Franklin Templeton Investment today announced that it will launch Franklin MENA Equity Fund for Korean investors. This is the first Korea-domiciled Middle East & North Africa (“MENA”) fund to be sub-advised by a local asset management team, Algebra Capital.
Joe Kawkabani, Managing Director of Algebra Capital, and sub-advisor responsible for foreign asset management of Franklin MENA Equity Master Fund, said, “The MENA region is finally on investors’ radar screens, and is recognized as one of the fastest growing regions in the world not only in terms of GDP growth but also in terms of capital markets and company earnings. These markets are increasingly open to international investors and we are witnessing a substantial inflow from them in both the retail and institutional space.” He added, “The region’s massive liquidity generated by high oil prices, and large government spending programs together with greater liberalization and transparency means investment opportunities will continue to be plentiful for both domestic as well as international investors.”
This fund offering is made possible through the strategic relationship between Franklin Templeton Investments and Algebra Capital, the MENA region’s leading asset management company, in which Franklin Templeton Investments holds a 25 per cent stake. Algebra Capital, headquartered in Dubai, makes about 300 company visits a year through its local resources and research teams and conducts stock analysis and portfolio management based on its findings and expertise.
"The anticipated launch of the MENA fund in Korea clearly demonstrates the continued interest by global investors in the MENA region, particularly from Asia. In 2008, we anticipate that we will be growing our strategic partnership with Franklin Templeton by combining our in-depth knowledge and expertise of the MENA region with Franklin Templeton’s global reach and perspective,” commented Ziad Makkawi, Founder and CEO of Algebra Capital.
Through Franklin MENA Equity Fund, Korean investors who are interested in the MENA region can now invest in a fund managed by local portfolio managers who understand the local culture and investment environment well.
The Korea-domiciled Franklin MENA Equity Fund is a feeder fund that invests most of its assets into the Franklin MENA Equity Master Fund. The master fund invests more than 60% of its assets into MENA stocks* over the long-term to seek capital gains.
The MENA region, which includes Lebanon, Tunisia, Egypt, Jordan, Saudi Arabia, Qatar, Oman, UAE, Bahrain and Kuwait, is the world’s eighth-largest economic bloc. The market capitalization of the MENA region in 2007 reached over $1.3 trillion. The top 150 listed companies in the region have recorded annual earnings growth rate of 40% on average since 2003 and are expected to show over 20% growth rate in 2008.
The high growth potential of the MENA region is also one of the critical factors attracting investment to the area. The Middle East possesses 41% of the world’s known petroleum reserves and has abundant oil revenues as one of the largest beneficiaries of increasing natural resource prices .
The economic development of the countries in the region is also an important factor. Huge sums of money from abundant natural resources have begun to be invested into infrastructure projects for their domestic economic development. Saudi Arabia, for example, has plans for mid-to-long-term infrastructure projects through 2024, valued at $624 billion. Dubai also has $200 billion in construction plans through 2025. The focus of the region’s stock market, which in the 1990s was oriented toward finance and industrial goods, has expanded to today include communications, facilities, construction, and transportation. At the same time, the non-oil sectors’ contribution to the MENA economies is gradually increasing.
