After half a decade, a new firm has been named the top equity seller across emerging Europe, the Middle East, and Africa.
Morgan Stanley dethroned Bank of America Merrill Lynch to capture the No. 1 spot in Institutional Investor’s 2018 ranking of the region’s equity sales teams. The bank took the crown from the veteran incumbent — which fell one spot to second place — based on the sentiments of more than 270 buy‐side analysts and money managers at 209 institutions, managing about $236 billion in emerging EMEA equities.
This year’s ranking is markedly different from 2017, with no firm staying put in the position it earned last year, and two banks falling out of the top 10 entirely: VTB Capital and Wood & Co.
Joining this year’s Emerging EMEA Sales Team are EFG-Hermes – regaining its place after missing out in 2017 – and Standard Bank Group Securities, a new addition to the II ranking.
The most improved was Sberbank CIB, which leapt from ninth place to fourth. Since last survey, the bank has investing in new digital products to enable faster execution and cut down on manual processes, according to Andrey Shemetov, Sberbank’s head of global markets. “This gives us an opportunity to trade larger volumes,” he said.
Another firm to gain favor with buy-side voters was J.P. Morgan, which bettered its standing from fifth place to third. Camila Penna, J.P. Morgan’s head of Central and Eastern Europe, Middle East, and Africa cash equity sales, confirmed that the bank has been making investments in its emerging EMEA equity sales and trading teams, specifically in South Africa, the United Arab Emirates, the U.K., and the U.S.
“J.P. Morgan believes that operating as a global house with strong on-the-ground local presence is the best format to cater to our emerging market clients’ needs,” she said. “Amid tougher market conditions and the rise of regulatory constraints, J.P. Morgan has benefited from maintaining dedicated emerging EMEA sales teams in key markets around the world.”
Over the last year, Penna said the bank has seen “rising interest in emerging markets as more positive fundamentals are beginning to surge.” These include an uptick in growth potential for emerging markets versus developed markets and the cautiously responding fund flows, as well as significant earnings growth forecasts for EM equities.
“However, as usually is the case in [emerging markets], we have seen volatility in currencies and other asset classes responding to global and local events,” she added.
Geopolitical tensions between the west and Russia have been at the top of clients’ minds for the past two months, Sberbank’s Shemetov said, and the April sell off created opportunities for some clients to add to positions.
“We expect this pattern of decent growth punctuated by moments of domestic political concerns to continue for EM EMEA in the near term, while also acknowledging that all [emerging markets] may be affected by policy tightening, especially a strengthening US dollar,” he said.
Providing the best global context for emerging EMEA portfolios was one of the eight attributes that respondents — who were part of the region’s broader research team survey — were asked to consider while ranking their favorite salespeople. Votes were weighted based on the size of each respondent’s emerging EMEA equity assets under management.
The buy side was also asked to judge the quality of service and responsiveness; knowledge and communication of the research team’s product; and proactivity in providing access to analysts.
Facilitating this access and generating quality investment ideas – another attribute in this year’s survey – will only grow in importance as emerging EMEA’s presence does.
“Looking forward, emerging EMEA will continue to present significant opportunities as a region,” Penna said. “Between the political changes in South Africa, the expectations of a growing Saudi market, and challenges presented by markets such as Russia and Turkey, the emerging EMEA region should remain front of mind for investors.”