Looking for assets with a weak reference to world markets in the event of a global collapse.
Global investors started to buy Ukrainian hryvnia and the Egyptian pound. Buy money as an “exotic currency”, Wall Street Journal reports. They are looking for assets with little reference to world markets amid growing concerns about the intensity of trade wars between Washington and Beijing and slowing global economic growth.
For example, since the end of January, the hryvnia strengthened against the dollar by 5%, and the Egyptian pound by 6%, writes the edition. Both countries offer its debt obligations in national currency, double-digit returns. And this despite the fact that the yield on 10-year securities U.S. Treasury only slightly more than 2%.
“The increased demand for the national currency began to be felt in 2018, and in 2019 he reached the peak. Foreign investors in full, buy the national currency to buy sovereign bonds of the Ministry of Finance. Looked too attractive yields: now at 18% per annum and has reached 20% per annum. Because the interest is quite understandable,” explained UBR.ua financial expert Vladislav Kravets.
Researchers say about other motivations. “As the rates of these currencies fluctuate for reasons that have little to do with global problems, the buyers expect that they will become a refuge in times of market stress” – explain the situation in the WSJ.
“Unlike many emerging markets, which are not diversifitsirovat your portfolio… these offer real diversification”, – said the representative of the hedge Fund Emso Asset Management Jens Nystedt. And adds that as a result of investor interest in Ukrainian and Egyptian money has grown substantially.
In the WSJ note that the investors ‘ interest in Egypt increased a few years ago, namely after the financial reforms in 2016 and receive $12 billion from the IMF. A similar applies to our country, which also reportedly receives financial assistance from the IMF. But we have some feature: investors are still betting that the new presidential administration will continue to fight corruption and to implement the necessary reforms.