LONDON, April 9 Reuters Fund manager Ashmore Group has bought Brazilian and Chinese local currency bonds as it remains focused on broader emerging market local debt, betting on strong performance during 2021.

Brazilian markets have had a tough start to 2021, with local currency bonds selling off by around 170 basis points and the real currency sliding 7 against the dollar as concerns about politics surfaced and as the country battles the worlds worst daily COVID19 death toll.

Ashmore, with assets under management of 93 billion at the end of 2020, was buying Brazilian local bonds, in part due to the belief that there was too much political risk premium priced in, Gustavo Medeiros, Ashmores deputy head of research told Reuters.

The BRL real terms of trade are extremely strong and the currency is close to its weakest level since 2002 in real effective exchange rate terms when Brazil had a balance of payments crisis, he said in an interview.

Some investors have worried about political interference after the exit of the heads of stateowned companies Petrobras and Banco do Brasil following tussles with President Jair Bolsonaro. The prospect of leftist former president Luiz Inacio Lula da Silva seeking election next year is heaping pressure on Bolsonaro to boost social spending, potentially diminishing chances of reform.

Ashmore is also buying up Chinese local currency bonds, said Medeiros.

Amid investor worries about rising U.S. Treasury yields, Chinese government…