Hasnain Malik, global head of equity research at emerging markets bank, Exotix Capital flagged up emerging investment opportunities at the event in London on Thursday.
Speaking at a forum that was looking at opportunities and risks for investors in “frontier markets” in 2018, he said: “From an investment perspective, the (political) risks are not new, they have characterized this region for a very long time, and you could argue that equity and debt markets have already priced in these risks. In some instances, they are pricing them in too much.”
There were now some value opportunities opening up in parts of the Gulf. “The banks across the GCC are perhaps the most leveraged play to rising interest rates across the whole frontier and emerging markets portfolio,” he said.
He added that if one took MENA as a broadly defined region, it had enough population to match the EU, and enough sovereign capital to match China.
“It has some of the world’s cheapest supplies of oil, gas, petrochemicals and plastics, so the potential is massive, but the problem is that it’s a marketplace with a lack of inter-regional trade, and this has hamstrung this region from realizing its full potential.”
He flagged up the example of the UAE’s Aramex as a top flight logistics company that has out-competed the likes of FedEx of the US.
“Aramex should be growing two to three times faster than it is, but it struggles amid regional dislocation and disruption in places such as Syria, Iraq and Libya. This constrains its growth rate,” he said.
But as long as there is trouble in the region, Dubai would continue to enjoy an inflow of “refugee” capital from high net worth individuals and other investors from throughout the Middle East and beyond.