Common Thread For World’s 3 Hottest Emerging Markets: Elections

August 26, 2014

Investors are betting big on newly elected leaders in hopes they will guide their countries to growth.


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The three emerging markets that investors will be kicking themselves for not investing in this year are India, Egypt and Indonesia. The common thread between them? Elections.

India's markets boomed in the lead-up to and in the aftermath of the country's elections that swept transformative leader Narendra Modi into power. The MSCI India Total Return Index has gained more than 25 percent this year, but some subsets of the India market have fared even better: The Market Vectors India Small-Cap ETF (SCIF | D-49) has returned nearly 50 percent so far this year.

In May, Egyptians voted overwhelmingly in favor of presidential candidate Abdel Fattah El-Sisi, who received more than 96 percent of votes cast. Markets cheered the relative stability after years of uncertainty and the Market Vectors Egypt ETF (EGPT | F-43) surged more than 30 percent since the start of the year.

Similar to how investors hope Modi will be able to cut through the red-tape, slowing business development in India, so too did investors cheer the election of Indonesian president Joko Widodo. Much like Modi, Widodo was successful in spurring regional economic growth. Investors in both countries hope these leaders will be able to replicate their regional success countrywide.

The iShares MSCI Indonesia ETF (EIDO | B-99) has returned more than 30 percent so far this year.

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