During the quarter, the Silk African & Frontier Markets Fund has absorbed the Silk Africa Multi Alpha Fund. The Fund’s major positions remained tilted towards Sub-Saharan Africa, however, the largest country allocation in our portfolio is now to Egypt at 14.47%, followed by Nigeria at 14.41% and Kuwait at 13.10%. We increased our allocation to Kuwait, while fully exiting Saudi Arabia and Oman in the GCC region.

The World Bank has downgraded the global economic growth forecast for 2019 to 2.6%, from the projected 2.9% due to the increased rising US-China trade tensions and its trickle down impact on other regional economies and surge in geopolitical tensions especially between the US and Iran. The lack of policy direction is another major factor adding to the uncertain investment climate. The Fed has recently hinted at a possible rate cut which should provide a stimulus to the reeling emerging markets at least.

With elections over in all major countries in the Sub Saharan Africa (SSA) region, the respective governments’ focus is more on the economic revival. Regional GDP growth is expected to be around 2.9% and 3.3% in 2019 and 2020 respectively, compared to the 2.5% witnessed in 2018. This improvement is expected to be supported by oil exporting countries. Furthermore, keeping the interest rates unchanged in most of the African countries provides the evidence that inflationary pressures are under control and hence indicates a positive investment climate.