CIMB-Principal Asset Management Berhad today announced the launch of the CIMB-Principal MENA Equity Fund, the first fund in Malaysia to offer investors exposure to large-cap stocks in the Middle East and North Africa (MENA) region.

The MENA Equity Fund allows investors to strategically capitalise on the oil-rich region’s prosperity to potentially enhance their investment portfolios. It has a benchmark target of 10% growth in net asset value (NAV) per annum. Datuk Noripah Kamso, Chief Executive of CIMB-Principal Asset Management Berhad, said: “The MENA region, which has previously been overlooked, potentially offers attractive returns as it trades at a price-to-earnings ratio of 16.4 times, a cheaper valuation compared to other emerging markets in Asia which are trading at 21 times (Source: Datastream, 2007).”

Datuk Noripah explained that the untapped MENA region is also appealing because it is less exposed to or affected by the current volatility in global markets. “Its low correlation to the World Market provides instant diversification to one’s investment portfolio. The Gulf Cooperation Council (GCC) countries add up to over 16.5% of Global Emerging Market (GEM) capitalization but they have no weightage in the MSCI EM (Emerging Markets) Index and are historically-proven to be less volatile when global emerging markets come under pressure,” she said. The Fund also avoids investments in potentially unstable countries like Iran, Iraq and Israel.

The CIMB-Principal MENA Equity Fund feeds into SG Asset Management’s Ocean Fund/Equities MENA Opportunities Fund, which invests in securities of companies principally established and listed in the MENA region. The fund seeks out sustainable businesses that will benefit from MENA’s long-term economic growth. The fund’s top two sectors are real estate and banks, sectors that are set to benefit from massive infrastructure projects.

High oil prices and revenue have created ample liquidity in the MENA region, which spills over to increased investment in construction, tourism, property and telecommunications. The GCC governments are also injecting another US$1.5 trillion into infrastructure projects over the next five years.

Datuk Noripah concluded: “Domestic demand, from healthy population growth, is seen as a dominant force that will accelerate long-term growth momentum in the region. This will create strong sustained demand for consumer products, financial services and real estate.”

The CIMB-Principal MENA Equity Fund’s initial offer period is from 19 Feb 2008 to 10 March 2008. It has an opening NAV of RM0.50 per unit and approved fund size of 300 million units. The fund’s annual management fee is 1.8%.

The CIMB-Principal MENA Equity Fund is distributed by CIMB Bank, CIMB Private Banking, CIMB Wealth Advisors, Citibank, Hong Leong Bank, OCBC, Philip Mutual and UOB.