World turned upside down

We wake this morning to a changed world. The Egyptian people appear to have achieved an almost bloodless revolution, and left the main square in Cairo clean and tidy. And China has officially passed Japan to become the world’s second largest economy. Analysts predict the Chinese economy could be as big as that of the US within a decade.

What happens in China and Egypt matters much more to us here in Europe than it would have done ten or even five years ago. Two reports released this morning underline the growing importance of emerging markets both for the European fund industry and the financial services in general.

A commentary from Charles Prideaux, head of BlackRock’s EMEA institutional business citing ten new challenges to be faced by institutional investors in 2011 lists ‘diversification – and more diversification’ as challenge number four, highlighting the role of emerging markets.

“One of the lessons of the financial crisis was that diversification requires dynamically managed exposure to a broad range of asset classes with low correlation and diversified sources of risk: this will increasingly be reflected in investor portfolios,” says Prideaux. “It will also lead to greater exposure to emerging markets.”

At the same time, 14th PwC Global CEO Survey shows that CEOs of financial services companies believe emerging markets will be more important than developed markets to their organisation’s future. China tops the list, followed by Brazil and India.

Meanwhile, the world waits to see what will happen next in Egypt. From an investment management perspective, it is a crucial moment for the world’s increasingly important frontier markets. Investment managers tend to prefer stable dictatorships to unstable fledgling democracies, but on Friday the Africa and Middle East specialist investment firm, Silk Invest, struck an optimistic note in the wake of the Egyptian protests.

“We have always believed in our countries and fortunately they are delivering,” said Zin Bekkali, CEO of Silk Invest. “Both Tunisia and Egypt have shown that regime change can happen. It was time for democracy to reach these countries and it did. From an investment point of view, we believe that the recent events will be a powerful catalyst for further growth.”

Fiona Rintoul, editorial director
©2011 funds europe

May it be so.

HAVE YOU READ?

THOUGHT LEADERSHIP

The tension between urgency and inaction will continue to influence sustainability discussions in 2024, as reflected in the trends report from S&P Global.
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

CLOUD DATA PLATFORMS

Luxembourg is one of the world’s premiere centres for cross-border distribution of investment funds. Read our special regional coverage, coinciding with the annual ALFI European Asset Management Conference.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST