Investment funds switch out of Africa into MENA

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According to BofA’s investment funds flows positioning recent research, the MENA region now tempts GEM funds from Africa. However, the UAE surge was missed until now, the bank’s analysts found out.

GEM funds have recently started to pare positions in Africa and increase their share in MENA markets including Saudi, Qatar and the UAE. For example, Vanguard has rebalanced its EM ETF in line with the benchmark with no further scope for marginal buying on the index change. However, GEM and MENA funds do not look to have repositioned and have largely missed the UAE’s run until now.

Frontier flows surge as GEM funds switch out of Africa into MENA
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The latest weekly flow data (ending Wednesday May 22nd) shows a further 2% of AUM added to Global Frontier funds vs. GEM funds seeing 0.1% of AUM in net inflows. This is the 17th straight weeks of inflows into Global Frontier funds and is the 11th time YTD when weekly inflows have exceeded 2% of AUM.
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While all equity funds have seen $178b of inflows in the past 26 weeks (or 3% of AUM), all Frontier Market funds have seen $1b of net inflow over the same period, which is equivalent to 14% of AUM.
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After consistently raising off-benchmark allocations in many African markets over the past 12 months, GEM funds have recently started to pare these positions while increasing their share in MENA markets including Saudi, Qatar and the UAE.

Foreign investors have netted buyers on Dubai Financial Market by AED 2.3 billion since year start; the highest level in over four years. This figure reflects improved investor confidence.

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