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03 March 2024

UAE emerges investors’ favourite destination

By Staff

The Mena Asset Management Survey found that Investor sentiment is most positive towards the UAE, Saudi Arabia and Qatar, while Syria, Lebanon and Jordan are regarded as having the most negative outlook.

The latest survey of investors in the Middle East and North Africa (Mena) region finds that lower political risk and improved market liquidity remain priorities for investors.

The survey of 90 institutional investors across 12 countries in the Mena region highlights continuing concerns over political uncertainty, and they are keen to see continuing market liberalisation.

One of the survey’s most important findings is investors’ assessment of risk in the Mena region. The Q1 2013 survey shows that investor sentiment is increasingly factoring in heightened risk.

Investors responding to the survey were asked whether political risk in the Mena region would improve or worsen over the coming year.

The UAE concerned investors least, followed by Saudi Arabia and Qatar.

On the other hand, investors are most concerned about the political risk in Syria, Lebanon and Jordan.

Additionally, the survey shows a discernible increase in high growth market to high growth market capital flows (East to East). However, fragmented liquidity hampers the potential growth of stock exchanges in the region.

Equally, the findings hint at rapid shifts in market and asset allocation, which up to now have favoured bonds and private equity investments, to growing cross section of investible product, including mutual funds, hedge funds, ETFs, and money market instruments.

In this regard, markets such as the UAE, Saudi Arabia and Qatar appear increasingly popular as investment destinations.

Clearly a paradigm shift in the mobilisation of capital is underway in the region, influenced by political risk, the rise of localised liquidity pools (but not necessarily residing in national stock exchanges) and a growing adherence to sophisticated collateral and risk management techniques.

This is now the fourth Mena Asset Management Survey, conducted by FTSE Global Markets, in conjunction with the Qatar Financial Centre (QFC) Authority. The survey is undertaken quarterly and measures the outlook of up to a third of the asset managers operating in the region.

At a time of immense market change in the global investment market as new institutions and regulations impinge on national and regional investment regimes, and a global economy still mired in the aftershocks of the 2008/2009 financial crisis, the asset management industry in the Mena region is poised on the brink of a new era.

The survey monitors the increasingly rapid evolution of the asset management industry in the wider Mena region, looking at how macro and regional factors continually exert their effects on the asset allocation, business solutions and business infrastructure.