Stock markets in the Middle East and North Africa, which suffered losses last year totalling nearly US$50 billion (Dh183.66bn), clawed back $44.7bn of their value in the first quarter of this year amid improving regional and global stability.
Many regional markets went into free fall last year as frightened investors took $47.5bn off the table amid sovereign-debt crises in Europe, recovery fears in the United States and explosions of violence and political upheaval across the Arab world. This year, action to contain debt in the European Union, positive signs from the US and improved political stability in the Middle East have encouraged investors back into equities.
Most stock exchanges in countries where money flowed out are still operating below levels of market capitalisation reached by the end of 2010.
The region's rebound is also heavily boosted by flows into the Saudi Tadawul All-Share Index, which pared last year's $2.9bn loss to gain $30.5bn in the first quarter as Saudis switched from investing in land to the stock market, and on renewed hopes the bourse will open up to foreign investors. During trading yesterday, the Tadawul climbed to its highest level since September 13, 2008.
The figures show Middle East and North Africa (Mena) markets are slowly clawing back last year's losses.
Egypt's main index, which contracted by $8.4bn last year as investors fled a revolution in which Hosni Mubarak was toppled from the presidency after three decades, was the second-best performing in the world in the first quarter. The EGX 30 has gained $3.8bn since January. "Egypt, being a part of the MSCI Emerging Market Index, has benefited from a global asset allocation perspective, and this has contributed towards higher foreign fund flows to the market," said Talal Al Tawari, the head of GCC equities at Gulf Investment.
In Tunisia, where a civil uprisingthat would lead to a wave of similar protests and revolutions across the Mena region began, the main index made a gain last year of $4.4 million after initial steep losses following the ousting of the Zine El Abidine Ben Ali from the presidency in January. The Tunindex rose by $50m in the first quarter of this year.
"We've seen three levels of Arab Spring," said Fadi Al Said, a senior fund manager at ING Investment in Dubai.
"At the beginning, when countries were experiencing some volatility, investors were cautious. Then Egypt and Libya had all-out revolution and the markets went into free fall. Now, after elections, there is some improved stability and our markets are starting to move higher."
Other North African countries have made more modest inroads into last year's falls in market value. Morocco, which lost $1.24bn last year, has regained $210m. Lebanon's main Blom index picked up $190,000 after losing $2.2bn last year.
"Some markets are still at level 1 of Arab Spring, and investors are asking 'are they going to move to level 2?'" said Mr Al Said.
Gulf markets also had mixed success in the quarter, with UAE indexes the best performers.
The Dubai Financial Market General Index gained $2.8bn of value after losing $5.8bn last year. The Abu Dhabi Securities Exchange General Index covered more than half its $9bn losses by gaining $5.6bn.
However, Kuwait, where $23.5bn was wiped off the value of its main index last year, managed to regain just $1.8bn in this year's first quarter. Oman's main index barely dented last year's $705m loss, retaking $20m in the quarter. Jordan managed to claw back only $9m of last year's $290m losses. Bahrain's main index picked up $30m after ending down $207m last year.
Analysts said weak economic drivers in lagging countries is keeping them unattractive to investors looking for bargains.
"The fundamentals of these countries is still a consideration," said Mr Al Said. "Morocco is not cheap. We've seen no earnings improvement, nothing dramatic. Jordan's stabilising but there is not momentum. It also has some debt issues. Bahrain, well we're still seeing investment banks and financial institutions in trouble and the government repricing natural gas."
As well as improving fundamentals, analysts and fund managers said deregulation of markets and lowering of barriers to entry would help in attracting foreign participation.
"Improvement in regulatory environment and facilitating new listings that ensure a wider representation of the key economic components in each country could be a catalyst," said Mr Al Tawari.
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The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
If you go...
Etihad flies daily from Abu Dhabi to Zurich, with fares starting from Dh2,807 return. Frequent high speed trains between Zurich and Vienna make stops at St. Anton.
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
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7pm: Flood Zone
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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