Posted on September 05, 2016

Global investors with more than USD 8 trillion in aggregate AUM are meeting 92 leading listed companies from MENA, Sub-Saharan Africa and Asia at the 2016 EFG Hermes London MENA & Frontier Conference, the largest investor conference held in the UK. A total of 270 investors from 155 institutions will be attending.

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This year’s conference as inflows into global emerging markets funds hit a 58-week high in mid-August, signaling a strong recovery in investor appetite for emerging market opportunities after the net outflows of late 2015 and early 2016. In parallel, Mideast markets are taking decisive steps to transition to a post-oil future, offering compelling opportunities in the process.

“Coming as it does just weeks before the US Federal Reserve’s decision on interest rates, the EFG Hermes London Conference is an ideal time for investors to take stock of changing realities in Egypt, the MENA region and beyond,” said EFG Hermes Holding Group CEO Karim Awad. “While global conditions remain volatile, we firmly believe that the region is on the cusp of transformational change, with upgrade stories including Saudi Arabia, Qatar and Pakistan potentially attracting significant passive inflows at the same time as compelling equity and fixed-income opportunities are on the horizon.

“Investors have shown interest in exploring opportunities in Saudi Arabia and Pakistan as the two countries gear up to join the MSCI EM index. The re-entry into the index will set Pakistan up for significant passive inflows,” said Mohamed Ebeid, EFG Hermes’ Co-Head of Brokerage. “With one of the largest populations in the benchmark behind China, India and Indonesia, Pakistan, in particular, holds a great deal of potential. Moreover. Qatar joining the FTSE emerging markets benchmark will put it in line to receive inflows of as much as USD 1.1 billion over the next six or so months.

“We also expect that Saudi Arabia, which is in the midst of implementing a very ambitious reform agenda under Deputy Crown Price Mohamed bin Salman, will decisively open up to more qualified foreign investors as new rules are expected to come into effect this month,” he added.

Global investors target  new 3 [].jpgEFG Hermes Head of Research Ahmed Shams noted that Saudi Arabia has implemented on 4 Sept. 2016 the new Qualified Foreign Investors (QFIs) rules, relaxing foreign ownership limits and minimum AUMs requirements for QFIs, bringing the market a step closer into benchmark status. “we believe that market infrastructure changes, mainly the move to T+2 settlement, remain the key change needed for Saudi Arabia to join FTSE EM (by Sept.’18) and MSCI EM (by May’19) indices. We estimate KSA’s weights within MSCI EM and FTSE EM at c2.5% and c3%, respectively (excluding Aramco’s potential IPO), leading to passive inflows of c. USD 6.5 bn and c. USD 3bn.”

Egyptian Minister of Finance Amr El Garhy is among the headline speakers for the conference. El Garhy co-led Egypt’s successful negotiations of a staff-level agreement for a USD 12 billion, three-year extended fund facility with the International Monetary Fund, a key step in the Egyptian government’s ambitious economic reform agenda. The program will pave the way for new foreign direct investment in Egypt’s largest market by population, with sectors likely to benefit including consumer, healthcare and finance, among others.

This year’s conference will be attended by 92 companies with an aggregate market cap of USD 550 billion and represent 15 countries and 9 industries including consumer discretionary, consumer staples, energy, financials, health care, industrials, materials, real estate and hospitality, telecommunication services and utilities.