China to beat U.S. economic influence in MENA: CFA survey

China will have the most positive foreign economic impact on the Middle East and North Africa (MENA) over the next five years, according to nearly half of respondents to the CFA Institute’s Middle East and North Africa Market Sentiment Survey.

The results are based on feedback from nearly 200 regionally based investment professionals from 11 countries.

Key findings include:

50% believe political stability and good corporate governance will have the most positive impact on the regional economy, followed by increased investment in infrastructure and SME’s, development of the private sector and improved capital markets regulation.
34% of respondents believe Saudi Arabia will experience the strongest economic growth in 2013, followed by 33% for Qatar and 23% for the UAE.
49% believe the Arab Spring will create decreased economic growth rates for the region generally over the next five years. 38% thought there would be overall growth.
46% believe that China will have the most positive foreign economic impact on the region over the next five years, followed by the U.S. at 24%, the European Union at 12% and India at 9%.
Freedom of labor and capital across the region are the biggest factors to help stimulate investment, according to 56% of respondents, followed by regulatory alignment across the MENA region with 47%. Creating an economic trading union (34%), a single capital market (19%) and a single currency (11%) were identified as the other major factors.
57% of respondents think the primary focus for regulators in 2013 should be the protection of investors, followed by the reduction of risk (35%).
One quarter of respondents (25%) think equities generally will be the most undervalued asset over the next 12 months.
Employment growth expectations for 2013 are spread across a number of areas with respondents estimating that the MENA financial services sector will see growth in private equity (39%), real estate (38%), commercial banking (35%), asset management (28%), sovereign wealth funds (26%), investment banking (24%) and insurance (22%).
70% said improved corporate governance practices and transparency are the two biggest issues to increase investor trust and confidence across all markets in MENA. This is followed by investor education (47%), as well as enforcement, improved trading rules and sufficient deterrents, which secured 46%.

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