Saudi, Egyptian equities shine as reforms take hold

Thursday 05 July 2018 11:57 AM

Egyptian Stock Exchange
Egyptian Stock Exchange

Equities in Egypt and Saudi Arabia are becoming more attractive to Emerging Market (EM) investors as structural and economic reforms remain in full swing in the Mena region, according to a newly published white paper.
Co-authored by Emirates NBD Asset Management (Dubai) and Jupiter Asset Management (London), the paper titled “Emerging Market Equities: Index Upgrades and the Middle East” provides an analytical overview of the regional equity market in 2018, focus markets and sectors for asset allocation, and what an MSCI upgrade really means for Saudi Arabia.
The picture for emerging economies globally is now more robust, as EM equities continue to benefit from long-term tailwinds, such as demographics and rising penetration of products. These positives, against a backdrop of continued earnings growth, make a strong case for investing in emerging and frontier market equities.

In the Mena region, Saudi Arabia and Egypt currently demonstrate the most significant upside potential.

Ross Teverson, head of Strategy – Emerging Markets at Jupiter Asset Management, said: “EMs had a strong run in 2017, and this outlook remains positive. This year, only 1 per cent of the MSCI Emerging Markets Index by country weighting have a fiscal deficit likely to be over 3 per cent of GDP. Additionally, countries are now less reliant on US dollar-denominated debt. Looking at EMs from the bottom-up, there are plenty of stocks that offer compelling long-term return potential, especially within travel and tourism, financials, and technology.”