London
Schroders changed its stance a few months on Egypt with an overweight expected double digit returns, as steps taken by the International Monetary Fund will act as an anchor for more reforms in the country.
The Egyptian equities benchmark index, which has gained 12 per cent so far in the year, has been one of the better performing regional equities after the country took several measures from devaluing its currency to removing subsidy, precursor to the loan that was given by International Monetary Fund.
“We look to buy into an environment of economic difficulty and you look forward say 18 months for benefit pf the reforms. That’s where you make the big money. You buy into companies where people were nervous that point in time, and you made good initial money on re-rating and later on earnings contribution as well,” Tom Wilson, head of emerging market equities told Gulf News in an interview. Wilson like financial sector.
“It’s early stage from an economic standpoint, but from we have a recovery from a tourism standpoint. As move in 18 months, we see inflation to ease and normalise due to subsidy removal and that would provide an opportunity to cut rates,” Wilson said.
The main risk to Egyptian markets may be deterioration from a security standpoint, which may impact tourism, and for Schroders it is the part of the recovery story.”
On Saudi Arabian equities, Wilson said they don’t have Saudi in its core emerging market portfolio.
“People are waiting to see how the political situation plays out. On a near term basis, we think Saudi moves in the right direction to be upgraded to the MSCI,” Wilson said.
Schroders has invested more than $1 billion in Mena equities and has $577 billion of assets under management globally.
