Written by Libyan George
LONDON (Reuters) – The new inability to predict, which is characterized by the threats of customs tariffs and growing global tensions, gives the emerging market investors to search for shelter in border markets that are relatively safe from the commercial policy of US President Donald Trump.
Trump’s return to the White House put the Bezo in Mexico on the rotating ship, more enthusiasm for foreign investment in China and the refrigerated hopes in a golden era for emerging markets.
The so -called border markets are the most dangerous in EM and are often the smaller developing economies in Africa, Eastern Europe, Asia and even Latin America. They are not completely safe, but investors say they are strong investment destinations this year because they are not in the Trump shooting line of tariffs and other political transformations.
Economies like Serbia have an additional attractiveness of strong growth, while for Ghana, Zambia and Sri Lanka, they allow them to appear to focus on reforms and growth.
“It is possible that the border markets are more isolated than others, because I do not think that countries like Nigeria, Sri Lanka or Paraguay … will be a target any time soon for this administration,” said Terry Laoire, an emerging market. Director of the portfolio with Vontobel.
“They have their own risks, but they are highly immune to the risks that affect the prevailing emerging markets,” he said, describing them as a “very strong engine for diversification.”
For Anton Hauser, the manager of large boxes at Erstest Asset Management, assets like Serbian local bonds are good bets to capture economic growth in Eastern Europe.
High return and high performance?
The most dangerous global climate often sends investors who rush to safe treasury assets such as US Treasury bonds or gold or German government bonds.
The Covid-19 crisis and repercussions of Russia’s invasion of Ukraine witnessed investors who get rid of the border markets on their journey to safety; Many of them fell to failure to pay the sovereignty.
But the background may be different with Trump’s second mercury presidency.
Some of the most dangerous debts – such as Argentine, Lebanese, Ukrainian and Ecuadorian international bonds – were amazing in the past year.
Many expect similar stories – mainly driven by local dynamics – to return again on revenues more than 2025.
“The high return has achieved well in general – it has been a good performance a few months ago so far.
Like Larose, border markets, especially in Africa, were martyred as “it is unlikely to be systematically affected by geopolitical or global macro factors.”
Investors were martyred in several other countries – many of which were faced to attract foreign money – including Egypt, Nigeria and the Dominican Republic – as good goals.
They said that Zambia, Ghana and Sri Lanka, who recently came out of debt restructuring deals, were also attractive bets this year.
But there are some bright points between the emerging emerging economies as well, such as Türkiye and South Africa.
Türkiye has become a popular play on foreign exchange since its return to the Orthodox fiscal policy in 2023, and has recently started a price reduction course and could benefit from the reconstruction in Syria and Ukraine.
Investors said that South Africa is less dependent on export to the United States, and could benefit from low oil prices and has a mixture of commodity exports that can help it overcome geopolitical turmoil.
“The few deals that … surprised the past few weeks have been low experimental, and low -linking with the dollar,” said Marik Dreammal, a Ceemea strategic expert with Societe Generele (OTC :): “Türkiye is a major example. They were fine.”
Dreaml also cited bets on foreign currency strikers in Egypt and the Treasury Department in Kenya.
But it is not a free pass for all emerging economies.
JPMorgan has reduced its recommendation on Panama’s bonds after Trump increased his threat this week from “restoring” the Panama channel.
Silver stories of the previous Trump administration may be less fortunate this time as well, especially those who have benefited from the transferred Chinese trade.
“Mexico, Vietnam, Malaysia … will be more targeted,” said Magda Branit, head of emerging markets with investment managers in Aksa. “Trump will look forward to closing these gaps.”
