Emerging Market Bond Fund Euro Accumulator

The objective of the Sub-Fund is to endeavour to maximise the total level of return for investors through investment primarily, in a well-diversified portfolio of debt securities and other fixed-income or interest bearing securities.

The Investment Manager of the CC High Income Bond Funds – EUR and USD has the duty to ensure that the underlying investments of the funds are well diversified. According to the prospectus, the investment manager has to abide by a number of investment restrictions to safeguard the value of the assets

• Minimum Credit Rating CCC+ (or equivalent)
• Up to 10% in Non-Rated Bonds
• Average Credit Quality of B- (or equivalent)
• Emerging Market Issuers as per MSCI Emerging and Frontier
• Up to 15% in Emerging Market Equities
• Use of FDIs for hedging purposes only
• No limit on exposure to CIS
• Up to 30% in Non Emerging Market Issuers

October 2020

5.45% Cemex 20Asian markets outperformed its Western counterparts throughout the month of October, amid pandemic and economic fears, partly related to the different stages of the virus cycle the two sides of the world are currently in, excluding India. South America remains in the worst position, as virus cases continue to be significant.

In Asia, the number of daily new Covid cases rose in India, Indonesia, the Philippines, and South Korea but declined in most other countries. Asia’s strong performance has been helped by China’s remarkable success in containing the virus. This has allowed subway usage in China’s major cities to recover to only 10% below 2019 levels, compared with tube use in London, which remained down more than 60% even before the latest work-from-home measures were announced.

China boosted foreign access to its huge onshore capital markets at the end of the month, making it easier for international investors to trade in China’s booming capital market. The country approved its new five-year plan (2021-2025) with the Dual Circulation Strategy as a central theme. This concept promotes a stronger role of domestic demand in driving growth without closing the door internationally.

In Latin America, the number of new cases remained high although the pace of increase slowed in Brazil, Mexico, and Chile, while in the Middle-East and Africa, the number of reported new cases continued to decrease across most of the region. The more encouraging economic indicators were outweighed by virus concerns.

From the data front in the emerging market world, China reported stronger results in its leading indicators, as business activity attempts to normalise, following widespread company shutdowns and travel restrictions earlier in the year. China’s manufacturing PMI remained in growth territory at 51.4 in October from September’s 51.5.

From the Latin America region, economic data in Brazil remained encouraging, with manufacturing PMIs reporting at 66.7 from 64.9 in September and similar services increasing to 52.3 from 50.4 for services. South American countries are considered further back in the recovery cycle, given that the emergence of the virus kicked-off late when compared to their North American and European counterparts.

In the month of October, the CC EMBF increased by 0.30% on encouraging economic data emanating from China and Brazil. Going forward, the Manager will continue to assess the EM space scenario even on the basis of further monetary policy actions taken by Central Banks, which seem to follow the Fed’s easing stance, primarily by cutting interest rates.29