Barings Emerging EMEA Opportunities PLC (LSE:BEMO) Investment Manager Adnan El-Araby talked with Proactive at the latest One2One investor conference about the investment case for emerging Europe, the Middle East and Africa, and why active management can uncover opportunities across markets that often receive less attention within global emerging-market portfolios.
El-Araby highlighted the diversification potential of EMEA, arguing that the region has lower correlation to developed markets and emerging Asia. He explained that the Middle East, emerging Europe and Africa also have distinct demographics and economic drivers, creating opportunities for investors prepared to take a selective, bottom-up approach.
Discussing the strategy, El-Araby said: “Usually we find most of the alpha below the benchmark weights.” He explained that many larger benchmark constituents can be cyclical or closely linked to governments and commodities, while Barings Emerging EMEA Opportunities has historically sought structural growth opportunities among smaller benchmark positions and companies outside the benchmark.
The discussion covered several areas where the investment team currently sees potential. In Saudi Arabia, El-Araby pointed to more targeted capital expenditure alongside investment in defence, export infrastructure, digitalisation, AI and healthcare. He also discussed opportunities in the UAE and highlighted Greece and Poland as examples of economic progress within emerging Europe.
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