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Apr 10, 2025 04:01 PM IST
Cogence, which is also backed by South African insurer Discovery Ltd., is looking to invest in select emerging markets over the next three to five years.
A BlackRock Inc.-backed South African fund manager said India and Saudi Arabia are its medium-term picks because the two nations stand to benefit from the demographic dividend and “mega-forces” of digitization.
Cogence Pty Ltd., which is also backed by South African insurer Discovery Ltd., is looking to invest in select emerging markets over the next three to five years, said Kerri-Ann Sattary, executive and investment specialist at the asset manager. For now, the firm, which manages $1.2 billion of assets, is overweight on US equities driven by the push in artificial intelligence, she said.
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Bonds and stocks in India, the world’s fastest growing major economy, weathered US President Donald Trump’s move to increase tariffs. Shares in the Asian nation were on pace to outperform regional peers by the most since 2009 before the American leader paused the hike in levies. Indian Commerce Minister Piyush Goyal said the trade mayhem provides an “opportunity of a lifetime” to reform and profit from the disruptions.
“On a strategic view over the medium and longer-term, we prefer emerging markets over developed market equities, such as Indian equities,” Sattary said. Still, the investment firm remains “marginally underweight,” in most other emerging markets because of Trump’s tariffs, she said.
In Saudi Arabia, Crown Prince Mohammed bin Salman has embarked on a multitrillion-dollar plan to reshape the nation. But an oil-price crash could have far-reaching consequences for Saudi Arabia’s finances and vast economic ambitions, according to Goldman Sachs Group Inc.
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“While geopolitical tensions and potential declines in oil prices could weigh on sentiment, we believe the country’s demographic strengths, diversification strategy and resource base provide a solid foundation for long-term growth,” said Sattary.
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At home in South Africa, uncertainty around Trump’s tariff plan and his actions against the nation keep the investment outlook mixed, she said.
The US leader claims that South Africa is confiscating farmers’ land and farms. The nation hasn’t seized any private land since the end of White-minority rule in 1994.
Trump also levied a 30% tariff on Africa’s most-industrialized nation, undermining the 25-year-old African Growth and Opportunity Act that gave it and other countries on the continent duty-free access to the world’s biggest economy.
South Africa’s government is grappling to keep a ruling coalition together following a furore over a plan to increase value-added tax. HSBC Holdings Plc strategists cut the nation to neutral from overweight because of rising uncertainty about the stability of the administration.
“Any potential instability could serve as a catalyst for fiscal challenges in the country,” said Sattary. Still, the fund manager said it preferred South African bonds to global bonds due to attractive yields, and remained neutral on its equities for now.
Cogence expects its long-dollar positions to provide a hedge over increased fiscal uncertainty in the country.
“Market dispersion has been a prominent theme this year, as investors grapple with policy uncertainty and market dislocations,” she said. “This is a key feature of the new investment regime and underscores the importance of maintaining a medium and long-term perspective to effectively navigate the near-term sharp bouts of volatility.”
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