Thursday 29th June, 2017
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The most popular investor picks for emerging markets in 2017

The most popular investor picks for emerging markets in 2017

These are some clear fa­vorites among investors for 2017. All things Rus­sian and Indian are popular, as are Brazilian corporate bonds and Mexico’s cheap peso.
 
The top calls for this year are centred on markets where the political climate is improv­ing and assets are less vulner­able to external shocks arising from higher U.S. borrowing costs and President-elect Don­ald Trump’s policy announce­ments.
 
Russia
 
For investors that borrow in currencies with low inter­est rates and buy high yielding ones, Russia’s ruble is a top bet. UBS Group AG says the ru­ble’s carry trade could poten­tially return 26 percent over the next 12 months, the most among developing EMEA peers. Aside from having rel­atively high interest rates, Rus­sia is benefiting from rising oil prices. That helps make its eq­uity market an “obvious candi­date” for NN Investment Part­ners.
 
South Africa
 
Some investors see President Jacob Zuma’s power waning, boosting the appeal of South African stocks and bonds, es­pecially given that some say the country will probably avoid a debt downgrade.
 
Mexico
 
The currency is the most attractive among developing Latin American peers. Not only is the peso cheap, it will benefit from a hawkish Banxi­co and a U.S. presidency that’s less protectionist than expect­ed, says Enrique Diaz-Alva­rez, chief risk officer at Ebury Partners.
 
Brazil
 
Petrobras bonds are “still cheap,” Banco do Brasil’s Coco bonds have upside and Samar­co is an aggressive bet as the company will likely resume operations this year and rene­gotiate its bonds, says Carlos Gribel, the head of fixed in­come at Andbanc Brokerage in Miami.
 
Chile
 
The nation’s stocks will ben­efit from rising copper pric­es and the prospect of more business-friendly policies af­ter 2017’s presidential election, according to Morgan Stanley, JPMorgan Chase & Co. and BTG Pactual Group.
 
India
 
Given the possibility of a protectionist turn from the U.S. under Donald Trump this year, the South Asian nation’s assets are looking increasingly attractive. Prime Minister Na­rendra Modi’s November de­cision to withdraw high-de­nomination bills may see a slowdown and prompt more interest-rate cuts, which will be good for bonds.
 
Indonesia
 
Many of the biggest compa­nies on the benchmark share index are either domestical­ly-focused consumer firms or miners, which should ben­efit if coal and nickel pric­es keep rising in 2017. Indo­nesia’s higher-yielding bonds are a perennial investor favor­ite, especially since the cur­rent-account deficit has nar­rowed significantly in the last few years, making the country much less vulnerable to high­er U.S. borrowing costs than it was during the taper tantrum of 2013.

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