Swiss & Global Asset Managements fund manager for the Julius Baer Northern Africa Fund has tried to put investors minds at ease by saying that there will still be stronger growth expected following the recent regime protests in North Africa and that investors with five-year investment horizon can benefit from continents unique position.
The short-term will of course be volatile and there are some important milestones ahead, says Tommaso Bonanata, fund manager, Julius Baer Northern Africa Fund, Swiss & Global Asset Management. Parliamentary and presidential elections will take place in Egypt in the fourth quarter of the year, and until then we will be cautious with our positioning. However, there is another angle to consider. Given North Africas overall growth in the last decade, and how government control limited economic expansion, we believe that growth will become stronger once the post-crisis adjustment period is over.
Today (April 18) the World Bank President Robert Zoellick issued the caution that the world is “one shock away from a full-blown crisis,” while speaking in Washington after meetings between the World Bank and International Monetary Fund (IMF).
He said poorer nations risked “losing a generation” because of food price inflation. Speaking in Washington after meetings between the World Bank and International Monetary Fund, Zoellick said support from his the bank would be vital to stability in the Middle East.”The crisis in the Middle East and North Africa underscores how we need to put the conclusions from our latest world development report into practice. The report highlighted the importance of citizen security, justice and jobs,” said Zoellick.
However, Bonanata says that a five-year investment horizon is a good average as this allows time to benefit from the continents unique position to feed and benefit from global economic growth, due to its commodity resources and strong demographics, and its huge market expansion opportunities, due to a surplus of underutilised land and people.
Investments in these frontier markets are of course generally riskier than in developed markets, Bonanata. The revolutions make it more important for investors to get the balance of exposure correct. The African region should be considered as a complementary exposure to the broader emerging markets universe, and not as a core exposure. Africa should also be considered as a long-term investment rather than a quick profit-making region.