Investing in Chile, Russia, Turkey, and Argentina (w/ Rashique Rahman & Ed Harrison)
RASHIQUE RAHMAN: On the flip side, countries where you're likely to see outperformance or where there's potential for gains is Chile. I think the market there is overshot considerably. I think hopefully, you'll get some noise here and there, but the move towards reform of the constitution should hopefully ease some of the tensions there in the markets more than adjusted. I like Chile from that standpoint. Russia, too, is potentially interesting. The valuations are compelling. This move towards fostering growth with a cabinet reshuffle is I think, a positive one. I like Russia on that side as well. From a local currency standpoint, Chile or Russia, I favor. I don't favor Colombia and South Africa. Those are the pairs that really, really stand out to me. ED HARRISON: Now, when we hear your macro tourists talk about EM, they're thinking about Argentina and Turkey, and actually, obviously, China, which we haven't talked about at all. First of all, talk to me about Argentina and Turkey, why we're not talking about them? Then secondly, why we're not talking about China? RASHIQUE RAHMAN: Great question. Argentina and Turkey have gone through, Argentina in particular, significant currency adjustment to address their imbalances. That's going to help. It's going to help address some of those imbalances. You're going to see a moderation in the external accounts, which will be beneficial for their funding and so forth. Argentina is on the path to restructuring their external debt. That's one thing to be mindful of, but that's a potential opportunity depending on the conditions of that restructuring. The perverse thing is the more they haircut, the more upside there is because the exit yield, the exit level of the debt is going to be lower the more they haircut because they'll have less debt to repay. Perversely, the more they haircut, the more upside there's likely to be for the debt. That's something to monitor. In general, the policy orientation is still a major concern in the currency as much as it suggests it doesn't seem overly cheap. From a competitive standpoint, Argentina and Turkey are still relatively challenged. Turkey itself still needs to undergo more of an adjustment, I would say, in the path of policy is not conducive, not reassuring. We're still going to see some disruption in those markets over 2020, I believe. It's not quite time to be thinking about investing, maybe opportunistically, the Central Bank of Turkey is likely to go on relatively aggressive easing campaign so there could be some opportunities, short term opportunities there. The restructuring in Argentina could be very interesting. We'll have to monitor that very closely. In general, it's not like oh, wow, these guys have adjusted significantly, it's time to buy. We're not in that mode just yet for those countries. JUSTINE: If you're ready to go beyond the interview make sure you visit realvision.com where you can try real vision plus for 30 day for just $1. We'll see you next time right here on real vision.