Pension funds bearish on Mena pending MSCI decision

20 Apr 2011

European pension funds are bearish on Mena, but may reallocate to the region if the UAE and Qatar win emerging markets status from the MSCI indices.

In a series of interviews with pension fund managers in the UK, Netherlands, Switzerland, Germany and Italy, Mena FM has learned that the recent political turmoil in the Mena region is the main reason why funds are unwilling to allocate to Mena in the short-term.

Dutch pension fund, Vopak, recently increased its emerging markets allocations to 12%, but ruled out Mena as a beneficiary. “The geo-political risk would be one reason to look at our Mena allocation but it is already very limited at the moment,” said pension fund manager Cees Blokzijl .

Blokzijl added that the company currently has more faith in emerging markets than in Europe or the US, and uses Blackrock and Aberdeen Emerging Markets funds with no plans to replace either.

However, Switzerland’s St Gallen Versicherungskasse pension fund, which is worth €670m ($951m), told Mena FM that it would consider increasing its Mena allocations if Qatar and the UAE attain MSCI emerging market status this year.

The pension fund’s manager René Menet said that he would be interested in reconsidering the Mena under the right market conditions, but added that the fund is not currently interested in allocating to the region, due to the political risk.

The MSCI is due to make a decision on the UAE and Qatar in June of this year,

A MSCI source told Mena FM that the political tensions in the Mena region will not influence the countries’ chances of potentially winning emerging markets status, and both the UAE and Qatar have been taking measures to advance the process.

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