Investment manager of Balkan Emerging Frontiers Fund attended European Family Office and Private Wealth Management Forum held from June 6th till June 8th 2012, in Geneva, Switzerland. Investment Manager was panelist at a round table on emerging markets named »Emerging Markets – Emerging, Re-Emerging, or Sub-merging – Which Markets matter?«
Round table was moderated by Erik van Dijk, chairman of LME Emerge from Netherlands, a company specialized for consulting to institutional and high net worth investors regarding investments and investment companies on emerging markets. Other panelists on round table were Andrew Brudenell, portfolio manager of HSBC GIF Frontiers Markets fund; Luis Gómez, partner at investment management company Tree Capital from New York (specialized for Latin America markets); Dmitry Alimov, managing partner of Frontiers Ventures Management (specialised for former Soviet Union markets) and Hicham Hammond, investment manager and advisor at Swiss company Mars Capital (investing in global emerging markets).
Round table began with discussion on effects of European crisis on emerging markets. BEF Fund Investment manager exposed the belief that »the worst has already past, or it is already included in stock share prices« and that there is a lot of generating of pressure on governments of countries in trouble in order to accept unfavoured conditions, that would otherwise not be accepted due to dissatisfaction of voting body. He expressed the opinion that Europe shall as always so far, find »a last minute solution« (as proved by bailout for Spanish banks). He also told: »I still remember last year October Opal’s Summit in Monte Carlo: There was similar pessimistic investment mood in the air as today. At the time I thought that that was a clear sign of contraindication and that turnaround is approaching. And in few days time, even sooner than I expected it, the global markets had indeed grown…«.
In further discussion with focus on undiscovered new markets Investment Manager presentedoutstanding potential of stock markets in the countries of former Yugoslavia. He highlighted the huge short term, as well as medium to long term growth potential of these markets. Short term stock value growth potential derives from these regional markets still lagging behind the most of the world. Except for minor disturbances, major global stock markets have been growing for the last three years, while some regional stock indices are still marked on just about 10 % of their 2007 values. On the medium to long term theregion has the greatest potential for growth in Europe, originating from the countries’outlook to join EU in this decade. Croatia will become a member next year, while other countries in the region will follow. This might be the last enlargement of EU. In this process of regional adjusting to European regulation the improvement of security and legal terms will enhance the business environment and investment security. Consequently there will be large inflow of European funds and other investment capital in the region. This will not only arouse the investments into infrastructure but also stimulate regional economy growth, increase of mergers & acquisitions and further accumulation of domestic and foreign investment capital into regional financial markets. This will all contribute to substantially higher values of enterprises and higher valuation of securities. He emphasized that the Balkan region has been so far pretty much overlooked while being »Unique opportunity in the heart of Europe«. When the investment capital will start flowing into the region, there will be high responsiveness of the quotations (high Beta), due to currently low liquidity and we will witness large increase of stock value. Time to invest is now. Once the region will be on the cover page of Financial Times, it will be too late for superb returns.
Concluding topics of the round table discussion were focused on investments in commodities and high tech companies on emerging markets.