JPMAM says focus on South Africa is more than just football

With the world focused on South Africa for the World Cup, J.P. Morgan Asset Management has confirmed the planned JPMorgan Global Emerging Markets Income Trust may have more than 10% of the initial portfolio invested in South African companies.

The new investment trust will focus on investing in emerging market companies which are providing an income to investors through dividends, as well as offering growth opportunities. The trust's manager, Richard Titherington, says a number of South African companies are demonstrating robust fundamentals which provide the opportunity to include them in the model portfolio.

According to Richard Titherington, historically South Africa has been perceived as a commodity focused market for investors and, whilst this is true in part, he says there are a number of other factors which reflect very positively on the investment potential and long term development of the country. He believes gaining exposure to the emerging middle classes and their spending habits can contribute significantly to returns for investors.

Despite a slowing trend in manufacturing output, South African consumer spending has increased during the first half of 2010 and is expected to remain buoyant during the World Cup period and positive beyond. The continued recovery of the South African economy and positive contribution to GDP growth has been mainly driven by consumer related sectors such as retail and services, highlighting the positive domestic demand.

Richard Titherington, Chief Investment Officer and Head of the J.P. Morgan Asset Management Emerging Markets Equity Team, said, "The growth in consumer spending and the development of an emerging middle class goes beyond the World Cup, although these events do highlight the international perception of the stability of a country. As well as consumer spending increasing, infrastructure is also improving, for example the Gautrain, Africa's first high-speed rail link (which links Johannesburg, Pretoria and the international airport) has just been opened, and sectors such as telecoms and finance are becoming more consumer focused. Companies are also becoming more sophisticated in their corporate governance and increasingly investor friendly and as a result we expect to see more companies understanding the benefits of paying dividends to investors."

Richard Titherington highlighted MTN and African Bank as examples of South African companies his team have identified as established organisations, which are providing dividend income for investors whilst capturing the emerging middle class trend in the country. MTN, a well-known telecoms company, has been expanding operations in Nigeria and Ghana as well as South Africa, where due to lack of infrastructure land line networks have been by-passed in favour of mobile networks. African Bank has increased its micro finance offering, thus providing small businesses and individuals with previously unavailable financing opportunities to develop their own businesses, which may contribute to the growth of the middle class.

The JPMorgan Global Emerging Markets Income Trust will seek to deliver a 4% target yield at inception. The portfolio will aim to have 50 - 70 holdings in global emerging markets equities. The Company will measure its performance against the MSCI Emerging Markets Total Return Net Index (GBP).

Investors can register their interest at jpmglobalemergingmarkets.co.uk.

Winterflood Investment Trusts is acting as sponsor.