Navigating emerging markets investing amidst key elections

Market volatility in emerging markets following key national elections has been a topic of concern for investors around the world. Recently, South Africa experienced its first coalition government in what is considered the modern era, leading to questions about the impact on markets and investor confidence. Joining CNBC Africa to provide insights on the implications of these election results and the long-term outlook for investors is Robert Davy, Emerging Markets Fund Manager at Schroders. Discussing the policy differences between the ANC and the DA in South Africa, Davy highlighted the need for lower interest rates and improved infrastructure to boost economic growth and investor confidence. He emphasized the importance of fiscal management and domestic policy confidence in attracting investment and driving sustainable growth in the country. Davy pointed out that while interest rates are partially influenced by the global situation, increased confidence in domestic policies can create a more favorable investment environment. Comparing South Africa's market volatility during elections to other emerging markets like Mexico, Taiwan, and India, Davy provided insights into the outcomes of recent elections in these countries. He mentioned that the success of the ruling party in Mexico raised concerns among investors about potential fiscal challenges and judicial influences. In Indonesia, the timing of the election results led to market uncertainties despite positive overall sentiment. Davy identified South Africa as a clear example where the ruling party's underperformance resulted in a coalition government that was well received by the markets. Addressing the positioning of fund managers in emerging markets given the mixed election results, Davy discussed the role of technology and AI in driving market trends. He highlighted Taiwan's leadership in technology-driven sectors and noted the importance of interest rate sensitivity in countries like South Africa and Latin America. Davy emphasized that global growth technology markets and interest rate sensitive markets are currently driving market dynamics, with potential shifts depending on developments in the US and the outcome of the presidential election. In conclusion, the emerging markets landscape remains dynamic and influenced by a range of factors, including election outcomes, policy decisions, and global economic trends. Investors are advised to stay informed, monitor market developments, and consider the implications of political changes on their investment strategies. With uncertainty prevailing in several key markets, a cautious approach and a focus on long-term sustainability are key for navigating the complexities of emerging markets investing.