Dubai: Franklin Templeton Middle East and North Africa (Mena), which was ranked top among the leading asset managers in the region by the latest Middle East Investment Panorama (MEIP) survey, believes that the emerging markets, including those in the Mena region, are set for a resurgence despite the global market turmoil and regional political tensions.
"There hasn't been any big change in the fundamentals of the emerging economies," said Dhiraj Rai, sales director, Gulf and Eastern Mediterranean, Franklin Templeton.
"In recent months we have seen a lot of uncertainty in the market because of the European debt crisis. The ensuing flight to safety saw emerging market currencies getting impacted and valuations taking a dip. But we believe the fundamentals of these markets remain unchanged. For example the GDP growth is forecast to be an average of 6.6 per cent in emerging markets whereas the developed world is expected to grow at about one third of that," he said.
Record Mena sales
While Franklin Templeton believes the recent recoiling of some of the emerging markets to be very temporary, the company reported record sales in the Mena region in the previous fiscal year which closed in October.
"We saw a substantial increase in demand last year. One of the reasons for that, we believe, is that we cover Greece from here. Because of the problems in the domestic market there we saw a big surge in demand for retail offshore investment products," said Rai.
The asset management firm said the current phase of turbulence in some emerging markets, including the Mena markets, presents interesting buying and/or consolidation opportunities for investors and asset managers.
In the Mena region, Franklin Templeton targets both retail and institutional clients for their asset management business. Though the expatriates constitute a big chunk of their business, the company is increasingly targeting the local population in the region.
Commenting on the MEIP report, Rai said the study is probably the only systematic examination of the market in the GCC/Mena countries for the offerings of international asset management companies, international life companies and regional asset management companies.
"There is lack of data on the industry in the region. This attempt gives all of us in the industry some indication of where we stand and it also sets some sort of benchmark for everyone in terms of what the clients and advisers want," he said.
As the regional fund management industry develops, Franklin Templeton expects to play a bigger role in the home grown asset management industry across the region, with substantial market share in each of the markets where they operate.
Mena money: where does it go?
The recent Middle East Investment Panorama (MEIP) — a survey of asset managers — shows about 30 per cent of the assets of clients from the region is invested within the region while the remaining goes into offshore asset classes.
While about 36.4 per cent of advisers hold less than five per cent of their client assets in the region, 26.3 per cent of them keep five per cent to 15 per cent of client assets in the region. Close to 40 per cent of investment advisers surveyed indicated they are looking to increase asset allocation to the Mena region. But only under one-third of the advisers (32.2 per cent) said they will be increasing clients' exposure to GCC/Mena equities.
By contrast, global emerging markets equities represent the "hot" asset class. More advisers (60.9 per cent) said they would be lifting their clients' allocations to emerging markets equities over the next year than for any other asset class. The advisers and their clients appear to be rather less upbeat about the prospects for emerging markets debt.