of Eleftheria Kourtalis
Bank of America maintains a constructive stance on EMEA stocks under the heading “Don’t walk away from your May purchases.”
As it suggests, its positive stance on the region’s markets in the second half of 2024 will see the ECB move ahead with its first rate cut this week as the monetary policy cycle in developed markets turns. As he points out, while the central bank may delay its own first tapering later this year, BofA continues to expect the dollar to weaken in the second half of 2024, and is a key factor in its positive stance on EEMEA stocks. .
The EEMEA region as a whole saw its strongest inflows in more than a year last month, the BoA noted, although they differed from country to country. Inflows were strong in Central and Eastern Europe and Turkey, against occasional outflows from the Gulf countries. On the other hand, investors continued to reduce exposure to South Africa due to post-election political uncertainty. The situation improved significantly in South Africa, Hungary and Turkey, but continued to decline in Saudi Arabia. However, the position is neutral to underweight across the region, with Hungary a key overweight and funds underweight against Saudi Arabia.
International emerging market funds are also overweight Greece, BofA and Hungary (mentioned above) and Egypt, while they are underweight other markets in the EEMEA region. As he explains, the figures come from EPFR and are based on a sample of 140 actively managed funds (active funds) with MSCI emerging markets as a benchmark, with $123 billion in assets under management.
In terms of ranking, the United Arab Emirates takes the top spot thanks to strong dividends and favorable valuations, Egypt is second, Turkey is back in third and Greece follows Hungary in fifth place, with more attractive dividends and valuations. On the other hand, weak revenue has pushed Kuwait down the rankings.
Greece’s risk premium is the fifth highest at 9.5%, while profit yields are set at 10.9% this year and 11.2% by 2025. At the same time, the Greek market has one of the highest dividend yields in the region. At 5.9% this year and 6.2% in 2025, it is the second highest market of the Czech Republic at the level of emerging markets in Europe, which is 7.3% this year and 6.6% in 2025.
The Greek market’s P/E ratio is 9.3x, while the book value P/B ratio is 1.7x, both of which are below the average over the past 24 years, as BofA noted, especially with a P/B ratio that is below the average for emerging markets as a whole. moves less than
The top 20 stocks in the EEMEA region include Eurobank, on which BofA maintains a buy recommendation, as well as PPC, which does not.
Conversely, OPAP stock is placed among the 20 stocks that emerging market funds had the lowest positions in the past three months.
