This may seem as a left field opinion and many detractors would give you a million reasons not to invest in the MENA (The Middle East and North Africa). They may tell you the region is unstable due to wars and sectarian violence but guess what? The US was in a civil war 150 years ago and so was Europe about 70 years ago. The region may seem unstable at the moment but there are many reasons to believe that the future looks bright. After all, just about 10 years ago the Middle East and public markets were in a great financial bubble. New investment banks and private equity companies were emerging; the region was stable and there was a lot of investment flowing in the country.
Here I’ll give you a few reasons why I feel the region is still good for investment.
#1. Steady Growth
The region is expected to be one of the world’s fastest growing with GDP rising at an impressive average rate of 4.1% per year. The region is also attractive for private equity investment due to its large and young population. Governments in the region are also making reforms to promote growth and investment which in turn could lure more investors in. There is also a big potential in the region that can be tapped as private equity investments make just 1% of GDP which is low compared to global superpowers like the US and England.
#2. Markets Are On The Up
Performances in the MENA markets have certainly improved and business is becoming more experienced and mature. There has been a large influx of international companies in the last few years due to a number of private equity-owned companies being sold in the local and international stock markets. Family businesses are also becoming more and more interested in private equity investment compared to a few years ago.
All the more reason for optimism in the region.
#3. Return On Investment Is Also High
The regional IPO markets have also experienced an upturn in fortunes due to the streamlining of IPO rules to attract more businesses. These are all part of the efforts of MENA authorities to promote investment within the region and to increase the confidence of foreign investors to drive in more investment. Their quest was aided by Saudi Arabia, with a stock market worth up to 600 billion US dollars, opening up its market to foreign investors. This would boost an already huge stock market to a mammoth one. The UAE is also playing its part in boosting the IPO market by reducing the percentage of stocks companies can float from 55% to 30%.
Finally not only is there light at the end of the tunnel for MENA, there is already light in the tunnel. The region remains to be an attractive place to invest in despite the negative factors surrounding it. Investors can continue to make profits in the region while also potentially reaping the rewards of a brighter and calmer future.