The prospect of a full-blown trade war between the US and China is prompting some of the world’s investors to look for rebound opportunities in emerging and frontier markets, and the Middle East could stand to benefit.
Increasing levels of trade protectionism, economic slowdown in China, upheaval in Turkey, Italy and Argentina and rising US interest rates have all been cited as some of the reasons behind a darkening global economic outlook. In October, the International Monetary Fund cut its growth forecasts for this year and the next by 0.2 per cent.
But one investor, Mark Mobius, who built the emerging markets arm of US fund management firm Franklin Templeton believes there are opportunities to be found in these conditions as currency declines make investments cheaper and reduce competition.
“The world of emerging and frontier markets is living up to their reputation as being fast in every way – fast growth and fast adoption of new technologies,” said Mobius. “We are entering the most exciting years for investors globally.”
For the Middle East and North Africa (Mena) region, the ongoing conflicts in Syria and Yemen are deterring investors, but there are still opportunities to be found.
“Family Offices in the Gulf are slowly but surely becoming more sophisticated in their outlook and are looking for something that is out of the ordinary to give their portfolios that extra oomph,” says Mishal Kanoo, chairman at UAE-based conglomerate The Kanoo Group. “The problem in the past is that there were no credible avenues to explore due to the scarcity of such vehicles. Now, as the demand is increasing, the alternative avenue such as invest in in classic cars and such are becoming a reality.”
Many GCC countries have been reclassified as emerging markets and with low debt-to-GDP, currencies that are pegged to the US dollar and huge foreign currency reserves with government plans designed to diversify their economies away from oil, “there are a lot of reasons to have exposure to these markets”, according to Ryan Lemand, senior executive officer at UAE-based ADS Investment Solutions.
The opportunities for investment in the region will be discussed at this year’s Alternative Investment Management (AIM) Summit on 26-27 November in Dubai. For more information please visit www.aimsummit.com