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Panel Detail:

Wednesday, April 26, 2006
10:35 AM - 11:50 AM

Middle East Capital Markets: Market Building, Nation Building

Moderator:

Fred McMahon, Director, Centre for Trade and Globalization Studies, The Fraser Institute

Maryam Al-Hashar, left, and Neveen El-Tahri were among the panelists offering their views on how to develop more efficient capital markets in the Middle East.

Sheika Al Farsi of the Omani Centre stated that Middle Eastern countries need to institute economic reforms and economic freedom in order to generate the millions of jobs necessary to employ the surge of workers they will need to accommodate as their extremely young populations age.

One of the keys to economic freedom is an efficient capital market. Maryam Al-Hashar of the Capital Market Authority in Oman discussed the development of the Omani Stock Market, which today contains 142 companies with a market cap in excess of $15 billion. Hani Sari-El Din from the Capital Market Authority in Egypt discussed the Egyptian Stock Market. This market was one of the best-performing markets in the world last year, rising 160 percent. This was due in large part to a very strong macro-economic environment in Egypt. GDP growth increased to 5.1 percent last year, inflation dropped from 17.3 percent to 5.2 percent, and foreign direct investment increased strongly.

Neveen El-Tahri from ABN Amro then discussed Egypt.s performance from the point of view of a private market investor. She noted that Egypt.s capital markets had been developing since the peace agreement with Israel in 1979. Neveen also complimented Egypt′s Central Bank head for doing an excellent job directing Egypt′s macroeconomic performance. One extremely interesting observation she noted was that many Egyptian nationals living overseas are beginning to return home to work and invest. She noted that this is similar to what is occurring in China, and has been a significant factor in China′s economic success.

Robert Bush of Istithmar discussed his company's mandate to seek attractive investment returns around the globe. Robert noted that a key when investing in emerging markets is to find trustworthy partners. He talked about the difficulties in dealing with opaque or nebulous regulatory environments in some developing nations, and felt that partnering with people one trusts can help mitigate regulatory risk. He also responded to a question about the outcry over DP World′s attempt to manage ports in the United States, noting that while he was surprised over the outcry, it would not stop him or other investors from the Middle East from looking around the globe for investment opportunities.

The panel concluded with a brief discussion of the impact of terrorism on Middle Eastern capital markets. This is an area of primary concern for many investors considering opportunities in the Middle East. The panelists noted that following previous terrorist attacks in Egypt, investment interest among institutional investors actually increased as they sought out potential bargains. In the event of a severe terrorist attack or a sustained outbreak of minor terror attacks, there would probably be a halt in the progress of the development of Middle Eastern capital markets. Absent such attacks though, the group agreed, it is expected that capital market development will continue.

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