A new global survey has ranked Saudi Arabia, Qatar and the UAE as top investment destinations in the Middle East and North Africa (MENA) region. These countries have been favored due to a stable business and political climate.
Conducted in association with the Qatar Financial Centre Authority (QFCA), the Global FTSE survey points out that, “markets such as Saudi Arabia, Qatar and the UAE appear increasingly popular as investment destinations”. Investors in these countries were least concerned about political risk as these destinations offered a predictable regulatory, tax and legal environment. On the other hand, investors remained skeptical about the political and economic situation in Syria, Lebanon and Syria.
The survey was based on the responses of 90 institutional investors across 12 countries in the MENA region. Results of the survey reveal how investor confidence is impacted by changing global and regional trends that affect inflows of trade and capital. The survey also shows how these factors impact asset allocation, business solutions and business infrastructure.
Survey findings reveal a significant shift in market and asset allocation as investors have shown a tendency to lean towards bonds and private equity investments. Further, there has also been a growing interest in investable products, such as mutual funds, hedge funds, exchange-traded funds and money market instruments. The trend has been influenced by political risk and the introduction of improved risk management techniques.
Findings of the survey clearly point out that investors are continually assessing risk in the MENA region and are more likely to hold assets in economies that offer more stability and ease of capital flows.
Yousuf Al Jaida, Chief Strategic Development Officer, QFC Authority, says: “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.
Andrew Neil, Head of Research and New Media, FTSE Global Markets, says: “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.”