By Temi Iyiola


Egypt and South Africa Update

Through 2017, we posited that the macroeconomic constraints that held back potential in South Africa and Egypt would ease and create a platform for recovery and growth.

Temi Iyiola (Analyst) takes a deeper look at how both economies are progressing andthe outlook for investors.


Concluding thoughts:

We see positioning in Egypt and South Africa as similar to that of Brazil 2 years ago, which we were able to effectively monetise in our Latin America fund, having protected much of the downside. Our Alquity Africa fund, with 70% of AUM in Egypt and South Africa, is positioned for cyclical recovery driven by political stability and economic fundamentals, as opposed to the alternatives in other African markets where the growth drivers are more volatile and linked to a less predictable commodity cycle.

At a stock level, the Alquity Africa fund is weighted to companies with sustainable competitive advantage, who provide exposure to domestic sectors in Egypt and South Africa that will benefit from growth over a 3 to 5 year time horizon. We own companies like Bidvest and KAP, industrials who have reinforced their competitive advantages while their competition were constrained, and companies like Edita, Oriental Weavers and MR
Price; well managed consumer names who are positioned to grow with consumption.



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