The material contained on Artisan Canvas represents the views and opinions of the authors. Material written by any particular individual may or may not reflect the views and opinions of Artisan Partners or its associates. The material contained on this site may contain forward-looking statements regarding future events and future performance, as well as management’s current expectations, beliefs, plans, estimates, or projections. Forward-looking statements regarding Artisan Partners Asset Management Inc. and its subsidiaries are subject to a number of risks and uncertainties, including those factors described within “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 18, 2020, as such factors may be updated from time to time. The views and opinions expressed in this material are based on market conditions as of the date indicated and are subject to change without notice. While this information is believed to be reliable, there is no guarantee to the accuracy or completeness of any statement in the discussion.
This website does not constitute an offer or recommendation by Artisan Partners of securities or services to, or a solicitation by Artisan Partners of an offer of services or to buy, sell or hold securities. Artisan Partners and the authors noted herein may have financial interests, through investment vehicles or personal investments, in any themes, trends, companies or securities discussed. Materials on this website are informational only and should not be taken as investment recommendation or advice of any kind whatsoever (whether impartial or otherwise). Investing is subject to risks, which include the potential for fluctuations in investment value and loss of principal. Past performance is not indicative of future results.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. Frank Russell Company ("Russell") is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication. The herein referenced S&P index(es) ("Index") is a product of S&P Dow Jones Indices LLC ("S&P DJI") and/or its affiliates and has been licensed for use. Copyright © 2023 S&P Dow Jones Indices LLC, a division of S&P Global, Inc. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). None of S&P DJI, Dow Jones, their affiliates or third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. Source ICE Data Indices, LLC, used with permission. ICE Data Indices, LLC permits use of the ICE BofAML indices and related data on an "as is" basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness and/or completeness of the ICE BofAML indices or any data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend Artisan Partners or any of its products or services.
© 2023 Artisan Partners. All rights reserved.
Easter-Egg Hunting: IMF Edition
EMsights team members returned to Washington, D.C., in April for the IMF and World Bank Spring Meetings, conducting some 200 interactions with a swath of government officials and representatives. Frequent readers will recall we similarly attended the IMF and World Bank Annual Meetings last fall—and were unsurprised by the somber mood, given ongoing macro and geopolitical uncertainty.
Since October, it’s hard to argue much material has changed on the macro front—on the contrary, if anything, things are more uncertain (with an exception or two). Yet the overall mood at this round of meetings wasn’t materially worse. Maybe observers have just capitulated to the relatively dour macro reality (incidentally, the IMF did lower its global growth forecast to 2.8% in 2023)—or maybe they’re just finding the few and far between brighter spots. Either way, we brought ample insights back with us—some positive, some negative and some in between. With that, a few of our more noteworthy findings.
Nigeria: Room for Upside
Nigeria held its presidential election in February and, as we largely expected, ruling party candidate Bola Tinubu won and his All Progressive Congress (APC) Party won control of the Senate. Tinubu will be inaugurated on 29 May 2023 and will face a tough challenge eliminating the country’s credibility gap, given its history on fuel subsidies, fiscal sustainability and its foreign exchange regime.
We certainly acknowledge there will be implementation risks as the government embarks on its reform agenda—including social costs, particularly if already high inflation (over 22%, as of March) spikes further, and the inherent challenge of confronting vested interests. Simultaneously, though, we note markets seem to have priced in ample skepticism on the incoming administration’s ability to deliver—which we believe offers an interesting opportunity for some upside surprise. We will watch with interest once the new administration is officially up and running.
Tunisia: Sowing Seeds of Doubt
Before April’s IMF meetings, Tunisian President Kaïs Saïed definitively rejected the IMF’s bailout terms, stating the country was unwilling to accept “IMF diktats.” But he then sent a team to Washington, D.C., to renegotiate the October 2022 bailout package. Among the IMF’s terms are reducing and better targeting food and energy subsidies and reforming loss-making state-owned enterprises (SOEs)—all of which Tunisian officials want watered down.
With a €500 million Eurobond payment due in October 2023, though, time is quickly running out for the country to make this payment and resolve concerns—which we share—about its longer-term debt sustainability.
Latin America: Growing Confidence in the Status Quo
Our discussions with an array of Latin American leaders and officials increased our confidence that inflation has indeed peaked in most of the region’s major economies—and that the nascent downtrend will likely continue. As a result, we expect central bank policies to shift to match this reality—i.e., we’ve likely seen the last of this cycle’s hikes and may even begin to see a few cuts. Though many regional central bank heads insist they will wait for confirmation inflation is indeed trending down, it seemed clear that, barring an external shock, the next move in Latin American rates will be lower. The main question is the timing.
An Easter Egg Hunt
There was certainly room for gloom in this round of IMF meetings—which made finding a few Easter eggs all the more rewarding. The emerging markets economies facing debt problems are not going away—and they’re handling their problems with varying levels of credibility. We don’t expect that to change materially soon.
However, we do believe there are some disconnects between investors’ expectations and reality, which can create interesting investing opportunities for those willing and able to act decisively. While we remain cognizant of the challenging macro backdrop, we will continue seeking to capitalize on such opportunities when we identify them.Contact the Editorial Staff
Have a question or comment? We welcome your feedback. Comments will not be made public, but will be read by a member of our editorial staff.
Thank you for your question or comment.