EFG Hermes’s 9th annual London Conference started on Monday, at the Emirates Stadium, with the participation of 360 leading global fund managers representing 182 global institutions.
Participants have more than $14tn in assets under management, and include top global and frontier emerging markets (FEM) executives from a record 177 companies meeting to explore key investment opportunities.
According to EFG Hermes, this year’s event will provide a necessary platform for participants to explore key potential investment opportunities across FEMs, learn about global investor appetite, and hear from one of the leading research houses in FEMs about what is shaping and moving markets represented at the conference.
Despite geopolitical tensions and their potential effects on oil prices, index inclusion has further entrenched demand for GCC securities, particularly sovereign debt, which enjoys an average rating of A+ due to the bloc’s low debt-to-GDP ratios, and its $44tn in liquid and quasi-liquid assets.
GCC securities’ attractiveness to global investors is set to grow further as governments intensify their drives to achieve economic diversification and fiscal sustainability, while the ongoing consolidation of the bloc’s banking sector is creating a more efficient and resilient financial system.
“Coming just weeks after the United States Federal Reserve cut rates for the first time in over a decade, the EFG Hermes London Conference comes at an ideal time for investors to take stock of changing realities across FEM economies,” said EFG Hermes Holding Group CEO, Karim Awad.
“Despite the continued volatility of global conditions, there are multiple positive stories coming out of the MENA and frontier economies, with encouraging economic data from Saudi Arabia and Egypt, and rallies across a number of markets including Vietnam, Kenya, and Nigeria, among others,” he added.
On the other hand, the MENA region’s net importers of oil, including Egypt, are growing rapidly as tourism receipts improve and aggregate demand rises. Egypt, the region’s demographic heavyweight, is beginning to reap the rewards of a comprehensive reform campaign and is expected to see its GDP growth hit 5.8% in 2020.
It continues to attract investors with the world’s largest carry-trade returns, helped by relatively high interest rates, and a low risk profile compared to its EM peers. A positive and improving currency position has also drawn attention, with rising foreign inflows helping the EGP to its highest level since the depreciation of 2016, leading EM currency returns in 2019.
“This year’s conference comes at an inflection point in the FEM story as global investors face a combination of factors including the rising concerns of a global economic slowdown due to trade tensions between China and the US, and the continued fluctuation of oil prices, all of which pose further threats to the global economy heading into the new decade,” said Mohamed Ebeid, Co-CEO of the Investment Bank at EFG Hermes.
“Despite recent macroeconomic global challenges, country-specific factors will ultimately dictate the direction of investment flows. Countries such Sri Lanka and Morocco have more room to follow Egypt’s model of cutting interest rates in the coming months, while Pakistan will likely continue to raise rates as it pursues funding from the IMF,” added Ebeid.
Ahmed Shams El-Din, head of EFG Hermes Research, added, “As diversification becomes a dominant trend across FEMs, countries such as Vietnam, Morocco, Egypt, and a number of GCC states are offering new opportunities away from the oil and gas sector and have begun looking toward private sector growth to attract FDI. We are proud of EFG Hermes’s role in creating a platform to bring together leading global investors and regional executives in order to explore investment opportunities in light of these evolving macroeconomic dynamics across some of the most compelling FEMs.”