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Investing.com - An escalation of geopolitical tensions in the Eastern Europe, Middle East and Africa in June did not keep investors from piling into the region in June, according to analysts at BofA.
Last month, a brief but violent air war between Israel and Iran threatened to spiral into a wider Middle East conflict, although it dissipated shortly after the U.S. carried out aerial bombardments of Iranian nuclear facilities.
Still, a conflict between Israel and Hamas in Gaza persisted, as did Ukraine and Russia’s ongoing fighting, even as U.S. President Donald Trump has pushed for ceasefires to both.
Yet equities in the Eastern Europe, Middle East and Africa (EEMEA) region continued to see investor inflows, which the BofA analysts argued may have been linked to fading concerns around the health of the global economy. A recently beleaguered U.S. dollar has also bolstered the appeal of emerging market names, they said.
"[We] continue to think that EEMEA equities are some of the best positioned to benefit from U.S. dollar weakness, as the reigonal outlook should start to improve this year," the analysts wrote.
Weekly data showed uninterrupted equities inflow to all major EEMEA markets through most of last month, they said.
Positioning has improved across all the main markets, but the biggest beneficiaries were Saudi Arabia and Poland, the analysts added.
Meanwhile, South Africa was the most represented country in a review of stocks in the EEMEA area, while the screen was dominated by the financials sector, the brokerage noted. The top three EEMEA stocks highlighted by BofA were Turk Telecom (IS:TTKOM), Absa Group (JO:ABGJ) and Gold Fields Ltd (JO:GFIJ).
They added that they were "bullish" on EEMEA currencies thanks to "geopolitical normalization" that has helped assuage worries over "possible mid-year volatility."