Investors should buy Russian and Hungarian bonds denominated in local currencies and sell Polish debt as yields are set to decline further because of interest- rate reductions, Bank of America Merrill Lynch said.
Bank of America Merrill Lynch said investors should buy emerging market bonds and equities as the so-called BRIC nations of Brazil, Russia, India and China post the biggest improvement in growth this year.
The ruble will climb 1.5 percent against the central bank’s target euro-dollar basket by the end of next year as global growth concerns recede and Bank Rossii stops buying and selling currency to manage the exchange rate, according to Bank of America Merrill Lynch.
Polish bonds beat German bunds and U.S. Treasuries in risk-adjusted returns since Europe’s debt crisis started three years ago, indicating the country that restructured a $35 billion debt load two decades ago is becoming a regional haven.
The pace of bond sales by junk-rated emerging-market companies is poised to slow from record issuance in the second quarter as concern that the global recovery is faltering sends yields to the highest this year.
The Bank of Israel “has room to ease policy considerably going forward” based on inflation expectations, David Hauner head of Eastern Europe, Middle East and Africa economics at Bank of America Merrill Lynch in London, wrote in a report today.