Nowhere in emerging Asia should be off limits to investors but that cannot prevent disappointments, according to Fiera Capital’s Dominic Bokor-Ingram.
Speaking to Citywire Selector, Citywire AAA-rated Bokor-Ingram, who manages several funds including the Magna New Frontiers fund, said that Myanmar has ‘certainly been a disappointment’.
‘About two years ago we started to get excited about the creation of the stock exchange and there were new companies IPOing domestically.
‘But the continued exclusion of foreigners in that market and the very slow pace of economic reform regardless of what’s going on politically has meant it really hasn’t panned out as we had hoped as an investment opportunity.'
Now, Bokor-Ingram said the economy seems to have been growing very strongly, but that still it still isn’t appealing to investors.
‘Maybe they have been doing the right thing for Myanmar, but certainly, as an investment destination it’s been a disappointment.’
Elsewhere, Bokor-Ingram said the team is still quite excited about Pakistan despite a ‘huge anti-climax’ following the country's upgrade from frontier to emerging market last year.
‘Unfortunately, that coincided with the Panama Papers and the ousting of the Prime Minister. Although the political situation is still reasonably unstable, in March this year there are Senate elections and there are two houses in Pakistan the lower and the upper.
‘We think that the incumbent party is probably going to win in the Senate and this will make reforms and changing laws much easier for them, and this might well bring around an acceleration of the reform process in Pakistan.’
Bokor-Ingram said the market is still very cheap and is probably the cheapest market in the fund’s frontier universe.
'It trades around 8x one-year forward earnings and we are still expecting quite strong earnings growth over the next year. Obviously, on the negative side, you have the issues around the US and how it categorises Pakistan in terms of terrorism.
'This could have some negative impacts on Pakistan in the short term. They have recently announced that they have extended by three months, the time they have allowed Pakistan to appear that they are not supporters of terrorism.'
With low exposure to Pakistan due to these internal and external political issues, Bokor-Ingram said this US policy will be a positive for the country, while its economy continues to grow.
'If you just look at the bottom up and the continued growth, the economy is still growing at 6%, the political issues have not derailed economic growth. If you look at the economic growth and the market valuation I can see it over the next six-to-nine months being a bigger weighting.'
Over the three years to the end of 2018, the Magna New Frontiers fund returned 77.61% in US dollar terms. This compares with a 29.28% rise by its Citywire-assigned benchmark, the MSCI Frontier Markets TR USD, over the same time period.