HSBC Global Asset Management is launching a Middle East and North Africa (Mena) fund by the end of October, subject to regulatory approval.
Andrea Nannini and his team at Halbis, the active management specialist within HSBC Global Asset Management, will manage the HSBC Global Investment Property Fund (GIF) Mena fund.
HSBC is the latest group to launch a fund investing in the Mena region, which includes Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Tunisia and the United Arab Emirates. Other investment groups to have launched Mena funds recently include Barings, Charlemagne Capital, Investec and Pictet.
Nannini’s team at Halbis also manages HSBC’s New Frontiers fund, which was launched in February and has almost half its assets invested in the Mena region.
Nannini says the underlying fundamentals in the Mena region are strong enough to warrant a stand-alone Mena fund.
“The region is experiencing a high and very stable GDP growth and non-oil-related parts of the economy are now driving the growth,” he says. “Also the region is more insulated from global economic shocks compared with other parts of the world.
“They are running a very high current account surplus, real interest rates are actually negative and the region has been less correlated with global equity markets.”
Another investment argument for the Mena region, Nannini says, is the opening up of financial markets. There is less restriction to foreign investors now than in the past. “The market cap open to foreign investors has grown a lot,” he says. “And in the GCC [Gulf Cooperation Council] [countries] and North Africa there is a very good pipeline of IPOs (initial public offerings) in the next two years.”
The HSBC GIF Mena fund will adopt a bottom-up, valuation-driven approach. It looks for stocks that display attractive valuations, sustainable business models and good corporate governance. The portfolio will have 50-60 holdings.
The main opportunities for investment in the Gulf region, according to Nannini, are banks, real estate and infrastructure-related companies. In North Africa there are more consumer and industrial-related plays. Minimum investment in the HSBC GIF Mena fund is $5,000 (£2,840).