MEIC PRE-CONFERENCE SURVEY MIDDLE EAST & NORTH AFRICA MARKET ISSUES 6 April 2014
SURVEY RESULTS
80% EXPECT THEIR LOCAL ECONOMY TO EXPAND IN 2014, 76% EXPECT THEIR BUSINESS TO EXPAND AND 67% EXPECT THE GLOBAL ECONOMY TO EXPAND For 2014, what are your expectations for the following? No change Contract Expand 27% 6% 14% 6% 19% 5% 67% 80% 76% Global economy Local economy Your business or organization
MOST RESPONDENTS (90%) EXPECT INFLATION IN LOCAL MARKETS TO INCREASE IN 2014 For 2014, what are your expectations for the following in your local market? No change Decrease Increase 6% 4% 22% 19% 5% 13% 28% 6% 34% 2% 38% 3% 90% 72% 68% 66% 64% 59% Inflation Debt issuing activities Foreign investments IPO and equity raising activities Mergers & Acquisitions Wage levels
THE POLITICAL CHANGE OCCURRING FROM THE ARAB SPRING WILL IMPACT THE MENA REGION THIS YEAR THROUGH DECREASED ECONOMIC RATES, AND OVER THE NEXT FIVE YEARS THROUGH INCREASED ECONOMIC GROWTH RATES What economic impact, if any, will the political change occurring from the Arab Spring have on the MENA region? 2014 Over the next 5 years 63% 61% 29% 24% 15% 8% Increased economic growth rates Decreased economic growth rates No change in economic growth rates
GLOBALLY, EQUITIES WILL HAVE THE HIGHEST EXPECTED TOTAL RETURN IN 2014 AND LOCALLY, REAL ESTATE FOLLOWED BY EQUITIES Rank the following asset classes in order of expected total return in 2014 where 1 indicates the highest expected total return. Displays % ranking each as 1-highest expected total return Globally Local Market 71% 56% 35% 12% 9% 5% 6% 1% 3% 1% 1% 2% Equities Real estate Precious metals Commodities Bonds Cash
IMPROVING MARKET INTEGRITY AND TRANSPARENCY WILL HELP JORDAN THE MOST IN ENSURING LONG-TERM SUSTAINABLE GROWTH. What does Jordan need to do most to ensure long-term sustainable growth? 51% 20% 12% 8% 6% 3% Improve market integrity and transparency Increase educational opportunities Focus on services Invest in renewable energy Tax reforms Other
ONLY 18% OF MEMBERS BELIEVE MENA ECONOMIES ARE COMPETITIVE IN THE INTERNATIONAL MONETARY SYSTEM. How competitive do you believe MENA economies are in the international monetary system? Not competitive at all 1 2 3 4 Very competitive 5 16% 2% 2% 36% 44%
INCREASED INVESTMENT IN INFRASTRUCTURE FOLLOWED BY POLITICAL STABILITY AND GOOD GOVERNANCE AND DEVELOPMENT OF A PRIVATE SECTOR WILL HAVE THE MOST POSITIVE IMPACT ON MENA ECONOMIES IN 2014 What impact, if any, will the following have on the MENA economies in 2014? No impact Negative impact Positive impact 3% 1% 1% 7% 6% 8% 2% 11% 12% 2% 15% 1% 4% 6% 96% 92% 92% 90% 88% 84% 79% 100% Increased investment in infrastructure Political stability and good governance Development of a private sector Improved capital markets regulation Increased investment in education Increased Regional economic investing in SMEs integration Other
IMPROVED TRANSPARENCY AND CORPORATE GOVERNANCE PRACTICES WOULD MOST IMPROVE INVESTOR TRUST AND CONFIDENCE ACROSS THE MENA MARKETS. What change(s), if any, would most improve investor trust and confidence across the MENA markets? Improved transparency of financial reporting and other corporate disclosures 87% Improved corporate governance practices 71% Improved enforcement of existing laws and regulations Improved market trading rules on transparency and frequency of trades Adoption of a code of ethics and professional conduct for all professionals managing investments Stronger deterrents to prevent market and investor abuses 55% 55% 64% 63% Improved auditing practice and standards 48% Improved investor education among clients Improved regulation and oversight of global systemic risk Increase the levels of industry knowledge for those working in financial services but outside investment roles Other No changes will improve investor trust and confidence across regional markets None of the above 1% 0% 0% 29% 42% 41%
EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS ARE EXPECTED TO INCREASE IN 2014 WHILE WAGE LEVELS ARE EXPECTED TO EITHER STAY THE SAME OR INCREASE In 2014, what are your expectations for employment opportunities for investment professionals? No change Decrease Increase In 2014, how, if at all, do you expect wage levels for investment professionals to change? No change Decrease Increase 32% 26% 45% 36% 15% 15% 9% 12% 53% 59% 43% 55% Global Local Market Global Local Market
MEMBERS THINK INVESTMENT OPPORTUNITIES IN THE COMING THREE YEARS WILL BE BEST IN SAUDI ARABIA, UAE, AND QATAR How would you rate the investment opportunities in each of the following countries in the coming 3 years? Poor 1 + 2 3 4 + Excellent 5 4% 2% 5% 11% 15% 16% 17% 19% 29% 32% 35% 35% 51% 57% 54% 64% 47% 85% 83% 79% 47% 19% 41% 42% 19% 51% 34% 30% 33% 30% 29% 26% 24% 14% 11% 6% SAUDI ARABIA UNITED ARAB EMIRATES QATAR OMAN MOROCCO EGYPT TUNISIA KUWAIT LIBYAN ARAB JAMAHIRIYA JORDAN BAHRAIN LEBANON
UAE, SAUDIA ARABIA AND QATAR WILL SEE THE STRONGEST ECONOMIC GROWTH IN THE MENA REGION IN 2014 Countries Expected to Experience the Strongest Economic Growth in 2014 Rank 3 Rank 2 Rank 1 18% 28% 25% 29% 28% 36% 42% 28% 21% 3% 10% 1% 3% 5% 2% 1% 1% 3% 4% 1% 1% 2% 1% 1% 1% 3% UAE Saudi Arabia Qatar Libya Egypt Kuwait Morocco Tunisia Bahrain Jordan Lebanon Oman
OPEN-END COMMENTS What does Jordan need to do most to ensure long-term sustainable growth? Other Keep asking other countries for handouts. Don't build two monstrous towers in the middle of a residential area then keep them lingering when the contractor goes bust. Political environment What impact, if any, will the following have on the MENA economies in 2014? Other Better Corporate Governance Governance Improved personal freedom and human rights Real Estate Regulations reducing governments corruption Transparency Additional Comments Corruption and ignorance are the main lesion in our region; once we get rid of these tumors we might witness a significant growth and prosperity rates For sustainable growth, regional economies need to diversify from their dependence on Hydrocarbon income. However, new source of income such as industries should not be based on subsidies or protections, rather they should be capable of competing at global level. / The mind set of the local population need to change. Rather than looking for protected jobs in public sector and they should be prepared ( through education) to take competitive roles in private sector. Good technology for the questionnaire. Well done. I just hope that I get an opportunity to use my CFA charter to move to a better front office role in the improved economic environment There is risk of social revolution in Saudi Arabia that nobody talks about.
ABOUT THE STUDY Global Market Sentiment Survey 2013 15
ABOUT THIS SURVEY To coincide with the 2014 Middle East Investment Conference held in Jordan on 9-10 April 2014,, in collaboration with member societies in the Middle East, conducted a survey to gather opinions on market issues in the Middle East and North Africa (MENA) region to raise the profile of members, societies, and and build meaningful dialogue within the region. METHODOLOGY An online survey was conducted from 23 February to 20 March 2014. CFA Institute members and those with charters pending in 12 countries across the Middle East and Northern Africa were invited to participate in the survey, totaling 1,818. 98 responded, for an overall response rate of 5% and a margin of error of ±9.6%. The survey consisted of thirteen questions in total.
RESPONDENT PROFILE Region North Africa, 6% Middle East, 94% Country UNITED ARAB EMIRATES 40% SAUDI ARABIA 16% BAHRAIN 9% KUWAIT 9% LEBANON 9% JORDAN 6% EGYPT 3% MOROCCO 2% OMAN 2% QATAR 2% TUNISIA 1%
RESPONDENT PROFILE Years with the Charter Top Job Functions Corporate Financial Analyst 16% Portfolio Manager 15% No Charter, > 20 years, 18% 1% 16-20 years, 1% < 2 years, 29% Chief-Level Executive Research Analyst 9% 10% 11-15 years, 10% Financial Advisor 9% 6-10 years, 15% 2-5 years, 26% Risk Manager Investment Banking Analyst 8% 8% Relationship Manager 2% Consultant 2%
ABOUT CFA INSTITUTE is the global association of investment professionals that sets the standard for professional excellence and credentials. The organisation is a champion for ethical behaviour in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors interests come first, markets function at their best, and economies grow. has more than 110,000 members in 138 countries and territories, including over 103,000 CFA charterholders, and 138 member societies. For more information, visit www.cfainstitute.org. QUESTIONS? Media inquiries: Nicole Haroutunian Public Relations Manager nicole.haroutunian@cfainstitute.org Survey inquiries: Lisa Schuetz Manager, Market Intelligence lisa.schuetz@cfainstitute.org
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