Manager perspectives on the Arab Spring

One year on from the demonstrations in Egypt’s Tahrir Square, managers polled by the UK’s Association of Investment Companies consider the prospects for investing in the region.

Has the Arab Spring changed investment prospects for the region?

 

Mark Mobius, executive chairman of Templeton Emerging Markets Group: “Yes, there have been fundamental changes. We believe that the political unrest, uncertainty and the subsequent government spending drives have created compelling investment opportunities there.

“Short term, of course, it won’t be an easy road and we can expect turmoil. But over the long term, it’s a very positive development because the move towards more open societies in the region creates an excellent environment for economic freedom and capital market development.

“You can never miss the boat if you buy when things are most negative, when people are the most concerned about the political viability of a country or region. We were investing before the Arab Spring and we ­continue to invest.”

Slim Feriani, managing director, Advance Emerging Capital: “The Arab Spring has changed investment prospects for the Middle East & North Africa region ­dramatically and for the better in the long term.

“But in the short term, we believe we should adopt a wait and see attitude on North Africa. Indeed, we need to see how things work out at the political, social and economic level in Tunisia, Libya and Egypt this year before deciding whether it’s the right time to invest there. Yet, we believe the outlook for some of the Gulf countries such as Qatar is extremely attractive in the short and long term.”

Sam Vecht, manager of ­BlackRock Frontiers: “Post-Arab Spring, we have seen divergent responses from different countries within the Middle East. For those countries, such as Saudi Arabia and Qatar with strong economic ­fundamentals, the Arab Spring may have actually improved the market outlook as their governments accelerated spending on necessary physical and human infrastructure. We are positive on the long-term outlook for companies operating in the fields of education, healthcare, retailing and water ­infrastructure.

“But in other countries, such as Egypt, the Arab Spring has led to economic fundamentals deteriorating. Egypt has seen its foreign currency reserves fall from above $35bn at the end of 2010 to $18bn at the end of 2011, raising questions as to how Egypt will meet its external financing requirements for 2012.

“In this context, we would ­highlight that while the Middle East is ­geographically conjoined, its politics and economic policies are ­divergent and therefore it is important to understand the relative investment merits of each individual country.”

 

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