Tuesday 25th November 2014
NEWS TICKER: TUESDAY, NOVEMBER 25TH 2015 - Morningstar has downgraded its Analyst rating for the Fidelity European Opportunities fund to Neutral. Jeremy Beckwith, director of manager research, Morningstar UK comments: “We have assigned the Fidelity European Opportunities fund a Morningstar Analyst Rating™ of Neutral. The fund had previously been placed Under Review following the fund’s management change announced in the summer. It was previously rated Silver. Alberto Chiandetti—who has gained most of his investment experience in the Italian market—took over from former manager Colin Stone on 1 October 2014. He is also responsible for two single-country strategies: Fidelity Italy since 2008, which has a Morningstar Analyst Rating of Silver, and Fidelity Switzerland since 2011, rated Neutral”. According to Beckwith: “This is Chiandetti’s first time running a European mandate and we expect to see him bring in relevant changes to the strategy. Over a full market cycle, he has proven able to execute his process well at the helm of Fidelity Italy; that said, his past results are not fully relevant for this product, given the differences in the investable universe and the opportunity set compared to the country funds. We have therefore assigned a Neutral rating to reflect the uncertainties surrounding the future of this strategy.” - Among the five China ETFs listed on Singapore Exchange (SGX), the three most active China ETFs in the 2014 year-to-date have been db x-trackers CSI 300 UCITS ETF, db x-trackers MSCI CHINA INDEX UCITS ETF, and United SSE50 China ETF. These first two are traded in US dollars, and the latter in Singapore dollars. These three China ETFs are synthetic ETFs that use derivative instruments such as swaps to track the reference index as compared to physical ETFs that hold the securities or assets of the reference index. These three ETFs generated an average 2014 year-to-date total return of 8.4% - The Straits Times Index (STI) ended +4.46 points higher or +0.13% to 3344.99, taking the year-to-date performance to +5.69%. The FTSE ST Mid Cap Index gained +0.21% while the FTSE ST Small Cap Index declined -0.47%. The top active stocks were SingTel (+0.26%), Olam Intl (-2.27%), DBS (+0.20%), ComfortDelGro (-2.71%) and CapitaLand (+0.30%). Outperforming sectors today were represented by the FTSE ST Technology Index (+1.14%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+2.40%) and STATS ChipPAC (-1.11%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -0.84% with Midas Holdings’ share price declining -1.70% and Geo Energy Resources’ share price unchanged. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (-0.77%), SPDR Gold Shares (+0.43%), STI ETF (unchanged). The three most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (+1.58%), Ascendas REIT (+1.76%), CapitaMall Trust (+0.25%). The most active index warrants by value today were HSI23800MBeCW141230 (unchanged), HSI23600MBePW141230 (-3.23%), HSI24400MBeCW141230 (unchanged). The most active stock warrants by value today were DBS MB eCW150602 (-2.96%), OCBC Bk MBeCW150413 (+1.08%), UOB MB eCW150415 (+6.25%) - Inter-American Development Bank (IDB) is providing financing under a Regional Public Goods Programme (RPG) that will be managed by Caribbean Export Development Agency in its capacity as the Secretariat for the Caribbean Association of Investment Promotion Agencies (CAIPA. The IDB has provided US$900.000 to CAIPA to support several initiatives geared towards increasing foreign direct investment (FDI) into the Caribbean and will be implemented over a two year period - Mexico has posted record FDI of $35.2bn inflow in 2013, nearly double the level seen in 2012, mainly due to Belgian brewer Anheuser-Busch InBev's acquisition of Mexican beer giant Grupo Modelo, which brought in over $13bn, according to figures released by the economy ministry - Eight Italian regions have hired banks to manage a round of bond buybacks for them, the treasury said on Tuesday, in a move aimed at giving indebted local administrations more time to repay their loans. Abruzzo, Campania, Lazio, Liguria, Lombardy, Marche, Piedmont and Puglia have hired Barclays, BNP Paribas, Citigroup and Deutsche Bank to manage any offers to buy back their bonds.
Michael Levy, investment manager, Baring Frontier Markets Fund,  says a steady flow of new companies to the market marks steadily increasing liquidity in the frontier markets asset class. Michael Levy, investment manager, Baring Frontier Markets Fund, says a steady flow of new companies to the market marks steadily increasing liquidity in the frontier markets asset class. Photograph kindly supplied by Barings, November 2013.

Barings makes case for frontier markets in 2014

Wednesday, 27 November 2013
Barings makes case for frontier markets in 2014 Frontier markets such as Argentina, Kenya, Nigeria, Saudi Arabia and the United Arab Emirates have delivered strong investment returns in 2013, and the asset class is set for continued strong performance in 2014, according to international investment firm Baring Asset Management. http://www.ftseglobalmarkets.com/media/k2/items/cache/9392051d1c6437a4aa44d9c49269a7c6_XL.jpg

Frontier markets such as Argentina, Kenya, Nigeria, Saudi Arabia and the United Arab Emirates have delivered strong investment returns in 2013, and the asset class is set for continued strong performance in 2014, according to international investment firm Baring Asset Management.

The firm sees every reason for investors in such markets to be positive as they look ahead to next year. Michael Levy, investment manager, Baring Frontier Markets Fund, explains why: “Frontier markets are inefficient markets at an early stage of development, providing many mispriced investment opportunities, and we expect the drivers which have supported markets in 2013 – potential for long-term structural growth combined with a low correlation to other asset classes – to remain intact. 

"We are encouraged by the political developments we have seen this year, which show that the countries in our investment universe continue to move towards economic liberalisation and democracy, albeit at a slow pace.”



Levy notes the performance of the MSCI Frontier Markets Index, which has returned +16.4% in US dollar terms to mid-November, reflecting the prospect of long-term structural economic and corporate earnings growth and continued allocations from investors attracted by low correlations to other asset classes.  The performance compares very favourably with a 7.1% decline in the MSCI Emerging Markets Index over the same period.

Two asset classes where Barings sees particular investment potential are new energy opportunities and healthcare companies.  The former encompasses exceptionally large oil and gas deposits in Kurdistan, Northern Iraq, which are likely to be brought to market shortly.  The latter reflects the rapid growth of generic pharmaceuticals production in many frontier economies as well as the increasing use of private healthcare provision to supplement public healthcare, particularly in the Middle East. 

Al Noor Hospitals, for instance, is one of the largest private healthcare providers in the United Arab Emirates and a core holding in the Baring Frontier Markets Fund.

In terms of country performance, Middle Eastern markets including the UAE stand out as one of the better performing regions, according to Barings, as the banking sector in the UAE has benefited as a safe haven at a time when continued instability has impacted some other countries in the region. 

In Africa, a continent where Barings sees the strongest long-term equity market potential, elections in Kenya have resulted in a more market-friendly government coming into power – evidence of the wider, long-term trend towards democratisation across the frontier market universe.  Nigeria’s Central Bank also continues to make good progress in managing the currency and inflation, and investments made in security and customer identification augur well for the development of Nigeria’s retail banking market, in Barings’ view.

Levy adds: “From an investment perspective, a steady flow of new companies to the market marks steadily increasing liquidity in the frontier markets asset class, and we expect further progress here next year, with potential for privatisations in Romania for example in 2014.  We recently invested in a company which has operations based in Laos, and increasingly, other Asian frontier markets, and continue to monitor new investment opportunities very closely.”

Barings launched its Frontier Market Fund in April this year, investing in markets outside developed and emerging market benchmarks.  In the six months to the end of October 2013, the Baring Frontier Market Fund has delivered a return of 9.48% versus 8% for its benchmark, the MSCI Frontier Markets Index.  The portfolio is diversified across the major Frontier markets, with significant exposure to Nigeria, the UAE, Saudi Arabia, Qatar, Kuwait and Kenya.  The top three sector holdings are Financials, Telecoms and Consumer Staples.

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