Fund managers put spotlight on emerging markets

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The Independent Online
THE increasing attraction of overseas markets to institutional investors and big corporates was spotlighted yesterday with a brace of fund-raisings by emerging market specialists.

Simultaneously, Welsh Water, in an interesting hint at new foreign diversification, was reported to have told a stockbrokers' meeting it was exploring with other large companies the scope for establishing a fund for infrastructure investment in Asia.

Freshening demand for overseas investments was underlined as Foreign & Colonial Emerging Markets Investment Trust said it was raising pounds 115m via a placing and public offer to exploit overseas opportunities.

It is particularly keen on the Middle East, with longer-term 'peace dividends' from the Israeli/Palestinian accord expected to outweigh negative sentiment arising from atrocities such as this week's terrorist attack in Tel Aviv. Extra money is also expected to be targeted at Egypt, Bahrain and Morocco.

F&C is raising pounds 85m via a placing and pounds 30m through a public offer for subscription of 115 million conversion shares at 100p a share. A source at Credit Lyonnais, brokers to the placing, said: 'In recent weeks we approached 32 institutions and are getting cheques from 30. It is unprecedented.'

Following the placing, it is understood that F&C's institutional following will double to around 70 investors.

Also yesterday the China Investment & Development Fund said it was raising dollars 30m ( pounds 19m) through a placing of 550,000 units, each consisting of five new shares and one warrant.

The fund said continued fast economic growth in China, combined with a credit squeeze imposed in July 1993 to reduce inflationary pressures, had created many investment opportunities.

Yesterday's fund-raisings bring the total capital raised by investment trusts for emerging markets to date this year, including new issues and rights issues, to pounds 1.18bn.

Audley Twiston Davies, managing director of F&C Emerging Markets, said that as well as the Middle East the fund was keen on Eastern Europe and Asia.

Poland, he said, was a favoured market as it was 'well ahead of the rest' on privatisation. It is also understood the Czech and Slovak republics will attract more capital.

However, political mavericks and inflationary instability in Russia are believed still to make it something of a wild card for foreign investment.

Mr Twiston Davies acknowledged that specialists in emerging markets were bound to hit problems in some regions over the next five or six years. But he said the spread of risk was a significant compensating factor.

It is believed Welsh Water's idea is that it might be one of several founding shareholders of a fund for Asian investment which would then seek institutional equity commitments.

---------------------------------------------------------------- PLAYING AWAY ---------------------------------------------------------------- Money raised since January for investment in emerging markets New issuesdollars m Baring Emerging Europe. . . . . . . . . . 82.7 Central European Growth Fund . . . . . . 129.3 Edinburgh Inca. . . . . . . . . . . . . . 39.1 Emerging Markets Country. . . . . . . . . 27.1 Five Arrows Chile. . . . . . . . . . . . 187.1 Fleming Indian. . . . . . . . . . . . . . 80.6 Israel Fund. . . . . . . . . . . . . . . .97.4 Morgan Grenfell Latin American. . . . . . 61.6 Old Mutual South Africa. . . . . . . . . .50.0 Scudder Latin America. . . . . . . . . . .48.1 Taiwan Investment. . . . . . . . . . . . .43.3 Templeton Latin America. . . . . . . . . .44.6 Total. . . . . . . . . . . . . . . . . . 891.1 Rights issues Beta Global Emerging Markets. . . . . . . 28.6 Emerging Markets Country. . . . . . . . . 10.0 Foreign & Colonial Emerging Markets. . . 115.0 Templeton Emerging Markets. . . . . . . .116.0 Total. . . . . . . . . . . . . . . . . . 269.6 ---------------------------------------------------------------- Source: NatWest Securit ies ----------------------------------------------------------------

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