GCC and MENA investors seek market liquidity and political stability

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DOHA: Good market liquidity and stable political environment in GCC states like Saudi Arabia, Qatar and the United Arab Emirates (UAE) have boosted investor confidence, according to a new regional survey.

The fourth MENA Asset Management Survey, conducted by FTSE Global Markets, in conjunction with the Qatar Financial Center (QFC) Investor Authority in the Middle East and North Africa region ( MENA), reveals that reducing political risk and improving market liquidity remain priorities for investors.

Because of this caveat, Syria, Lebanon, and Jordan had the most negative outlook due to their respective internal situations of respondents.

The survey of 90 institutional investors in 12 MENA countries highlights continued concerns about political uncertainty and they are eager to see further market liberalization.

The survey shows a noticeable increase in capital flows between high-growth and high-growth markets.

However, fragmented liquidity is hampering the potential growth of stock exchanges in the region.

Likewise, the results suggest rapid shifts in the market and asset allocation, which until now have favored bond and private equity investments, towards a growing range of investable products, including mutual funds, hedge funds, ETFs (exchange traded funds) and money market funds. market instruments.

In this regard, according to the survey, markets such as Saudi Arabia, Qatar and the United Arab Emirates appear to be increasingly popular as investment destinations. It is clear that a paradigm shift in capital raising is underway in the region, influenced by political risk, the rise of localized liquidity pools.

But not necessarily residing in national stock exchanges and a growing adherence to sophisticated collateral and risk management techniques.

In the context of the MENA region, continued political unrest in North Africa and the Levant is likely to further concentrate assets in more stable economies and trigger cross-border capital flows, according to the survey, which is conducted every quarters and measures the outlook of one-third of asset managers operating in the region, said.

QFC Authority, Director of Strategic Development, Yousuf Al Jaida, said: “The FTSE Global Markets Investor Sentiment Survey is a valuable guide to how investors are reacting to economic and political developments in the MENA region.

“This latest survey shows how investor sentiment towards the region is influenced by global and regional trends such as changes in trade and capital flows. Positive attitudes towards Qatar largely reflect cautious developments in its environment. legal, regulatory and fiscal in light of regional and global changes and the maturation of its financial sector.

FTSE Global Markets head of research and new media, Andrew Neil, said: “Increased political risks in the MENA region are having two effects: the concentration of assets in countries deemed more stable and a shift in the types of employed assets.

“It is therefore not surprising that in the more stable markets of the GCC, investors are increasingly turning to equity investments and in the riskier markets of North Africa and the Levant, bonds seem to be the investment vehicle of choice, especially the relatively safe haven of sovereign bonds.”

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

With this overview in mind, the MENA Asset Management Survey has three objectives: to describe the investment prospects of a wide range of asset management companies in the MENA region; assess the perception of political/economic risk in the region; and describe the current thinking in the asset management industry about the infrastructure that is important to the proper functioning of their businesses. (QNA)

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