Emerging market investors eye SA

SOUTH Africa is among the emerging markets investors are eyeing this year.

These are some clear favourites among investors. 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 US borrowing costs and president-elect Donald Trump’s policy announcements.

Russia:

For investors who 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% over the next 12 months.

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 US presidency that is less protectionist than expected.

Brazil:

Carlos Gribel, head of fixed income at Andbanc Brokerage in Miami, said: “Petrobras bonds are still cheap, Banco do Brasil’s Coco bonds have upside and Samarco is an aggressive bet.”

Chile:

The nation’s stocks will benefit from rising copper prices and the prospect of more business-friendly policies after the presidential election, according to Morgan Stanley, JPMorgan Chase & Co and BTG Pactual Group.

India:

Its 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 this year. –Bloomberg