Vaulting from third place back to first is the Bank of America Merrill Lynch team under Michael Harris, who also directs the top CEEMEA and Turkey equity strategy squads and co-captains, with Stephen Pettyfer, the group at No. 1 in Middle East & North Africa Equity Strategy. The analysts downgraded Russian equities in late March, fearful of collateral damage from the then-unfolding financial crisis in Cyprus. “They were more negative on Russia, and that was the right call — everyone who was more positive on Russia was wrong,” declares one appreciative investor. In early May, after the benchmark Russian Trading System Index had slid about 5 percent, the strategists alerted clients to a buying opportunity; specifically, they advised overweighting consumer staples and oil and underweighting natural-gas stocks. “The $1.2 billion of outflows from Russia country funds since the Cypriot debacle have made Russian equities cheaper, while the conditional lifting of capital controls on foreign banks operating in Cyprus should also help reduce risks,” explains Harris, 43. Moreover, recent improvements in U.S. payrolls — “the single most important indicator of the direction of investor comfort,” the London-based leader declares — and stabilizing crude oil prices should help boost Russian stocks. Top picks include Eurasia Drilling Co., an oil field services provider headquartered in Cyprus, and Magnit, which operates thousands of convenience stores and supermarkets throughout Russia. — Paul Sweeney |
Economics & Strategy – Emerging-Europe Equity Strategy: First
