What is the asset class and geography you are focused on?
I am focused on managing long-only equity funds and portfolios, managing the Invest AD Iraq Opportunity Fund and Sicav Emerging Africa Fund. My stock-picking is based on fundamentals.
What is the outlook for the month ahead in your opinion?
Investor interest in emerging and frontier markets remains positive since the US Federal Reserve’s decision to delay tapering – its quantitative easing programme. But this could turn quickly. Sentiment in Egypt has improved in recent weeks, when the MSCI Egypt index recorded an 8.7 per cent increase between August 29 and September 26, driven mostly by local retail investors. In Kenya, the attack by Islamists on Westgate Mall had minimal impact on stock prices, with Safaricom actually hitting an all-time high in September. However, while trading values declined around the height of the attack, it has recovered strongly lately.
What are the main risks — either upside or downside – to the outlook?
Once the political overhang settles in Egypt, and the economics start to take shape, the market has potential to rise – especially since foreign investors, historically big investors in that market, have been staying in the sidelines. Should things calm down, they will return – especially since companies continued to grow despite the challenges. In Morocco, expectations are that we may see increased interest given the higher weighting the country gets within a region that is already in high demand.
What is the best investment at the moment in your opinion?
We are bullish on the [African] continent as a whole. While Nigeria will offer the highest potential of organic growth across all sectors given its demographics and being the biggest populated country in the continent, Kenya has been consistently growing at over 5 per cent year-on-year, and despite its stellar performance, is still trading at attractive valuations. We are also of the view that the Egyptian market may be poised for gains as the political and economic landscape stabilises. While [sub-Saharan Africa] markets have been the catalyst to our fund’s rise, the following months may see the re-emergence of North African markets.
What was the best investment you were ever involved in?
There have been quite a number of investments which have turned out well. In Ghana, we’ve held Ghana Commercial Bank since late 2009, and have made more the 1.5 times the initial investment. One of my best investment decisions, however, was with a bank I held in Nigeria at a time when the central bank had begun conducting audits only to find that this particular bank, as well as five other banks out of 24, were deemed insolvent. I had sold that stock days before the announcement and averted what was quite a plunge in its price.
What was the worst?
Investing in Egypt in 2012 was quite challenging and stressful. The market had a roller-coaster performance and was strongly influenced by political news and what was happening on the street, rising on developments and falling on setbacks. Companies were doing well, so there was justification for investing in them, but since price action was unpredictable, I got whipsawed a number times, buying as prices rose and selling as prices dropped.