EM elections Q1

EM elections Q1

It’s a busy political year in emerging markets, with significant elections in twelve countries. Four elections occur in the first quarter of 2018 and this is our overview of their likely implications and outcomes.


Colombia – centre-right former vice president Germán Vargas Lleras and centrist former mayor of Medellin Sergio Fajardo look like the most competitive candidates to win, along with Ivan Duque, who is expected to be endorsed by former president Álvaro Uribe. Regardless of who is elected, the next administration will inherit a peace deal with the FARC that will improve national security. However, fiscal constraints stemming from low growth and high spending remain a problem. We are not invested in Colombia as we see more compelling prospects in other parts of the emerging markets universe currently.

Czech Republic – a fiercely contested election was narrowly won in January by the populist incumbent Milos Zeman. However, investor sentiment is likely to remain sanguine against a backdrop of positive economic growth, falling unemployment and a recovery in foreign direct investment.

Egypt – somewhat of a conundrum for investors. This is a country at the crossroads of global trade routes, with significant natural gas resources and a large, young population, but it is also struggling with structural economic problems. The presidential election in March is likely to return incumbent Abdel Fattah al-Sisi. This should please foreign investors, as Sisi’s priorities remain economic reform and rebuilding state institutions. At the strategy level, we are not invested in Egypt as we currently see more opportunities elsewhere.

Russia – Vladimir Putin looks likely to win handsomely in the presidential elections in March and is expected to then embark on some (limited) fiscal and pension reform. Russia’s economic recovery remains somewhat fragile, but with a modest rally in oil prices, public finances will improve. Our investments here include the leading food retailer, the country’s most innovative banking franchise and its best-integrated energy producer.