- With oil price back to levels seen before Saudi-Russia spat, we compare equity and FX value in the fuel exporters in EM
- In large EM, potential upside on FX rate in Russia more than compensates for its equity valuation premium to Saudi
- In small EM and FM, Oman and UAE are the cheapest equity markets but Colombia and Ghana offer the most FX upside
Oil price is up 12% in the last month, up 45% since the end-October 2020 low, and back above the level in March 2020 prior to the Saudi-Russia market share battle.
Covid-19 second waves, the reliance on Saudi unilaterally shouldering the burden of marginal output restraint, and the fragile nature of Saudi-Russia cooperation tempers our optimism on oil relative to other commodities with secular demand drivers (eg copper, cobalt, lithium) beyond the post-Covid normalisation.
But the scale of this move in oil prices forces us to ask, where are the cheapest oil exporter equity markets in EM and FM?
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