Markets in the Middle East and North Africa (MENA) are likely to outperform emerging markets (EM) in 2017 but political instability continues to be seen as the main source of risk for regional growth, according to the results of a survey conducted by EFG Hermes.
The EFG Hermes’ research team recently polled 510 international fund managers and institutional investors from 260 institutions and 147 leading companies from MENA and frontier market on the outlook for the markets.
The survey found that around 42 percent of the investors saw higher trade barriers as the key risk to global markets in 2017.
Despite the current economic challenges, investors appear to be very optimistic about the future of Egypt with 46 percent of the participants of the survey expecting Egypt to be the top-performing market in USD terms in 2017.
Within MENA sectors, most investors continue to see health care as the one with greatest performance potential in 2017. The survey results show that investors expect MENA earnings to rise by 10 percent in 2017.
Despite a consensus view on lower oil prices for longer, most participants believed that the Gulf Cooperation Council (GCC) pegs would not change by 2020.
Most of the investors who took part in the researchexpect that the US Fed will hike rates twice this year, but there was no view on whether or not EM funds will see net outflows in 2017 with votes split equally among the “yes and no” answers.
However, 77 percent of the participants said that passively managed funds would continue to grow at the expense of active assets under management (AUMs). Moreover, despite big frontier markets (such as Pakistan, Qatar and the UAE) leaving the frontier index in recent years, 68 percent of the participants believed that the frontier will continue to be a standalone offering, which is good news for Kuwait which most participants believe will remain a frontier market by 2020.

Source: Arab News