DUBAI — Consumer driven companies operating in the Middle East›s healthcare, financial services, energy and tourism sectors, among others, will become a key investment target as the region’s economic transformation continues, according to a report by UBS.
The world’s largest wealth manager believes the region’s young populations and high per-capita income make long-term investments in regional equity markets an attractive investment proposition.
However, the bank’s latest ‘Prosperity Beyond Oil’ report on longer term investment trends in the region warns that a prolonged period of declining energy prices might cause reforms to stall, and a failure to absorb large and growing populations into the labour force could strain the process.
The UAE is one of the most ‘advanced countries in terms of its economic diversification’, benefiting from a stable political environment and substantial public foreign assets. In the case of Saudi Arabia, given the Kingdom’s recent decision to open equity markets to foreign investors, the bank believes local Saudi Arabian stocks could be included in the MSCI Emerging Markets index by as early as mid-2017. “As regional transformation programs gather momentum, the Middle East’s major economies present increasingly attractive non-oil, long-term investment opportunities,” said Ali Janoudi, UBS Group Head Mideast and North Africa. “What remains fundamental to the region’s future is its collective ability to further implement economic reform programs, and cultivate an ecosystem through ongoing market liberalisation that enables private sector growth and supports the acceleration of economic diversification.”