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Wednesday, 26 January 2011

Buy into Middle East growth - MoneyWeek

Each week, a professional investor tells MoneyWeek where they'd put their money now. This week: Ghadir Abu Leil-Cooper, investment manager, Baring MENA Fund, Barings Asset Management.

Equity markets across the Middle East and north Africa have been doing well recently. The MSCI Arabian Markets ex-Saudi Arabia Index rose 18% in US dollar terms over the course of 2010. Yet regional equities have only just returned to the levels seen at the start of 2009's fourth quarter, before concerns over the scale of Dubai's debt and the global recovery surfaced.

While strong and stable oil prices remain a key foundation for regional growth and performance, this is by no means the whole story. A number of economies are diversifying away from hydrocarbons. This is creating opportunities across a range of sectors. Elsewhere, political risk remains a key consideration when investing in the region. We continue to monitor the events in Tunisia closely. While this is clearly a de-stabilising factor over the short-term, we believe that job creation and structural reform is a must, given the young and growing population. Indeed, demographics across the region are attractive. The fast-growing, increasingly affluent middle class means we're very positive on the long-term domestic demand story. Elsewhere, we expect strong oil prices to support state infrastructure investment, providing a further source of economic stimulus.