Elections are shining a spotlight on struggling emerging markets, with the prospect of fresh leadership unlocking opportunities in the asset class.

Argentines are lining up at the polls Sunday to pick their next president, just a week after voters in Ecuador and Poland backed new, pro-business leaders. Egypt, India and Mexico are all gearing up for their own elections in the coming months.

That’s adding yet another layer of complexity — and, for some investors, optimism — to developing assets. All together, those six elections stand to affect more than $200 billion of sovereign bonds, according to data compiled by Bloomberg.

Any vote-related boost would help offset the year’s losses in emerging-economy debt, stocks and currencies, which have fallen under the pressure of China’s housing crisis, the Federal Reserve’s higher-for-longer stance and wars in Europe and the Middle East.

“We are coming into a period of very, very heavy electoral calendar,” said Philip Fielding, co-head of emerging markets at Mackay Shields UK. “There’s some significant potential for some political positive surprises over the next 12-or-so months.”

Already, investors have seen gains in the aftermath of elections this year. A victory in Ecuador by Daniel Noboa, a 35-year-old business leader from a wealthy banana-exporting family, helped the nation’s bonds due in 2035 to gain by the most in the region last week.

Polish stocks, bonds and the zloty also advanced after the pro-European Union coalition unseated the nationalist government in what money managers described as the best scenario for markets.

Claudia Calich, the head of emerging-market debt at M&G Investments, said she bought Polish hard-currency bonds before the vote and is still holding them after last week’s advance.

“There are upside risks on elections, if changes as a result of those elections are a step in the right direction,” she said. Calich pointed to the reelection of President Recep Tayyip Erdogan in Turkey earlier this year, which saw the leader shift away from unorthodox economic policies.

Risk Lingers

Not every election cycle, however, is guaranteed to result in asset gains. Anxiety is spreading among Argentina’s bond investors as the nation votes on Oct. 22. The South American country is on the brink of its sixth recession in a decade, the central bank is devoid of dollars and Argentines are suffering under the weight of triple-digit inflation.

Read More: Inflation Raging at 130% Is Pushing Argentina Down Radical Path

Most of the country’s sovereign debt is trading below 30 cents on the dollar, with yields that signal concern about a 10th default — especially with major debt repayments coming next year.

In certain countries, “you need some potentially difficult economic reforms that require stakeholders across the economy to talk to one another and to form an agreement,” said Eamon Aghdasi, an analyst for emerging-market country debt at Grantham Mayo Van Otterloo & Co.

Egypt’s December election will also see an economic plight take center stage. The nation’s sovereign bonds are trading in distressed territory as the clock ticks to unlock more financing from the International Monetary Fund. Egyptian President Abdel-Fattah El-Sisi has confirmed he’ll seek another term.

India, meanwhile, is expected to hold its next general election in the first half of 2024, with polls already pointing to a third term for Prime Minister Narendra Modi.

A win would likely mean a continuation of market-friendly reforms, infrastructure spending and a push for foreign direct investment, said Malcolm Dorson, senior portfolio manager and head of emerging markets strategy at Global X Management Co.

That could offer more upside to the nation’s stocks, which have become a favorite on Wall Street, thanks to a relatively resilient consumption-driven economy. Indian government bonds will also be in focus after JPMorgan Chase & Co. said it would add the securities to its benchmark emerging-market index, a keenly awaited event that could drive billions of foreign inflows.

Global X’s Dorson said he’ll also watch Mexico’s presidential vote next June, where both leading candidates appear more pragmatic and centered than the current administration. Either one could help reduce political risk and bring in capital to fund the country’s nearshoring development, he said.

“We see next year’s election cycle full of positive catalysts for emerging markets as an asset class — and various countries within it,” he said.

What to Watch

• Mexico’s economic activity likely extended its uptrend in August, bolstered by robust household consumption and increasing investment, according to Bloomberg Economics.
• Chile’s central bank is expected to cut its benchmark rate by another 75 basis points to 8.75%, with policymakers likely to acknowledge risks from tight external financial conditions.
• Brazil’s consumer price inflation data will probably show inflation ticking down, thanks to slowing pressures from transportation costs and lower food prices, according to economists surveyed by Bloomberg.
• In China, declines in industrial profits probably narrowed — providing more evidence that manufacturing is starting to turn around, according to Bloomberg Economics.
• South Korea’s third-quarter GDP will likely show growth slowing from the prior quarter due to smaller gains in net exports.
• Turkey’s central bank is forecast to announce a jumbo hike of 500 basis points, while Bank of Russia will likely lift the policy rate by 100 basis points to 14%.

--With assistance from Leda Alvim and Maria Elena Vizcaino.