These Are 2018’s Most (And Least) Attractive Emerging Markets

By some measures, Mexico and Turkey come out as the most attractive emerging markets for 2018.


These Are 2018’s Most (And Least) Attractive Emerging Markets
  • Mexico, Turkey bolstered by relatively lower REER levels
  • India, China less appealing as growth lower vs 10-year average

By some measures, Mexico and Turkey come out as the most attractive emerging markets for 2018.

In a Bloomberg analysis based on a range of metrics including growth, yields, current-account position and asset valuations, the two countries score highest among 20 developing economies. Asian economies occupy the five lowest-scoring positions.

Mexico and Turkey scored higher because their real effective exchange rates are more competitive than the average of the past 10 years, according to the analysis. India and China’s valuations are relatively expensive in historical terms. Their economic growth is unlikely to be as fast as it has been in the past decade, estimates show.

“If you are on the hunt for something to buy now, Turkey and Mexico stand out because they are relatively cheap,” said Takeshi Yokouchi, a senior fund manager in Tokyo at Daiwa SB Investments Ltd., which oversees the equivalent of $50 billion in assets. “When political risks ease up, that’s when you want to make an entry, given their solid fundamentals and high yield.”

Turkey’s five-year government bond yields about 13 percent, while Mexico’s yields 7.5 percent. Both exceed India’s equivalent rate of about 7.3 percent, which is the highest among Asian nations covered by the analysis. China’s yields about 3.9 percent.

The study covers 20 of the 24 markets making up MSCI Inc.’s Emerging-Market Index. Greece is excluded owing to its use of the euro, while Egypt, Qatar and Pakistan are excluded because of data limitations. The result for each is shown as a Z-score, which measures the relationship of the individual value to the 10-year average.

“Asian countries do look relatively expensive as they have been bought amid strong fundamentals in the region,” Yokouchi said. “They may not have the potential like Turkey or Mexico to rally big, but Asian currencies and assets are also likely to stay steady from here.”

The Turkish lira is the worst-performing currency against the dollar in the past six months, partly due to lingering political tension with the U.S. The Mexican peso ranked second worst amid the ongoing Nafta negotiations.

The MSCI Emerging-Market Index of shares has rallied 80 percent since bottoming two years ago, outperforming the developed-market gauge’s 47 percent advance during the period.

Author Info:
This article was first published by Yumi Teso , Masaki Kondo , and Hannah Dormido on Bloomberg



Bridging People to Opportunities

Share this Story

More Stories

BEAMSTART News covers the latest stories on Business, Finance, and Opportunities in Asia. We are an extension of global partnerships platform BEAMSTART.

Stay updated with us via our channels below:


Download the App

Be part of the global community of CEOs, Business Leaders, and Professionals. Download below to instantly form partnerships and discover opportunities:

© 2016 - 2020 BEAMSTART. All Rights Reserved.