Sovereign credit ratings are an awkward fundamental on which to base an investment strategy. But they are a signposts for yield in this environment. Investors are spending more time than usual sorting out the differences between Indonesia and South Africa, when the major markets have little to offer. Certainly the backdrop favors emerging markets. Commodity prices are more stable; valuations remain attractive. Political risk is no longer viewed as a primary hurdle, given what we see in the US and Europe. Consistent with this backdrop, the government-sponsored investment conference in Buenos Aires this week is standing-room only. Argentina is among the few nations anywhere showing material progress in its risk profile. One lesson: chase relentlessly after rate-of-change, at least in a positive sense. ■
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