Investment professionals in the Middle East and North Africa (MENA) expect the local economies to grow and think that Saudi Arabia, the United Arab Emirates, and Qatar present the best growth potential and investment opportunities in 2014.
These are the salient findings from a recent survey by CFA Institute. It is the fourth consecutive year that CFA Institute has surveyed its charterholders and members in the MENA region in the run-up to the Middle East Investment Conference. Of the 1,818 finance professionals in 12 countries that were surveyed, 98 responded, for an overall response rate of 5% and a margin of error of ±9.6%. Interestingly, the findings this year are quite similar to the findings last year.
Local economic expansion expected in 2014. Eighty percent of respondents expect their local economies to expand in 2014; 76% expect their businesses to expand; and 67% expect the global economy to expand. In terms of countries with the strongest economic growth and best investment opportunities, Saudi Arabia, the United Arab Emirates, and Qatar came on top, whereas Bahrain, Jordan, Lebanon, and Oman were placed at the bottom.
Equities are expected to perform well globally, but real estate is expected to deliver the best return locally. The majority of respondents, 71%, believe equities will have the highest total return in 2014, but more than half, 56%, think real estate will be the best-performing asset class in local markets. Fewer than 10% expect precious metals, commodities, bonds, or cash to be the highest performing asset globally or locally in 2014.
Transparency and good governance are key to investor confidence and development. Respondents believe that improved transparency in financial reporting, better corporate governance, and enforcement of existing laws and regulation have the best chance of improving investor confidence. In a similar vein, respondents think that increased investment in infrastructure — followed by political stability and good governance, and the development of a private sector — will have the most positive impact on MENA economies in 2014.
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