Political unrest in North Africa could ultimately foster strong economic growth if the protests succeed in establishing more democratic regimes, says Tommaso Bonanata, fund manager at Swiss & Global Asset Management's Julius Baer Northern Africa Fund.
The advice comes as many investors consider pulling their assets out of the region to limit their exposure to instability in countries such as Egypt, Tunisia and Libya. Bonanata conceded that the region may be volatile in the short term, but believes these economies will ultimately benefit from political changes. He favours investing in big conglomerates that are active in the region, such as Orascom Construction.
Bonanata also sees signs that unrest is dampening. He said Egypt's interim government has confirmed all outstanding infrastructure projects and highlighted measures for promoting small enterprise. In addition, in Tunisia the financial sector “remains compelling”. However, Bonanata remains sceptical of Libya while the conflict continues.
Bonanata said investors should not be misled by the short-term negative impact of political revolutions in North Africa. “They are a positive step towards democracy and social improvement rather than risky unjustified events,” he claimed.
©2011 funds europe