FMG, the frontier and emerging market funds provider, has announced the launch of its Mekong fund, which will focus on Cambodia, Laos, Myanmar (Burma), Thailand and Vietnam.
The attractions of the region include the 300 million population, with a growing middle class, and average government debt levels below 50% – in contrast to the US (72%) and EU (87%)
FMG also cites a wide range of resources, such as low cost labour, agriculture, oil, gas, copper, gold and hydroelectric power.
GDP growth averages around 7%, while developments in rural areas are set to have a greater impact currently because of the currently lower rate of urbanisation – 38% of the population is urbanised in contrased to 81% in the US and 89% in the UK – while the expected shift towards urbanisation will open up other opportunities going forward.
FMG notes that the the market capitalisation values are still low by international standards – Vietnam’s is currently estimated at just $50bn – but the markets are beginning to open up.
The fund has built up a geographic exposure in the model portfolio that is 18% Myanmar, 15% Thailand, 11% Cambodia, 5% each for Laos and Vietnam, and 3% other, which reflects the mandate to allow investments in Hong Kong and Singapore listed companies that are based in the Mekong area, and which are focused on doing business there.
Weightings in the fund are limited to 25% per country, except Thailand (50%), 25% by industry and 10% by company.
Manager of the fund is Thailand based Siam Knight Fund Management