The Fund generated a positive return in September despite a mixed performance in volatile trade from frontier markets as investors focused on the US Federal Reserve’s decision, ultimately postponed, to begin to withdraw the liquidity that it is currently providing to financial markets. Although share prices in Asia were broadly weaker, this was countered by some strength in Africa and Europe. The strong relative performance of the Fund was again supported by its stock selection. The portfolio’s exposure to health care services in the Gulf continued to add value, with the Abu Dhabi-based Al Noor Hospitals Group putting on an additional 14% over the month. Since coming into the portfolio at its June, Al Noor has seen its share price rise by 45% supported by encouraging interim results and some ambitious growth plans leading to increasing investor interest in the stock. Bank of Georgia, the leading bank in Georgia, was 12% higher on the back of positive broker cover age following a roadshow with the chief executive that served to highlight robust second quarter results and the potential to grow its loan book going forward.
Elsewhere, the iron ore miner African Minerals recovered strongly from earlier weakness as it signed a memorandum of understanding with the Chinese iron ore trader Tewoo, which will pay close to USD 1,000 million for a 16.5% economic interest in its Tonkolili project in Sierra Leone, including a 10% stake in African Minerals itself. The price of the deal suggests that each African Minerals share should be valued at around GBp 700 rather than the GBp 225 at which it closed the month. The downside during the month came largely through the portfolio’s exposure to the Financials sector, which succumbed to profit taking and sector rotation. The Nigerian Zenith Bank fell 2% whilst Qatar National Bank was down 3%. Exposure to the Telecommunications Services sector has been reduced through the divestment of Mobily, the number two mobile service provider in Saudi Arabia. Mobily has had a strong run and further immediate upside now seems limited with the chief executive announcing plans to invest SAR 22 billion over the next five years likely to drag on profitability. The position has generated a substantial profit for the Fund.
