Mena economies 'post solid growth'
Dubai, April 22, 2013
Many economies in the Mena region are enjoying healthy rates of growth, at a premium to developed or even emerging neighbours, and are offering good opportunities for investors, according to top global investment firm Baring Asset Management (Barings).
Governments across the Mena region are investing in infrastructure and a youthful middle class is emerging with a taste for consumer goods of all kinds, creating new opportunities for companies, the Barings stated in its report.
Moreover, since many of these companies are not widely followed by investment analysts, Barings believes this is an environment in which it is possible for active managers to add significant value by identifying mis-priced investment opportunities in regional equity markets.
The Baring Mena Fund has just celebrated its third anniversary, and over this period it has performed strongly, returning a cumulative 20.8 per cent in US dollar terms since inception, significantly out-performing the benchmark which declined by 0.9 per cent in US dollar terms.
Dr Ghadir Abu Leil-Cooper, the manager of the Baring Mena Fund said, "In the three years since we launched the fund, we have seen significant changes. Protests in Tunisia that year marked the beginning of the Arab Spring, which led to changes of government not just in Tunisia but Egypt, Libya and the Yemen too."
“While this may seem like a challenging investment environment, by navigating carefully we have managed to generate significant outperformance of the benchmark index,” remarked Dr Ghadir.
The fund invests across the region, with major holdings in the UAE (22 per cent ), Qatar (19 per cent ), Turkey (18 per cent ), Saudi Arabia (16.4 per cent) and Kuwait (15 per cent). Oman currently accounts for 6 per cent of the Fund.
According to Barings, the most attractive investment opportunities can currently be found in Saudi and the UAE.
In Saudi, the asset manager has identified a number of stock selection opportunities in the telecoms, healthcare, consumer and infrastructure sectors. These are all sectors where the government has announced its intention to boost spending in order to help support growth over the medium and long-term.
In the case of the UAE, the economy continues to rebound strongly, driven in particular bysectors such as tourism and real estate. These areas have recently seen strong inflows from overseas markets due to recent unrest in countries such as Egypt, and this has been generally encouraging for companies linked to these sectors.
It is more cautious on the near-term outlook for the Egyptian market as the uncertain political environment continues to impact the domestic economy.
Elsewhere, Barings maintains off-benchmark exposure to Turkey, where a fast-growing and increasingly affluent population supports the long-term outlook for financials and consumer-related sectors.-TradeArabia News Service