There is a key factor to consider when investing in sovereign bonds issued by emerging economies, HSBC's global head of EM rates research advises: Look for structural reform.
Bonds issued by EMs that are undertaking reforms or plan to implement them will shine as investors move away from U.S., Japanese and European bonds, Andre de Silva told CNBC's "Street Signs."
De Silva picked bonds from India, Indonesia, Brazil and Russia as the most attractive because these countries had "independent pull factors" that were attractive to investors channeling funds from developed markets to emerging markets.
"Both Indonesia and India stand out within the region of Asia," de Silva said, because of the extensive reforms introduced by their respective governments in recent years.
The Indian government was able to get a crucial goods and services tax (GST) bill through parliament in early August, which is expected to simplify India's byzantine tax infrastructure. Other crucial labor and land reforms are in the works, after the Modi government turned its focus on rural spending in the 2016-2017 budget, allocating $13.1 billion.
Indonesian President Joko Widodo, meanwhile, introduced a series of reforms that freed up fiscal space, including the late 2014 abolition of gasoline subsidies and the July 2016 tax amnesty program that encouraged locals to declare previously undisclosed taxable income in order to avoid penalties.