Former pariahs in emerging markets have been among the world’s best-performing stock markets this year as investors bet reforms in troubled economies such as Argentina and Pakistan will help them leave the worst of their currency woes behind them.
Argentina’s Merval index has led Latin American bourses, rising 53 per cent in US dollar terms, while Pakistan’s stock gauge is one of the best performing in Asia, as markets that until recently were seen as very troubled have outperformed larger and more expensive peers.
These so-called frontier markets have been attractive because of their cheap valuations, say investors. In contrast, indices in more established markets such as Mexico and Brazil have declined in dollar terms as capital has been pulled towards surging artificial intelligence stocks in the US.