Financial institutions with an existing physical presence and established relationships in the Middle East region are set to benefit most from emerging opportunities created by the Arab Spring, according to financial experts.
In a panel discussion at the 51st ACI Financial Markets World Congress, currently taking place at the Dubai International Convention and Exhibition Centre, leading finance experts discussed rising financial market opportunities in the wake of the Arab Spring, sparking lively debate on what the best strategies are going forward.
Hirsh, the Middle East Economist for Capital Economics, London UK, and one of the panelists said the opportunities beyond the initial period of unrest in certain countries could be significant, particularly in the poorer countries in need of capital investment. “Emerging financial market opportunities created by the Arab Spring varies across countries,” said Hirsh. 'For the resource-poor countries, particularly those hit hard by the turmoil, the opportunities beyond the initial period of unrest could be huge,' he noted. 'If these countries end up pursuing market-friendly economic reforms, along with legal and regulatory reforms, this would boost their growth and incomes in the medium and long-term, which would in turn attract foreign capital,' he added.
Hirsh said, “If fiscal reforms are also pursued, this could transfer some of the banking assets into the private sector, which also benefits the economy.” 'The global and regional financial institutions should begin to think of their exposures beyond solely extending credit to major corporations and sovereign funds in the region, with those that don’t take the region seriously likely to miss out,' he added. 'If large countries such as Egypt and Morocco grow rapidly in the next ten years as we expect, then there is likely to be a marked acceleration in demand for financial products, both in wholesale and retail markets.' “Those financial institutions that already have a physical presence and relationships in the region are set to benefit most.
Others will lose out if they don’t begin to take the region more seriously, in spite of the current difficulties,” remarked Hirsh. Joining Hirsh on the panel discussion at the ACI Financial World Markets Congress was Farah Foustok, CEO ING Investment Management, Middle East and Africa; and Brad Bourland, Chief Economist and Head Prop Investments of Jadwa Investments. Foustok said that the Arab Spring acted as a catalyst for Arab people to appeal to regional governments for an overhaul of the economy and increased levels of prosperity, but warned significant policy reforms still need to be implemented to attract foreign capital. “As the eyes of the global investors focus on the region, an improvement in the framework supporting governance, compliance, and risk is needed,” Foustok said. “Improved transparency, communication and increased local participation in the work force will also be essential to attract foreign investment,” he added.
Under the patronage of Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance, the ACI Financial World Congress is hosted by the UAE Financial Markets Association, which was established in December 2011, and is an affiliation of the Association Cambiste Internationale (ACI).