5 idiosyncratic investment opportunities
Diana Kiluta Amoa, senior portfolio manager on the local-currency team at JPMorgan Asset Management sees idiosyncratic investment opportunities in five frontier markets (FRN) (FM). These include Ghana (EZA), Dominican Republic, Egypt (EGPT), Peru (EPU), and Colombia (ICOL). Let’s take a quick look at how these markets are placed currently.
Inflation in Ghana cooled to 13.1% for 1Q17. It stood at 18.9% in 1Q16.
In the near-term, agribusinesses in Ghana should benefit on the back of the following three factors:
- Farmers are expected to receive subsidized fertilizers in the coming weeks
- Rainfall is seen normal to above normal levels across forest area, according to the Ghana Meteorological Agency.
- The United States Agency for International Development (USAID), was seen promoting investments in the Ghanaian agriculture sector during the recent 4th Annual Ghana Agribusiness Investment Summit hosted on May 4th. The event themed “mobilizing strategic investment for agriculture” primarily stressed the importance of leveraging financial opportunities for Ghanaian agribusinesses.
“When you look at the demographics of the country, you look at the microeconomic factors in the country, you can see that there is clearly an opportunity to actually position Ghana as one of the leading countries in West Africa,” said Yolanda Zoleka Cuba, CEO Vodafone Ghana.
The Dominican Republic announced an impressive 6.4% increase in 2016 for overall tourism to the country, a 10% increase from 2015. Tourism is one of the key elements driving growth in the economy. The US accounted for about 35% of all tourists in the country in 2016. Consequently, the economy’s Dominican hotel occupancy rate also rose to 78%, up 18% from last year.
Egypt is set to announce a ‘social package’ soon according to Deputy Finance Minister Ahmed Kouchouk. Inflation in the economy is expected to average 22.8% in the fiscal year starting July 1 and will ease to 9.7% the following year, according to Kouchouk. The government plans to pay arrears to foreign oil and gas companies operating in the country by the end of June. The government also has a Eurobond sale in late May 2017 and another international bond sale by early 2018 on the cards currently.
Rising inflation is one of the key challenges facing the economy since the removal of currency controls and fuel subsidies in November 2016; all in an attempt to secure a $12 billion loan from the IMF.