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
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6th Floor, Candlewick House
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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. The
opinions and conclusions contained are those of King & Shaxson Limited. ("K&S"), and are subject to change without notice. No responsibility is taken
for any losses, including any consequential loss, which may be incurred by acting upon such recommendations or information.
Whilst all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forecasts opinions and expectations
contained herein are fair and reasonable, neither the author nor K&S has verified the information contained herein and accordingly none of the author,
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completeness of the information or opinions contained herein and shall not be in any way responsible or liable for the contents hereof and no reliance
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Anasakti Thaker
D: 0207 398 3114
www.KingandShaxson.com
Page 3 of 3
INTERNATIONAL DESK
E: [email protected]