TheChek News Flow

Nestlé investors call for chair to step down over executive turmoil

Paul Bulcke has presided over chaotic period culminating in sacking of CEO Laurent Freixe for undisclosed affair

Nestlé investors have called for chair Paul Bulcke to step down over the departure of a second chief executive in just over a year, blaming him for a period of instability and poor performance at the embattled Swiss group.

The consumer goods giant last week sacked chief executive Laurent Freixe, who was appointed by Bulcke just one year ago, over an undisclosed romantic relationship with a direct subordinate.

Shareholders told the FT that the appointment of Freixe and the way investigations into his conduct were handled have exacerbated their concerns over governance at Nestlé, and led them to question Bulcke’s decision making.

“It’s a matter of decency and respect that [Bulcke] resigns from the position and not wait until April next year,” said one top-30 Nestlé shareholder, referring to the chair’s scheduled departure date. “Bulcke has lost the respect and the trust of investors.”

Nestlé ousted Freixe with no severance pay and swiftly replaced him with the head of the company’s Nespresso business, Philipp Navratil. 

The Frenchman became the second chief executive to be ousted in just over a year after Bulcke, a Nestlé veteran of 46 years, and the board pushed out his predecessor Mark Schneider in August last year.

“Given [CEO appointments] have gone wrong twice, I think it is time for decisive leadership at Nestlé,” said Christopher Rossbach, portfolio manager at J Stern, a long-term shareholder.

Rossbach added that he would like to see chair designate Pablo Isla assume the role now, to coincide with Navratil’s appointment.

A Nestlé spokesperson said the two CEO departures were “entirely unrelated”, pointing out that Freixe’s conduct was a “clear breach” of its code of conduct.

The maker of KitKats and Nescafé announced in June that former Inditex chief Isla, who currently serves as Nestlé’s lead independent director, would replace Bulcke in April 2026. Isla was already actively involved with decision making, said a person close to the company, including in the latest CEO change.

Bulcke became Nestlé chief executive in 2008, before being appointed chair in 2017, in line with the company’s long-standing and unconventional approach to succession.

“I don’t think Bulcke will move on before April but he should have left when Mark Schneider was forced out,” said Alexandre Stucki, founder of AS Investment Management, which represents founding family investors in Nestlé.

“It is the board who makes these appointments,” he added. “They need to wake up and look at the share price . . . I am very worried about the company’s immediate future”.

At the company’s last annual general meeting, in April, 9.7 per cent of shareholders voted against Bulcke’s re-election, while 5.4 per cent abstained.

Investors in Nestlé, which also owns Maggi noodles and Perrier water, were once accustomed to steady growth and sound governance.

However a series of scandals and sluggish sales, as well as mounting concerns over governance, have combined to drive down Nestlé’s shares, which have slumped by 40 per cent since 2022.

Nestlé said the board acted immediately to investigate claims about Freixe’s conduct, launching a probe in the spring on the back of reports made through its internal whistleblowing channel.

After it failed to substantiate the claims — and Freixe denied the affair — the company received more detailed complaints from whistleblowers. The board then initiated a second investigation involving external counsel, which found evidence of the relationship.

J Stern’s Rossbach said it was “deeply concerning” that it took a second investigation to uncover the relationship. Nestlé said its values and governance “are the foundation of the company”.

Several former and current Nestlé executives the FT spoke to questioned how Bulcke could have been unaware of Freixe’s affair, which they characterised as an open secret.

“If it turns out that the chair knew more than he admitted, it will become clear that the company is suffering from weak governance and poor oversight,” said Kai Lehmann, senior analyst at Nestlé shareholder Flossbach von Storch. 

Others questioned whether incoming chair Isla, who has served on the board since 2018, represents a fresh start.

“The board is weak and the new chairman is part of that legacy,” said one Swiss institutional investor. “They need change, someone external . . . to stop this dynamic”.

The battle for Armani: will his anointed suitors swoop on late designer’s empire?

Giorgio Armani’s will outlined hopes for one of three European giants to buy into his fashion group. But a deal may prove complex

Giorgio Armani repeatedly vowed he would never sell his eponymous Italian fashion empire to a French conglomerate, and in 2016 the designer even went as far as establishing a foundation to shield it from break-ups or takeovers.

Yet in advance of his passing this month, aged 91, Armani’s resistance had melted away.

In his will, drafted in March and published on Friday, Armani tasked the Giorgio Armani Foundation with selling a stake in the company he started in Milan 50 years ago.

Many in the Italian fashion industry were shocked to learn that two of his three preferred suitors — LVMH, L’Oréal and EssilorLuxottica — are French and that Bernard Arnault, the French billionaire who controls LVMH, had the opportunity to pounce on a coveted Italian asset.  

Armani’s will has fired the starting gun on a potentially extraordinary battle to buy into a fashion institution, which analysts estimate could be worth at least €7bn.

Getting hold of a piece of Armani — one of the world’s largest privately owned luxury groups — has long been regarded as a major prize in an industry with a limited number of viable targets.

Friday’s announcement was met with effusive responses from Armani’s anointed suitors.

Cosmetics giant L’Oréal, which has produced Armani’s popular beauty line for almost 40 years, said it was “touched and honoured” to be considered. Meanwhile, EssilorLuxottica, the Milan-based eyewear group EssilorLuxottica, which plans to move its global headquarters to Paris, said it was “proud” to be named and would carefully consider the opportunity.

Yet insiders at both companies cautioned that despite those warm words they were unlikely to attempt to buy Armani outright.

For LVMH, the luxury industry’s dominant force, it’s a different story. Industry executives in Milan and Paris told the Financial Times that Armani could be a welcome addition to Arnault’s vast stable of brands. The French magnate has had an eye on Armani for some time, according to people close to LVMH, and would take an interest.

Arnault said he was “honoured” his company was named as a potential partner by the late designer and drew parallels to the talent of Dior founder Christian Dior.

“If we were to work together in the future, LVMH would be committed to further strengthening [Armani’s] presence and leadership around the world,” Arnault said.

Three luxury executives in Milan expressed surprise that Armani had mentioned LVMH in his will.

One person mentioned the 2023 documentary Milano. The Inside Story of Italian Fashion, which features Armani ruling out a sale of his group to the French. “It’s just unthinkable that only a few years later, out of all people he mentioned Arnault as his preferred buyer,” the person said.

Armani’s will also instructs his heirs, which include right-hand man Leo Dell’Orco and members of his family, to consider other groups “of the same standing” as potential buyers, and to prioritise those that already “entertain partnerships” with the fashion house.

An initial 15 per cent stake is to be sold within 18 months from his death, with an additional 30-54.9 per cent going to the same buyer in three to five years, according to a copy of the will obtained by the FT.

According to the will the Giorgio Armani Foundation — in which Dell’Orco, nieces Roberta and Silvana, nephew Andrea Camerana and sister Rosanna own stakes — will always own at least 30 per cent of the group.

For those who wish to own the rest, Armani’s lucrative licenses, particularly its highly successful beauty deal with L’Oréal, are likely to be attractive assets.

The Armani Privé fragrance line, launched in 2004, retails for about €300 a bottle. Meanwhile, Acqua di Gio, which has been on the market since 1996, is one of the best-selling men’s perfumes of all time.

But with the beauty licensing deal with L’Oréal set to run until 2050, potential buyers are unlikely to be able to capture all of the value.

The breadth of Armani’s product range — which spans its EA7 sportswear line, through to its accessible casual wear label Armani Exchange and the high-end Armani Privé line — may also act as a deterrent to buyers.

Some luxury executives believe the variety of products bearing the Armani name serves to dilute the brand and confuse consumers. As well as beauty and fashion, the Armani group owns restaurants, hotels and a high-end home design line. 

Pierre Mallevays, co-head of merchant banking at Stanhope Capital, said a standalone Armani group “works very well, but it’s hard to see a big strategic buyer being genuinely interested in all of its operations”.

While LVMH is viewed in the luxury industry as the most likely buyer, the group’s upmarket positioning implies it will have little interest in the more affordable lines in the Armani stable, which contribute a significant portion of its €2.4bn annual revenue.

LVMH also tightly controls product distribution to enable it to charge higher prices, while Armani products, which are distributed through wholesalers, are often discounted.

One leading Italian executive said it was hard for any strategic investor to buy an asset and “sit on it” for a while before “deciding what to do with its various parts in the longer term”.

“That’s what the prospect of buying Armani would look like,” they said.

In his will Armani raised the possibility of a public listing of the business if plans to sell a stake failed. That would see Armani follow in the footsteps of other Italian family-owned fashion brands, such as Prada, Cucinelli and Moncler, which have gone on to list on the public markets. In each case the brand’s family owners have retained a controlling stake.

In several interviews with the FT, the late designer, who led his company until his passing this month, said his priority was to protect his legacy. 

Armani’s executive committee said in a statement after the will was made public that the foundation would act “as a permanent guarantor of compliance with the founding principles”.

Two industry executives said Armani might have named LVMH, L’Oréal and EssilorLuxottica because they have the scale and financial clout to secure the group’s future and his legacy going forward.

Armani’s desire to sell a stake to a larger group makes sense, according to Bernstein analyst Luca Solca, because there is a “lot of work to be done to ensure the continuation of the Armani brand legacy”.

“[Armani] liked to run his own business and there is an element of vanity when you are a very, very important designer — you don’t want to be part of a much bigger group. [But] today we are seeing a more rational side”.

Pop Mart’s elflike doll has its rivals but the greatest threat may be the temporary nature of viral toy crazes

The global mania for Labubu dolls has given parent company Pop Mart a huge boost. The Hong Kong-listed stock has shot up 470 per cent over the past 12 months. With a market cap of HK$367bn ($47bn), Pop Mart is now worth more than Mattel, Hasbro and Japan’s Sanrio combined.

The profitability of the toothy elflike creature and Pop Mart’s “blind box” business model has given rise to a host of would-be competitors, such as Wakukus — launched by Chinese retailer Miniso — and Lafufus, as the fake Labubus flooding the market are called. Fears that they could take a bite out of Pop Mart’s colossal success, however, look misplaced. 

Miniso looks like the chief challenger. The launch of Wakuku dolls drew long lines at its flagship stores across China, and the group has a far bigger physical presence than Pop Mart itself, with 7,900 retail stores worldwide against Pop Mart’s 443 stores and 2,437 vending machines. While Miniso is best known for selling budget-friendly knick-knacks such as home goods, toys, snacks and fashion accessories, it has form in selling products licensed from brands such as Disney and Marvel.

Yet the $42bn-a-year global collectable toy market is vast and can accommodate both Labubus and the nascent Wakuku. And striking viral toy gold is easier said than done. Pop Mart’s doll only became the fashion accessory du jour after K-pop singer Lisa of Blackpink posted about her collection to her 100mn followers on social media.

Rather than Wakuku sales, a better indication of longer-term demand for Labubu may be the resale market. What started as a $22 toy was regularly being flipped for three or four times that. Speculative buying appears to be cooling, with anecdotal evidence suggesting resale prices are falling. But a healthier secondary market may actually make it easier for Pop Mart to expand Labubu’s fan base.

Pop Mart has made a mint from its success. A gross margin of 67 per cent last year puts it on a par with luxury groups such as LVMH, rather than traditional toy companies. At 26 times forward earnings, too, the group now trades at a premium to the luxury behemoth.

Trouble is, viral toy crazes have less durable appeal than buttery-soft handbags. This means that Pop Mart has to keep releasing new products to keep its star brand relevant, while also developing its next superstar. The risk for Pop Mart is not that consumers will prefer a different toothy doll. It is that they will eventually lose their taste for them altogether.

Immigration "parole" had been granted under Biden

Judge in April faulted Trump's homeland security chief

BOSTON, Sept 12 (Reuters) - A federal appeals court rejected on Friday a challenge by immigrant rights advocates to the decision by U.S. President Donald Trump's administration to revoke the temporary legal status of hundreds of thousands of Cubans, Haitians, Nicaraguans and Venezuelans living in the United States.

The Boston-based 1st U.S. Circuit Court of Appeals overturned, opens new tab a ruling by U.S. District Judge Indira Talwani, who had decided that Homeland Security Secretary Kristi Noem lacked the discretion to end the immigration "parole" granted to about 430,000 migrants under Democratic former President Joe Biden.

The U.S. Supreme Court in May put Talwani's April ruling on hold, allowing the parole terminations to take effect while the litigation played out.

Judge Gustavo Gelpí, writing for a three-judge 1st Circuit panel, said Noem's action forced parolees who entered the United States lawfully to have to choose suddenly between returning to the dangers in their home countries or staying in the United States and risk being detained and deported.

But Gelpí said lawyers for a class of migrants pursuing the case had failed to make a strong showing that Noem lacked authority under a law called the Immigration and Nationality Act to categorically end their parole. All three judges on the panel were appointed by Democratic presidents.

The Biden administration, starting in 2022, let Venezuelans who entered the United States by air request a two-year parole if they passed security checks and had a U.S. financial sponsor. His administration in 2023 expanded that to Cubans, Haitians and Nicaraguans.

Between October 2022 and January 2025, about 532,000 people received grants of parole through those programs. But in March, Noem moved to terminate the parole programs, affecting about 430,000 migrants.

Esther Sung, a lawyer for the plaintiffs at the immigrant rights group Justice Action Center, called Friday's ruling "devastating" but narrow, adding that "there's still room for us to prevail as the litigation continues and moves to final judgment."

A Department of Homeland Security spokesperson did not immediately respond to a request for comment.

The Justice Department, in asking the 1st Circuit to overturn Talwani's decision, pointed to the Supreme Court's action staying her ruling and urged the appeals court to "reject the plaintiffs' brazen request to defy the Supreme Court."

If the five most-valuable U.S. technology companies want to buy startups, they can certainly afford to do so.

Today, the Big Five — Nvidia, Apple, Microsoft, Alphabet and Amazon — have a combined market capitalization of more than $16 trillion. They’ve also got close to $400 billion in cash on the books between them.

Even with that massive spending power, however, the largest tech companies have not bought many startups this year. Per Crunchbase data, they’ve disclosed just 10 deals to purchase private seed or venture-funded companies.

This doesn’t reflect a change in M&A appetite. Rather, It’s a continuation of a trend toward fewer acquisitions that’s persisted for a few years, as charted below.

Before we push the slow M&A narrative any further, however, it would be remiss not to mention that this year’s tally does include the largest planned startup acquisition of all time. That would be Google’s agreement, announced in March, to buy cloud security provider Wiz for $32 billion in cash.

It’s not a done deal, as the transaction still faces scrutiny from antitrust regulators. It may help that Google is planning to buy a cybersecurity company, and not, say, a giant acquisition of a search engine or advertising platform. But still, the sheer dollar size means some pushback is likely.

Meanwhile, among the rest of this year’s disclosed Big Five startup acquisitions, listed below, none comes with a reported price.

Some deals without disclosed prices still do involve companies that previously raised quite a bit of funding and likely sold for good-sized sums.

For instance, Gretel, a synthetic data platform for AI, raised about $68 million in seed and early-stage funding before selling to Nvidia in March. And Axio, a Bangalore-based fintech startup, raised more than $200 million in debt and equity before selling to Amazon early this year.

In other cases, the Big Five snapped up companies still in seed stage. This spring, for instance, Google snatched up design startup Galileo AI, which had raised a few million in seed funding. And Amazon snagged Bee, the seed-backed developer of an AI-enabled wearable.

It’s also likely there were more acquisitions we haven’t heard about. It’s not impossible for a tech giant to pick up a seed-stage or stealth startup without an announcement or attracting attention, if it so desires.

Also, because the Big Five are so valuable, they may not have to disclose details for acquisitions that might qualify as significant and require reporting for a smaller company.

Of course, tech giants don’t need to buy a company to have a stake in it or otherwise benefit from its success.

All of the Big Five are prolific startup investors. That includes leading several of the larger GenAI financings and taking equity stakes as well as forming partnership agreements.

They’re also big acquirers of talent and have ways to pursue this goal without buying companies outright. Last year, for example, Microsoft drew headlines when it lured two co-founders of GenAI startup Inflection AI away from the company, hired most of its 70-person staff, and licensed its technology.

If something that looks like a trend or cycle persists long enough, it’s logical to conclude that it might instead be the new normal. This is one interpretation of the persistent slow pace of startup acquisitions by the Big Five.

While a couple decades ago, getting acquired by one of the top tech giants was an oft-discussed startup exit path, that strategy now looks passé. After all, the Big Five have plenty of reasons not to do an acquisition, including regulatory and compliance burdens and the prospect of antitrust pushback. Additionally, they can pay whatever it takes to simply license a technology or lure top talent.

So far, there’s zero indication that public markets care about the Big Five’s slow M&A pace. Companies don’t get valuations in the trillions because investors are pessimistic about their prospects.

The Week’s 10 Biggest Funding Rounds: A Busy Week For Big Financings, Led By Databricks And PsiQuantum

This past week was a busy period for mega-sized funding rounds, with all 10 of the largest U.S. financings exceeding the $100 million mark. Topping the list were billion-dollar financings for AI data platform Databricks and quantum computing startup PsiQuantum. Overall, we saw robust investor interest across AI, healthcare, spacetech and fintech.

1. (tied) Databricks, $1B, AI data platform: Databricks said it raised $1 billion in Series K funding co-led by Andreessen Horowitz, Insight Partners, MGX, Thrive Capital and WCM Investment Management. The financing sets a valuation of over $100 billion for the San Francisco-based company, which says it has surpassed a $4 billion revenue run-rate and is growing over 50% year over year.

1. (tied) PsiQuantum, $1B, quantum computing: Palo Alto, California-based PsiQuantum, which is hoping to build the “world’s first commercially useful, fault-tolerant quantum computers,” announced that it secured $1 billion in Series E funding. BlackRock, Temasek and Baillie Gifford led the round, which set a $7 billion valuation for the company.

3. Cognition, $400M, AI: AI coding startup Cognition locked up over $400 million at a $10.2 billion post-money valuation. Founders Fund led the financing for the 2-year-old, San Francisco-based company.

4. Strive Health, $300M, kidney care: Denver-based Strive Health, a care provider for patients with kidney disease, closed on $300 million in Series D equity funding led by New Enterprise Associates. Strive also raised $250 million in debt financing led by Hercules Capital.

5. Odyssey Therapeutics, $213M, biopharma: Odyssey Therapeutics, a biopharmaceutical startup focused on autoimmune and inflammatory diseases, picked up $213 million in Series D funding from a long list of new and existing investors. Boston-based Odyssey filed to go public in January but withdrew the planned offering in June.

6. (tied) Perplexity, $200M, GenAI: GenAI startup Perplexity reportedly secured $200 million in fresh capital at a $20 billion valuation. To date, San Francisco-based Perplexity has raised $1.5 billion in known funding, per Crunchbase data.

6. (tied) Torus, $200M, modular power plants: Utah-based Torus, a provider of modular power plants for utilities, data centers and other customers, announced a $200 million investment by Magnetar Capital. The company is also now preparing to open GigaOne, a 540,000-square-foot manufacturing campus in Salt Lake City.

6. (tied) Apex, $200M, spacetech: Los Angeles-based Apex, a manufacturer of satellite products, landed $200 million in Series D funding led by Interlagos Capital. The round reportedly brings Apex’s valuation to $1 billion.

9. Harbour Health, $130M, health care and insurance: Harbour Health, a provider of primary care services and coverage, picked up $130 million in new funding co-led by General Catalyst, 8VC and Alta Partners. To date, the 4-year-old, Austin, Texas-based company has raised over $255 million in known funding.

10. Speedchain, $111M, fintech: Atlanta-based Speedchain, a provider of credit cards and expense management tools for businesses, secured $111 million in equity and debt funding. Community Investment Management extended the debt financing, while GTMfund, Village Global, TTV Capital, K5 Global, Tandem Ventures and Emigrant Bank provided the equity.

Dr. Pangloss, welcome to Wall Street, where it is indeed the best of all possible worlds.

Voltaire’s oblivious optimist fits in well in a place where domestic political violence and escalating global tensions don’t intrude.

And so major equity indexes notched records again in a week marked by an abhorrent assassination in the U.S. while Russia sent drones supposedly intended for Ukraine into Poland and Israel expanded the Gaza war into Qatar. As Peter Atwater observed in his Financial Insyghts missive this past week, it isn’t known if Chinese President Xi Jinping might tag along with an assault on Taiwan or India’s Prime Minister Narendra Modi could up the ante with Pakistan, but global markets have priced in none of this.

Stocks’ advances in the face of these risks may mainly prove President Calvin Coolidge’s observation that the business of America is business. Even if the U.S. economy is slowing, it is still growing, and profits even more so. As noted, stock and bond markets also continue to advance in expectation of a new round of Federal Reserve interest-rate cuts, even with quite easy financial conditions. That’s evidenced by corporate credit offering slim yield premiums, which sent the popular iShares iBoxx $ High Yield Corporate Bond exchange-traded fund (ticker: HYG) to a 52-week high this past week.

Among equities, along with the S&P 500 and the Nasdaq Composite ending the week at new high marks (and the Dow Jones Industrial Average setting a record on Thursday), the market for initial public offerings is back. A highlight was the debut of Klarna Group, which, as Macro Intelligence 2 Partners helpfully explained, “for those of you who don’t finance your Chipotle burritos,” is a popular buy-now, pay-later service. That Klarna describes itself as “a global, AI-driven” payments platform makes its $31 billion market capitalization easier to explain, they wrote in a client note.

Klarna was followed by Figure Technology Solutions and Gemini Space Station, both crypto-related outfits that popped following their debuts. “We assure you that the reopening of the IPO window isn’t usually considered a symptom of tight financial conditions,” MI2 dryly added.

Despite that, the Fed will be easing this coming week, which will only be the ninth time it has cut rates within 10 days of the S&P 500 hitting a 52-week high since 1994, according to Bespoke Investment Group. It would also be only the sixth time the Fed has cut since then after a pause of more than six months between rate reductions. In either scenario, the advisory found the S&P higher a year later with bigger gains than the 12-month median return.

Based on that history, equity investors can safely ignore domestic political risks, international tensions, richly priced bonds, exalted equity valuations, and signs of speculative fervor in the IPO market. And with the Cboe Volatility Index, or VIX, the so-called fear gauge for stocks, trading below 15 and evincing no worries among options trades, could Dr. Pangloss actually be right? Or does complacency reign based on expectations of continued easy money?

Government finances are deteriorating in the U.S., United Kingdom, and France. They are improving in Mexico and Peru, and at least holding steady in most emerging and frontier markets, from Costa Rica to Pakistan.

Investors have noticed. The iShares J.P. Morgan USD Emerging Markets Bond exchange-traded fund has climbed by 8% this year, bringing spreads over U.S. Treasuries to their lowest in a decade. The analogous local currency bond ETF has jumped 13% as Donald Trump’s tariffs and tax cuts counterintuitively spurred flight from the dollar.

“EM is pretty much the same old EM,” says Samy Muaddi, portfolio manager for emerging market bonds at T. Rowe Price. “What’s new is structurally higher volatility in developed market debt.”

The highest U.S. import tariffs since the 1930s have left emerging market debt unscathed for two somewhat contradictory reasons. For one group of large borrowers—China, Brazil, India, South Africa—exports to the U.S. are 3% or less of gross domestic product. “That’s not of the magnitude that would move the needle much on sovereign creditworthiness,” says Cem Karacadag, head of global sovereign debt and currencies at Barings.

Countries with more exposure—Mexico, South Korea, Taiwan, Malaysia—can expect a Trump tariff-driven slowdown, notes Arthur Budaghyan, chief emerging markets strategist at BCA Research. But that, along with an expected fall in U.S. interest rates, will allow their central banks to loosen.

Declining rates are generally positive for fixed-income investment. “U.S. tariffs are deflationary for the rest of the world,” Budaghyan concludes. “That’s bearish for equities, bullish for bonds.”

Opinions divide on where the sweet spot is in a highly diversified asset class. Karacadag is focusing on dollar credits from BB-rated sovereigns, the top rung of high yield. Examples: Turkey, Guatemala, Paraguay, Serbia, Albania. “You’re getting a yield above 6%, and most EM BB is resilient enough for a cyclical U.S. slowdown,” he says.

BCA’s Budaghyan tilts toward local-currency credits, anticipating interest rate cuts and continued dollar weakness. “EM currencies will be flat to up, and even the Asian economies will be cutting,” he predicts.

His top pick is Mexico, where President Claudia Sheinbaum has so far managed to exempt most exports from U.S. tariffs and is nibbling away at the budget deficit left by predecessor Andres Manuel Lopez Obrador. “If there’s one asset of any kind to buy in EM, we recommend 10-year local-currency Mexican bonds,” he says.

Peter Kent, co-head of emerging market fixed income at asset manager Ninety One, sees “super interesting currencies” in Asian trade titans like Taiwan, Korea, and Malaysia. These currencies all climbed as the dollar dove following President Donald Trump’s April 2 Liberation Day. Kent expects more of the same as governments “sell excess dollars to cut their overexposure.”

T. Rowe’s Muaddi is inclined to caution, as bond values everywhere look rich. “We’re three years into a very strong rally in leveraged credit products globally,” he says. “One portfolio theme for us is a rotation out of frontier into investment-grade debt.”

A borrowing splurge by advanced economies since the pandemic erupted five years ago has eroded the certainty that they are safe and emerging markets risky. Trump’s economic gamesmanship since January undermines it further. “The breakout event this year is higher policy uncertainty in the U.S., while EM governance inches forward,” Barings’ Karacadag says.

Investors will remain uncertain for a while about where the global dust settles. Emerging market credit still offers opportunity.