Friday, Feb 17, 2012
Dubai When it comes to the Middle East, Fidelity’s Emerging EMEA Markets Fund has just one stock: Industries Qatar, a conglomerate that includes both petrochemical and fertiliser companies.
“They have got cheap feedstock and cheap gas that is ultimately used in the fertiliser sector. Right now that is what the world needs and we like it,” says Mark Livingston, investment director of emerging market equities, Fidelity Investments.
But generally speaking, what happens in the Middle East is a bit inconsistent with the way Fidelity looks at stocks, he says. For example, with regard to the Emerging EMEA Funds, liquidity is very important.
“It’s a highly liquid, highly scalable fund. The companies in the Middle East and the UAE, generally speaking, don’t have the liquidity for the size we are looking for.
Serial compounders
“In addition to that, what happens in the Middle East is sometimes they blow hot and cold. And so the way we look at companies are ones which are serial compounders — that have growth over a period of time as opposed to what we are seeing which is a sharp rally. We look to avoid that.”
And on Saudi Arabia, the biggest market in the Gulf, he feels it is still quite difficult for international investors to get into the market. “But we always keep it on the radar, with our team visiting them.”
STOCKS TO WATCH
n In China, Fidelity’s picks are manufacturers of smartphone parts such as Largan Precision, which is involved in the front and back-end technology of iPhone cameras. Historically they have also bought into AAC Acoustic, which manufactures the microphone. In fact, in the fourth quarter of 2011, global smartphone sales grew by 47 per cent, driven by demand for Apple’s iPhone.
n In Nigeria, it’s Nestle Nigeria and a number of banks such as Guaranty Trust Bank. The banks in Nigeria are well-capitalised, with strong lending growth and net interest margins in excess of seven per cent.
By Gaurav Ghose?Financial Features Editor
Gulf News 2012. All rights reserved.
