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The 2014 Emerging EMEA Research Team: Consumer/Discretionary, No. 1: Paul Steegers & team
For a second year running, the six-strong Bank of America Merrill Lynch crew piloted by Paul Steegers wins first place on this roster and on the Consumer/Nondiscretionary lineup as well. From their bases in Russia, South Africa, Turkey and the United Arab Emirates, the analysts cover 24 regional consumer shares. We remain selective in our stock picks, says the 43-year-old team leader, who is headquartered in Cape Town. Based on our macroeconomic forecasts for gross domestic product, real wages, consumption growth and low formal retail penetration, Russia and Saudi Arabia emerge as the favored areas to support retail spending in 2014. South Africa is least preferred, although it has the bonus of the Rest of Africa growth angle for a number of companies, and valuations are at a discount to global emerging-markets peers. Steinhoff International Holdings which manufactures and sells furniture and household goods in Africa, Europe and the Pacific Rim is their favorite player in the South African retail space. Steegers and his colleagues believe that Steinhoff will continue to consolidate a fragmented and now growing European furniture market, thereby driving sustainable superior growth, margins and returns going forward. The shares were trading at 53.51 rand at the end of May, and the researchers believe a price of 63.80 rand is justified.