EM Fixed Income: Swimming upstream after Bangkok

Emerging market fundamentals remain resilient despite a challenging global backdrop characterized by elevated oil prices, persistent inflation, and rising U.S. Treasury yields. While broad beta plays face pressure from tight valuations and duration risks, a selective approach focusing on country-specific catalysts and relative value is essential. In EMEA, fiscal concerns and energy exposure drive differentiation, with Hungary, Romania, and Turkey presenting unique idiosyncratic stories. Meanwhile, Asia experiences a K-shaped growth impulse driven by the AI trade, which is broadening from hardware exports to data center infrastructure and local consumption. South Korea serves as a prime example, where record memory chip profits are fueling significant tax revenues and shareholder returns, ultimately supporting the local currency and bond market outlook. Investors must navigate shifting macro risks, including potential stagflationary pressures and evolving central bank policies, by prioritizing high-conviction, high-carry opportunities.