Abu Dhabi: The markets of the Middle East and North Africa (Mena) will benefit from global investors allocating more of their investments to emerging and frontier markets, a prominent economist said Tuesday.
The forecast was made by Gary Dugan, Chief Investment Officer and Acting General Manager of Private Banking at Emirates NBD.
Emirates NBD has predicted that emerging markets will outperform developed economies in the future.
"We strongly believe that many emerging markets have emerged and therefore warrant a higher percentage of investor portfolios," Dugan said.
"Given the relatively low valuation of the Middle East and North Africa markets, we expect them to attract significant international capital in the near future. The continuing high oil prices and the considerably high bond yields currently available in the regional markets will further encourage capital inflows to the region since investors can expect higher returns on their investments," he added.
The US Federal Reserve announced last week that it would pump an additional $600 billion (Dh2.2 trillion) into the US economy over the next eight months in an attempt to accelerate growth and cut unemployment. However, the move was criticised by several countries including Germany, China, Brazil and South Africa.
Dugan said: "While this increase in money supply is expected to keep the interest rates very low and stimulate the borrowing and spending activities in the economy, a significant part of this excess cash will be channelled to the emerging market economies as these countries are better positioned than their developed counterparts in terms of economic growth, superior corporate profits growth and more secure long term prospects".
"The growth potential in the emerging economies could be impacted if some of these countries introduce more substantial capital controls in order to slow the pace of appreciation in their currencies," Dugan said. "However, at this stage we believe any controls they introduce will be modest."
