Bank of America (BofA) reported shifts in its equity market rankings, with South Africa rising to the top due to increased positioning upside and positive price-to-earnings per share (EPS) momentum.
Conversely, Türkiye has dropped from the top three to the lower half of the rankings. The Gulf Cooperation Council (GCC) countries, including Saudi Arabia, remain at the bottom, primarily due to their rich valuations.
Türkiye’s equity risk premium is converging with Egypt’s but stays the highest in the region, attributed to ongoing inflation concerns. Egypt and Hungary follow with the next highest premiums. According to BofA’s analysis using Z-scores, Türkiye is the cheapest based on enterprise value to sales (EV/Sales), Hungary on enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), Egypt on price to earnings (P/E), and South Africa on price to book (P/B). Czechia is the most expensive on P/E and P/B, Egypt on EV/Sales, and Qatar on EV/EBITDA.
Egypt has been highlighted as having the highest return on equity across all emerging markets, with the United Arab Emirates and Hungary trailing closely behind. In the top-20 screen, which is based on a weighted average of six quantitative screens, financials continue to dominate with eleven names across six sectors.
This screen now features a broader market representation, spanning seven countries. The bottom-20 ranking, however, has become more concentrated on Saudi Arabia, with eleven names, and is also more sector-focused, with materials being the most represented sector.
Equity inflows have resumed in the EEMEA (Eastern Europe, Middle East, and Africa) markets towards the end of April, with Türkiye being a notable exception after experiencing strong inflows earlier. Overall, the positioning across the region has seen an improvement in March but remains generally neutral to underweight.
Greece has shown the most significant improvement in positioning, while South Africa has seen a deterioration, presenting a notable upside opportunity. Hungary and Greece are now the main overweight (OW) positions in the EEMEA region, in contrast to Saudi Arabia, which remains the primary regional and one of the key global underweights.
The equity risk-return (ERR) ratio remains below 1 in EEMEA but has slightly increased compared to other major regions.
