GCC, MENA Investors Look for Market Liquidity, Political Stability: Survey

Doha, February 19 (QNA) - 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 Centre (QFC) Authority of investors in the Middle East and North Africa (MENA) region, finds that lower political risk and improved market liquidity remain priorities for investors. Due to this caveat, Syria, Lebanon and Jordan had the most negative outlook due to their respective internal situations from the respondents. 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. 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 (Exchange Traded Funds), and money market instruments. In this regard the survey said, markets such as Saudi Arabia, Qatar and the United Arab Emirates 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. In the MENA region context, continuing political unrest in North Africa and the Levant is likely to further concentrate assets in more stable economies and cause attendant cross-border capital flows, the survey, which is undertaken quarterly and measures the outlook of up to a third of the asset managers operating in the region, said. QFC Authority, Chief Strategic Development Officer Yousuf Al Jaida said, "The FTSE Global Markets survey of investor sentiment is a valuable guide to how investors react to economic and political developments in the MENA region. "This latest survey shows how investor sentiment towards the region is influenced by global as well as regional trends such as shifts in flows of trade and capital. Positive attitudes towards Qatar substantially reflect the careful evolution of its legal, regulatory and tax environment in the light of regional and global changes and the maturing of its financial sector." FTSE Global Markets Head of Research and New Media Andrew Neil said, "Heightened political risks in the MENA region have two effects: the concentration of assets in those countries that are deemed more stable, and a shift in the types of assets employed. "It is no surprise then that in the more stable markets in the GCC investors are increasingly looking at equity-based investments and in the riskier markets in the North Africa and Levant bonds seem to be the investment vehicle of choice, particularly 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, looking at how macro and regional factors continually exert their effects on the asset allocation, business solutions and business infrastructure. With this overview in mind, the MENA Asset Management Survey has three aims: to describe the investment outlook of a diverse range of asset management firms in the MENA region; to assess the perception of political/economic risk within the region; and to outline current thinking in the asset management industry as to what infrastructure is important to the proper functioning of their businesses. (END)