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First State’s Asante calls for IMA emerging markets change

First State’s Jonathan Asante is lobbying for more freedom when it comes to investing in emerging markets.

Guidelines set by the IMA require emerging market managers to invest at least 80 per cent of their portfolio in companies listed in emerging markets.

Asante, the head of emerging markets and manager of the £1.8 billion First State global emerging markets leaders fund, says he is pushing for those restrictions to be loosened.

Multinational companies are increasingly deriving revenues from their businesses in emerging markets, the growth of which Asante would like to capture.

The manager says many companies listed in the US, the UK or elsewhere in the developed world are actually big players in emerging markets.

British-DutchUnilever, for example, gets more than half of its business from emerging markets while half of Colgate’s business is concentrated in South America. Switzerland-listed Nestle’s biggest export market is now Brazil.

Cross-country expansion of companies is becoming an increasingly important factor for managers like Asante, especially when it comes to more risky markets.

He offers the example of South Africa’s Shoprite, which has expanded into neighbouring Botswana and Zambia, and is now moving north to tap new markets such as Ghana and Nigeria.

The IMA says it welcomes Asante’s comments and will take them into account. The trade body reviews its sectors and sector definitions on rolling basis, but says it will remain committed to the 80 per cent guideline for now.

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