Investment opportunities in emerging Europe, the Middle East and Africa will increase as the region develops, says Fidelity International.
The fund firm believes that growing consumer demand, increased infrastructure spending and improved utilities will change the market structure.
It says that while the region is dominated by the energy and financial sectors, representing 51 per cent of the market, its dependence on energy is likely to fall relative to other sectors over the next 10 years.
The EMEA region covers more than 58 million sq km and Fidelity says there will be more investment opportunities as the market expands.
Fidelity EMEA fund manager Nick Price says the region’s GDP growth over the last decade is three times that of Western Europe and the US, which has produced a growing generation of consumers finding new uses for their rising incomes.
Price says: “I expect the sectors to broaden further over the coming years. As countries in the region experience surging consumer growth, increased infrastructure spending, improved utilities and improved corporate governance, the structure of the markets will change. I fully expect the energy sector to lose some of its dominance while other sectors increase market share.”
Price says the emergence of a middle class is evident in Russia and the Middle East, shown by trends across a range of goods and services such as cars, second homes, tourism, private education and financial advice.
In sub-Saharan Africa, he has identified new patterns of spending, including mobile phone use.
Price says: “Today’s dominant sectors will remain to a certain extent but the emphasis is expected to change. I expect financials to increase their weighting slightly while energy, materials and telecommunication services will lose share to other sectors, making the market even more diversified.”