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Carmignac EM star adds Argentina for ‘first time in years’

Carmignac EM star adds Argentina for ‘first time in years’

Argentina has become the most promising frontier market in the world following Mauricio Macri’s victory at the general election in November 2015, Citywire A-rated Xavier Hovasse has said.

Speaking at the Carmignac annual conference in Paris, Hovasse, who runs the Carmignac Emerging Discovery and Carmignac Emerging Patrimoine funds, said the Latin American country is bouncing back from a decade of decline.

‘We have added exposures to Argentina in the funds for the first time in many years,’ Hovasse said.

Speaking to Citywire Selector prior to the first round of the general elections in October 2015, Hovasse had forecasted strong long term growth for Argentina but had also said investors needed the ‘guts’ to wait for the long-awaited reforms to kick in.

The electoral result had positively surprised Hovasse, who in October had little hope political transition would take place in the near future as Daniel Scioli, the leftist candidate, was likely to win the elections.

As a result, Hovasse said he has gradually increased exposure to the country in the past couple of months and is planning to further invest in Argentina as the newly-elected President implements reforms.

Commenting on what sectors of the economy he is focusing on within the funds, Hovasse singled out Argentina-based MercadoLibre, a Latin American e-commerce platform, as his favourite name on that market.

‘It has all the characteristics we look for in the companies we invest, it has a high projected growth and an excellent cash flow,’ he said.

Hovasse then said Argentina’s neighbour, Brazil, also offers some interesting opportunities for inflation-linked bonds investors.

‘The valuations are improving in Brazil, we think they will soon reach attractive levels and although my view might be a little contrarian, I actually think this is a good entry point for investors,’ he said.

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