“We remain bullish on the global growth path (and the pass-through to commodities prices) as vaccine distribution ramps up, and would recommend that investors use this as an opportunity to re-engage in pro-cyclical trades,” they wrote in a Friday note. “Local equity indices in South Africa and Russia are good candidates.”
The relatively high market share of commodities companies in Russia’s MOEX and South Africa’s JSE Top 40 indexes also means they are among the most likely to benefit as commodity prices bounce back from a recent reversal, the analysts wrote.
An additional perk is that rising yields are often more painful for long-duration, growth stocks, such as those more commonly from China, they wrote. While risk lingers that geopolitical tension between Russia and the U.S. may escalate or that the pandemic could worsen, the firm expects a global reopening to drive market strength.