Emerging markets are drawing renewed interest as stronger domestic financial systems help several economies absorb global shocks more effectively.
Foreign investment in emerging-market debt reached $214.4 billion through July, up from $177.7 billion over the same period a year earlier. Governments also issued about $19 billion of bonds in July, roughly double the average for that month over the previous decade. Total government bond issuance for the year reached $187 billion.
Many emerging economies now have larger domestic investor bases, stronger foreign-currency reserves and more credible central banks than in previous periods of global stress. That reduces their reliance on foreign capital and gives governments more room to manage periods of market volatility.
Local bond markets are central to that shift. Local-currency sovereign bonds outstanding reached about $13 trillion by the end of 2024, compared with roughly $1.4 trillion of international hard-currency sovereign debt. Countries such as Brazil and South Africa increasingly rely on domestic buyers to fund government borrowing, which can reduce vulnerability when international capital becomes more cautious.
Pakistan, Ghana, Ecuador, Nigeria and Argentina have received credit-rating upgrades, improving their access to capital markets. Measures of currency risk have also remained near multi-year lows despite geopolitical and economic uncertainty.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
