To Templeton’s Stephen Dover, political stability and efforts at changing rules to support economic growth are bolstering his outlook on the five countries. He expects Brazil to cut its benchmark interest rate to 8.5 percent from 14 percent over a 12-month-plus period, leading to more borrowing by consumers and companies. Meanwhile, India’s efforts to control inflation have steadied fiscal and current account deficits. Indonesia’s current-account gap also appears to be on the decline, he said.
In Turkey, despair last year from a wave of credit-rating downgrades amid terrorist attacks, a coup attempt and escalating tension with Russia, has made stocks cheap, Dover said by email. The Borsa Istanbul 100 Index’s price-to-earnings ratio will likely drop to 7.79 times in 2018, which would be the lowest since 2009, according to estimates compiled by Bloomberg.
"Many of the factors that originally attracted investors to the asset class have come back into play," said Dover, who oversees about $80 billion for Franklin Templeton Investment’s emerging-markets group. "Even in regions that are still going through adjustment and rebalancing, we are seeing improved visibility and increasing signs of robust underlying economic conditions."
This article was provided by Bloomberg News.