Hidden Gems in Frontier - Our Latest Ideas from Africa, Asia and Beyond
Oliver Bell, Frontier Markets Portfolio Manager, was recently joined by four Frontier Market analysts to discuss their latest ideas from recent research trips.
Areas covered include:
- What do Sri Lankan politics mean for our investment thesis?
- How are we playing the strong consumer in Vietnam?
- Where are we finding opportunities in late-cycle Romania?
The team also talked about Argentina, which has experienced heightened volatility since the webcast was filmed. Argentina typifies the investment case for frontier markets but the transition from poor economic policy to good long term reform policy is always difficult as politicians have to keep one eye on the ballot box whilst instituting near term socially harsh or costly reforms.
In the team’s discussion we alluded to some of the monetary policy challenges the country faces as it tries to bring down inflation and inflation expectations. Argentina has benefited from a weaker US Dollar, cheap global money and the chase for yield. But this environment is being challenged and earlier missteps by the Argentinian central bank (cutting interest rates and lifting inflation targets) have led to a credibility gap being punished by the markets.
The rapid ratcheting up of interest rates to 40%, among other measures, should stabilise the peso and enable the economy to continue on its disinflation trend, which we believe should be positive for the country’s longer term outlook.
Key Risks - The following risks are materially relevant to the strategy discussed:
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