6th Floor, Candlewick House 120 Cannon Street London EC4N 6AS International Bond Research Thursday 13th November 2014 India Emerging markets continue to struggle as the US and UK continues to head towards tighter monetary policy. Whilst it comes with no guarantee that rates will rise next year, this remains the most likely next step for both major economies. However we remain Bullish on India as a region to invest in across bonds and equities, an exception to the general emerging markets tren d. Emerging market uncertainty continues to affect the results of corporates, with retailers such as Burberry and Adidas already blaming foreign exchange weakness for lower reported profits. IT company, Cisco, is the latest to acknowledge EM weakness, reporting a decrease in spending in the BRIC nations due to currency volatility and cautious growth. However, India remains a strong emerging market, with Narendra Modi’s government making strides to make the economy more investable. The Rupee has fared better than other emerging market currencies against dollar strength but still remains on a short-term downtrend. India’s 10 year has fallen from a high of 9.06% to 8.15% this year. Aluminium and construction materials giant, Aditya Birla, has done a U-turn on previous comments regarding India. They now says there is “excitement” in the country and India is now “top again” in their list of potential investments. For the likes of Birla, this government’s focus on cutting red tape to facilitate construction and development projects is crucial and puts In dia in a good position for further growth and investment both domestically and internationally. The IMF back up this view saying they believe growth in 2016 to be at 7.2% and will surpass even China. Investment in Indian shares has topped almost $15 billion this year alone. Now looks an opportune time to buy Indian bonds, with a weak currency where a dollar interest rate hike has been priced in. With US and UK monetary policy uncertainty, both the dollar and sterling may come off in the near term. The central bank has expressed that they want to ensure money-market rates are at the 8% repo level and have already begun to engage in bond purchases and sales to ensure the rate remains at that level. If looking to keep emerging market exposure but reducing risk o f positions, consider Indian debt for growth and an opportunity to buy on. India 10 year bond yield source: Bloomberg Anasakti Thaker D: 0207 398 3114 www.KingandShaxson.com Page 1 of 3 INTERNATIONAL DESK E: [email protected] 6th Floor, Candlewick House 120 Cannon Street London EC4N 6AS International Bond Research Thursday 13th November 2014 INTERNATIONAL BOND COMPARISONS yield (s/a) yield change yield change return MTD UK US Australia Canada Japan Germany France Netherlands Austria Switzerland Sweden Denmark Spain Italy New Zealand Anasakti Thaker D: 0207 398 3114 2 yr 5 yr 10 yr 30 yr 2 yr 3yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 30 yr 2yr 5yr 10yr 30yr 1 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 25 yr 2 yr 5 yr 10 yr 20yr 2 yr 5 yr 10 yr 26 yr 2 yr 5 yr 10 yr 26 yr 2 yr 5 yr 10 yr 28 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr UKT 4 09/2016 UKT 1.75 07/2019 UKT 2.75 09/2024 UKT 3.25 01/44 912828F47 912828F54 912828F39 912828D56 912810RH3 EC575249 Corp EK3821791 EJ2445694 EK4387479 EK1739599 EJ7362241 EI7057215 EK5229738 EK4879822 EK4690054 EK4826393 EK4355757 EK4585510 EK4694379 EK0809500 EK1774786 EK3340909 EK3074136 EJ6098374 EJ4989046 EK4197019 EK1418137 EK0414632 EF3754068 EJ2583262 EK3001824 EG1036748 EC394599 Corp ED4438336 EJ1752710 SWISS 2.5 3/36 EF0868820 EH0398089 EK0417692 EH7669102 EI5589029 EH6950768 EK2541788 EH6131138 EI7927748 EH8448167 EK3289700 ED7737726 EJ6263705 EK3526614 EK0933524 EJ6794667 EC935138 EJ6281665 EI7035203 0.62 1.49 2.19 2.92 0.51 0.97 1.64 2.37 3.11 2.57 2.84 3.34 1.03 1.55 2.06 2.61 0.04 0.17 0.53 1.54 -0.05 0.11 0.81 1.73 0.00 0.29 1.17 2.27 -0.02 0.22 0.95 1.78 -0.00 0.14 0.99 1.70 -0.20 -0.03 0.38 0.86 -0.04 0.25 1.14 1.14 -0.04 0.15 1.02 1.68 0.42 1.03 2.10 3.22 0.51 1.15 2.34 3.63 3.52 3.92 4.08 www.KingandShaxson.com Page 2 of 3 on day % -0.04 -0.05 -0.04 -0.02 0.00 0.01 0.01 0.01 0.01 0.02 0.02 0.01 0.00 0.00 0.00 0.00 0.02 0.02 0.04 0.03 -0.00 -0.01 -0.02 -0.02 0.00 0.01 0.00 -0.00 -0.00 -0.01 -0.01 -0.02 0.01 -0.00 -0.01 -0.02 -0.05 -0.02 -0.03 -0.03 0.00 -0.00 -0.01 -0.01 -0.00 -0.01 -0.02 -0.02 -0.00 0.03 0.01 -0.01 0.01 0.02 0.03 -0.06 0.00 0.03 0.04 MTD % -0.03 -0.04 -0.06 -0.06 0.05 N/A 0.04 0.04 0.04 0.05 0.02 0.06 0.01 0.01 0.01 0.02 0.03 0.05 0.07 -0.06 0.01 -0.01 -0.03 -0.03 0.01 -0.01 -0.01 0.00 0.00 -0.02 -0.03 -0.02 0.02 -0.02 -0.04 -0.03 -0.11 -0.07 -0.08 -0.09 -0.02 -0.02 -0.04 -0.04 -0.03 -0.04 -0.07 -0.05 -0.11 0.03 0.03 0.03 -0.07 -0.01 0.00 -0.10 0.01 0.06 0.10 (local CCY) 3.24 1.69 2.75 3.83 0.34 N/A 1.32 1.74 1.95 4.65 2.30 2.05 0.85 1.44 1.99 2.05 0.03 -0.07 -0.27 2.66 -0.01 0.27 1.14 2.41 0.19 0.45 1.52 2.26 -0.00 0.33 1.83 2.42 3.10 1.62 1.69 3.02 1.82 2.54 1.70 3.46 2.43 3.14 2.29 2.29 2.05 3.03 2.13 3.37 3.56 3.00 1.95 2.62 1.97 1.32 2.85 4.04 5.08 2.44 3.63 Duration 1.75 4.46 8.56 18.94 1.87 2.89 4.69 8.71 19.46 2.11 4.63 8.31 1.94 4.60 8.47 14.99 1.91 4.81 9.40 20.74 1.83 4.87 9.31 22.83 2.01 4.95 9.15 20.63 1.41 5.13 8.87 22.55 1.79 4.41 9.25 16.03 1.88 4.23 9.06 14.52 1.62 3.97 9.33 17.64 1.97 4.66 10.13 17.53 1.91 4.59 8.87 14.99 1.48 4.54 8.33 15.78 0.41 5.01 6.90 INTERNATIONAL DESK E: [email protected] Thursday 13th November 2014 sell buy 10yr GLOBAL UK US Japan Euro 10yr DOLLAR US Australia Canada NZ UK -11 -58 -67 sell US 97 -32 301 EUROPE Belgium Denmark France Switzerland Austria Italy Netherlands Spain Sweden Spread to Germany 2 yr -4 1 5 -14 5 57 4 47 1 US -18 Japan 166 184 Euro 138 156 -4 Canada 32 -128 NZ -171 -74 -203 -47 -56 Australia -97 -128 96 249 10 yr -16 21 36 -43 18 154 14 130 33 The information used here is obtained from sources that we consider to be reliable but its accuracy and completeness cannot be guaranteed. 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