Meanwhile, an end to the Russia-Ukraine war may also boost the allure of eastern European stocks, he said. Other countries now on Bokor-Ingram’s radar include Argentina and Turkey.
Argentina’s Merval Index is up 20% in dollar terms this year as investors bet Javier Milei’s incoming government will rein in spending and deregulate the economy on the path toward fiscal sustainability. Bokor-Ingram said Fiera might consider investing in the country’s stocks this year, after a gap of six years, if the new president does make headway with reforms.
“The problem is, for Argentina to start to grow again, the population has to become poorer first and the wage-hike spiral has to end,” he said. “Whether the new administration of Milei has enough follow-through is something we are watching closely.”
Fiera is also beginning to look at Turkish companies again, as Ankara pursues economic orthodoxy in a reversal of years of ultra-loose monetary policy. The country has “major macro headwinds” and its foreign-exchange reserves are poor, but the policy shift has brightened the country’s outlook, he said.
Fiera’s selective strategy also includes a list of markets to avoid in 2024. Top on the list are Egypt, Nigeria, Kenya, Bangladesh and Pakistan.
Bokor-Ingram’s reasons: Conflict along the Red Sea shipping route could cut Egypt’s GDP; Nigeria’s reforms have stalled and inflation remains stubborn; Kenya’s debt problem is much worse than expected because of public-sector losses; and Pakistan faces balance-sheet stress because of a “circular debt” problem arising from unpaid energy subsidies.
“We don’t like countries that create an existential risk to our capital,” Bokor-Ingram said.
This article was provided by Bloomberg News.