks, including a potential US recession and trade wars. It highlights the impact of yield curve inversion and the possibility of negative yields in emerging markets. Despite these challenges, there are opportunities for risk-adjusted returns, particularly in Eastern Europe, where investors seek refuge from low eurozone rates. The video emphasizes the importance of understanding risk and return dynamics in emerging markets.

What are some of the factors contributing to the challenges faced by emerging markets?

• Political stability

• Technological advancements

• High inflation rates

• US recession risk and trade wars

What is a 'micro haven' in the context of emerging markets?

• A market with high volatility

• A region with high inflation

• A safe investment area within emerging markets

• A country with a strong currency

Why might investors accept negative real yields in Eastern Europe?

• Because of the relative safety and escape from low eurozone rates

• To avoid currency fluctuations

• To benefit from high growth rates

• Due to high inflation rates

How can investors achieve risk-adjusted returns in emerging markets?

• By investing in high-risk stocks

• By focusing on short-term gains

• By avoiding all forms of insurance

• By hedging exposure to emerging market bonds

What is the long-term average risk-adjusted yield in emerging markets?

• 2.5 percentage points

• 3.7 percentage points

• 3.1 percentage points

• 4.0 percentage points