London, United Kingdom, 19 March 2013
CFA Institute, the global association of investment professionals, has today published its annual Middle East and North Africa Market Sentiment Survey (PDF) ahead of its fourth annual Middle East Investment Conference (MEIC), hosted this year in Dubai. Based on feedback from nearly 200 regionally based investment professionals from 11 countries, it highlights key findings on a broad range of economic, investment, and employment trends currently facing the region.
In summarizing the research, Nitin Mehta, CFA, managing director (EMEA) CFA Institute, said: “Investment professionals in the MENA region are perhaps less optimistic than their colleagues in other markets elsewhere in the world. But this obscures some real disparities. The GCC is seeing increasing confidence and a return to form following the global financial crisis at a time when the rest of the region is still struggling with the impact of the Arab Spring.”
“However, despite this economic diversity, the challenge remains almost the same. Renewed growth and sustained prosperity in all markets across MENA will be dependent upon the region’s ability to nurture investor trust and confidence. Beyond the obvious need for political stability, this will require greater transparency and improved corporate governance practices, together with the promotion of international best practice, investor education, the development and enforcement of stronger trading rules, alongside sufficient deterrent mechanisms.”
Elaborating on these findings Yacoub Nuseibeh, CFA, president, CFA Society Emirates, said: “Almost half of respondents think that the Arab Spring will continue to have a negative economic impact on the broader region over the next five years. However there is increased confidence in the GCC with Saudi Arabia, Qatar, and the UAE expecting the strongest growth in 2013.”
On the markets, one quarter of respondents think equities generally will be the most undervalued asset over the next 12 months, followed by real estate and commodities. Regarding employment growth, respondents believe that the MENA financial services sector will see growth in private equity, real estate, commercial banking, and asset management, amongst others.
Mr Nuseibeh concluded: “Feedback also suggests that freedom of labor and capital across the region are seen by our colleagues as the biggest factors to help stimulate investment, followed by regulatory alignment across the MENA region. Creating an economic trading union, a single capital market and a single currency were identified as the other major factors.”
Global research: The regional MENA research complements the Global Market Sentiment Survey 2013 conducted by CFA Institute which measured the opinions of 6,783 CFA charterholders and members in 141 countries and territories around the world. It concluded that investment professionals worldwide are more optimistic about global economic growth this year. A greater number of those surveyed (40%) believe the global economy will expand in 2013, a six point increase from last year’s poll. However, CFA Institute members believe there is much work to be done to restore financial market integrity. Citing an overwhelming lack of trust in finance, members think the primary fix is to encourage a culture of ethics and integrity inside financial firms.
About the CFA Institute Middle East Societies Market Sentiment Survey 2013
- 50% believe political stability and good corporate governance will have the most positive impact on the regional economy, followed by increased investment in infrastructure and SME’s, development of the private sector and improved capital markets regulation
- 34% of respondents believe Saudi Arabia will experience the strongest economic growth in 2013, followed by 33% for Qatar and 23% for the UAE
- However 49% believe the Arab Spring will create decreased economic growth rates for the regionally generally over the next five years. 38% thought there would be overall growth
- 46% believe that China will have the most positive foreign economic impact on the region over the next five years, followed by the USA on 24%, the European Union on 12% and 9% for India
- Freedom of labor and capital across the region are the biggest factors to help stimulate investment according to 56% of respondents, followed by regulatory alignment across the MENA region with 47%. Creating an economic trading union (34%), a single capital market (19%) and a single currency (11%) were identified as the other major factors
- 57% of respondents think that the primary focus for regulators in 2013 should be the protection of investors, followed by the reduction of risk (35%)
- One quarter of respondents (25%) think equities generally will be the most undervalued asset over the next 12 months, specifically broken down as 18% for MENA markets and 15% for GCC. This is followed by 11% for real estate and 5% for commodities
- Employment growth expectations for 2013 are spread across a number of areas with respondents estimating that the MENA financial services sector will see growth in private equity (39%), real estate (38%), commercial banking (35%), asset management (28%), sovereign wealth funds (26%), investment banking (24%) and insurance (22%)
- Improved corporate governance practices and transparency are seen as the two biggest issues to increase investor trust and confidence across all markets in MENA with 70% of respondents believing this to be the case. This is followed by investor education (47%) as well as enforcement, improved trading rules and sufficient deterrents, all of which secured 46%
CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 113,000 members in 140 countries and territories, including 102,000 CFA charterholders, and 137 member societies. For more information, visit www.cfainstitute.org.