On February 19, J.P. Morgan analysts projected that the equity markets in Argentina and Turkey could see returns exceeding 20% this year due to policy reforms targeting inflation reduction.
J.P. Morgan highlighted that the removal of capital controls could benefit Argentina's market, while improved economic conditions and reduced interest rates in Turkey could support its equities.
J.P. Morgan's estimates indicate that Argentina's Merval stock index is currently valued at nine times its 12-month forward price-to-earnings ratio, whereas Turkey's BIST 100 index is at seven times, both trading at a discount compared to the MSCI emerging markets index at a P/E ratio of 12.
Despite record highs in 2024, J.P. Morgan remains optimistic about Argentina's stocks and bonds as the government endeavors to combat inflation and business impediments.
Anticipating positive outcomes from the lifting of capital controls and upcoming elections in October, J.P. Morgan foresees continued backing for the region's equities moving forward.
Argentina's benchmark index has surged by 77% in the past year in dollar terms, ranking second globally in equity markets performance.
With an upgraded rating on Turkish equities to "overweight" from "neutral" recently, J.P. Morgan expects that declining inflation and the ongoing rate reduction cycle could bolster the broader stock market. In local currency, the BIST 100 index has shown an 8% increase over the past year.
Following consecutive rate cuts in December and January, the Turkish central bank's policy rate now stands at 45%, with projections suggesting a decrease to 30% by year-end, aligning with J.P. Morgan's forecasts.
J.P. Morgan favors Argentina's financial and energy sectors and identifies food retailer BIM Birlesik Magazalar AS as the top pick for Turkey while also expressing preference for Akbank, Turkish Airlines, and food retailer Migros.