Emerging market elections offer new hope for investors
investmentnews.comElections are shining a spotlight on struggling emerging markets, with the prospect of fresh leadership unlocking opportunities in the asset class.
While Argentines surprised again at polls on Sunday to pick their next president, the result came just a week after voters in Ecuador and Poland backed new, pro-business leaders. Egypt, India and Mexico are all gearing up for their own elections in the coming months.
That’s adding yet another layer of complexity — and, for some investors, optimism — to developing assets. All together, those six elections stand to affect more than $200 billion of sovereign bonds, according to data compiled by Bloomberg.
Any vote-related boost would help offset the year’s losses in emerging-economy debt, stocks and currencies, which have fallen under the pressure of China’s housing crisis, the Federal Reserve’s higher-for-longer stance and wars in Europe and the Middle East.
“We are coming into a period of very, very heavy electoral calendar,” said Philip Fielding, co-head of emerging markets at Mackay Shields UK. “There’s some significant potential for some political positive surprises over the next 12-or-so months.”
Already, investors have seen gains in the aftermath of elections this year. A victory in Ecuador by Daniel Noboa, a 35-year-old business leader from a wealthy banana-exporting family, helped the nation’s bonds due in 2035 to gain by the most in the region last week.
Polish stocks, bonds and the zloty also advanced after the pro-European Union coalition unseated the nationalist government in what money managers described as the best scenario for markets.
Claudia Calich, the head of emerging-market debt at M&G Investments, said she bought Polish hard-currency bonds before the vote
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