In Dubai, United Arab Emirates, fighter jets will be the focus at an upcoming airshow as Arab countries update their military might, reports Stefania Bianchi for The Wall Street Journal. According to consultancy Frost & Sullivan, defense spending in the Middle East could go above $100 billion by 2010, or 11% of global arms deals. Many leading arms companies believe the region is the up-and-coming place for defense spending.

Saudi Arabia and the U.A.E. are both using defense deals to offset unemployment and diversify away from their predominantly oil-related economies.

The long-term goals of the Arabian Gulf region will be brought on by robust local economic fundamentals, strong political will, a resourceful business tourism profile, continued healthy regional demand and expanding air access, writes Mohamed Tamer for Global Arab Network.

Tourism is seen as a rising key industry in the region and groups like ADTA, which manages the tourism industry in the Arabian Gulf emirate, are trying to entice travelers to consider the Middle East a must-see locale.

Marriott International (NYSE: MAR) announced the signing of five hotels to the Middle East & Africa Region, according to CNNMoney. Ed Fuller, president & managing director international lodging for Marriott, sees that “the Middle East appears to have weathered the global economic storm” and they “look forward to rising occupancies through the end of this year and into the next.” (Frontier markets the next big thing?)

For more information on the Middle East, visit our Middle East category.

• WisdomTree Middle East Dividend  (NYSEArca: GULF): up 6.1% year-to-date; Qatar is 31.8%, U.A.E. is 18.9%, Egypt is 17.4%, Kuwait is 15.5%, Morocco is 9.7%, Oman is 3.9%, Jordan is 2.9%

• Market Vectors Gulf States (NYSEArca: MES): up 8.9% year-to-date; Kuwait is 47.7%, U.A.E. is 25.5%, Qatar is 18.0%, Oman is 4.0%, Germany is 2.4%, Bahrain is 1.3%, Norway is 1.1%

Max Chen contributed to this article.

In the last couple of years, Turkey economy has been augmented by increased exports to its Middle East and north African neighbors, extending pipelines for transferring energy, more air traffic and a number of infrastructure projects, according to The Economist. (Does Turkey need more support?)

Turkey is starting to utilize the soft power of trade and historical links to stabilize the country’s position in the Middle East. Reform needed to meet EU membership has prodded the government to look inward and what resulted was a greater stability in the region.

The realignment of interests has allowed Turkey to gain greater ties with its Muslim neighbors, and the country help bridge the Western countries with the Middle East.

The European Commission estimated Turkey’s GDP will contract 5.8% this year, followed by a 2.8% growth for 2010 and a 3.6% growth for 2011, as stated in Hurriyet Daily News and Economic Review. The commission also expected public debt-to-GDP ratio to rise above 51% of GDP in 2011

The Turkish economy was constrained by exports and investments, which dropped 8.5% and 17.6% respectively, as well as a 5.3% decline in private consumption. The banking sector is well-capitalized but loan growth is decelerating, which could slow the recovery of private consumption and investment. High requirements for public sector borrowing may further limit credit for the private sector.

For more information on Turkey, visit our Turkey category.

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR): up 83% year-to-date

• Market Vectors Gulf States ETF (NYSEArca: MES): up 11.9% year-to-date

Max Chen contributed to this article.

The Economist states that cell phones have a different role in developing countries than they do in industrialized nations. Cell phones are giving many of the world’s poor their first exposure to telecommunications. In the developed world, cell phones generally are just extensions to existing land lines.

What has the expansion of cell phones in emerging markets meant for the industry and these countries?

• A recent study showed that adding 10 cell phones per 100 people in a typical developing country will boost GDP growth by 0.8% per person.
• The spread of mobile phones in developing countries has been accompanied by the rise of home-grown mobile operators in China, India, Africa and the Middle East. These providers rival the providers in the West. (What’s next for global telecom?)
• The emergence of China’s two leading telecom equipment-makers, Huawei and ZTE, have entered the global stage in the past five years and now have a growing reputation for quality and innovation, prompting a shakeout among the incumbent Western equipment-makers (How to play China’s telecom boost ).
• The development of new phone-based services, beyond voice calls and basic text messages, are now becoming feasible.. The services tend to center around agricultural advice, health care and money transfer – things that could deliver enormous benefits to residents of poor nations.

For more stories on the telecommunications industry, visit our telecommunications category.

• iShares S&P Global Telecommunications (NYSEArca: IXP): up 6.9% year-to-date

• SPDR S&P International Telecom (NYSE: IST) is up 11% year-to-date

Kevin Grewal contributed to this article.

Turkey. Turkey is rapidly developing and there’s no indication that the economy needs aid from the International Monetary Fund (IMF). Growth in the economy could likely accelerate in 2011 after a return to growth in 2010. Turkey’s market index has been driven up by the banking sector, which makes up around 40% of the market. Bank earnings have been bolstered by a series of rate cuts that have reduced interest on customers’ deposits as lending rates remain high. (Does Turkey need more support?)

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR): up 179% since low; up 101.6% year-to-date

Russia. Next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected. Economists believe Russia’s GDP growth may gain a foothold as soon as the fourth quarter because of fiscal stimulus. Additionally, the economy will pick up speed once oil prices increase and world economies recover. The Russian economy is dominated by resources and banking. (Russia’s potential stumbling blocks).

• Market Vectors Russia (NYSEArca: RSX): up 161% since low; up 139.5% year-to-date

Brazil. Brazil could sustain average annual economic growth of 5% over the next 10 years. Low inflation and sound fiscal policy have released a tide of investment in Brazil. For now, Brazil’s small-caps are benefiting from the carry trade. Companies are hiring workers to meet growing demand for manufactured goods and new homes. In 2010, Brazil’s economy is expected to grow 4.4%; this year, growth is expected to be around 0.12%. (Seven things to like about Brazil).

• iShares MSCI Brazil Index (NYSEArca: EWZ): up 125% since low; up 114% year-to-date

India. The Indian Prime Minister’s Economic Advisory Council expects the GDP to expand 6.5% to 6.75% in 2009-10, despite a potential decline in agricultural output. Inflationary concerns may be met by tighter monetary and fiscal policies in the coming months. Factors such as capital flows, domestic demand, portfolio flows and a strong savings rate have India in a good position to continue moving forward. (Why India could strengthen).

• WisdomTree India Earnings (NYSEArca: EPI): up 138% since low; up 88.2% year-to-date

Indonesia. A young population and a falling birth rate equate to a surge in the ratio of working population to the number of dependents. Circumspect fiscal policy has left the government with enough cash for infrastructure and public services. Indonesia may enjoy a period of political stability and does not rely too heavily on exports. Declining interest rates have helped boost consumption, which is around 60% of GDP. (Five points in Indonesia’s favor).

• Market Vectors Indonesia ETF (NYSEArca: IDX): up 180% since the low; up 155.6% since Jan. 20 inception

Max Chen contributed to this article.

Over the next three-to-nine months, frontier markets are anticipated to outperform the emerging and developed markets, reports Allen Wan for Bloomberg. The Middle East is in a position to lead the way, since the region has not yet recovered from the global market meltdown, making valuations cheap. The region’s equities are expected to catch up as corporate earnings improve. (Read about five risks to the Middle East economy).

A frontier market is generally a country that is fairly poor. An example is most of Africa. (Four reasons Africa is appealing).

The markets are usually locked up with little or no liquidity, but they can be a good diversification tool for investors. They can be long-term uncorrelated investments and they have enormous potential for growth. There are currently 28 countries listed as frontier markets, reports IS for Intelligent Speculator. (Read about MSCI’s latest review of these markets).

For more stories about frontier markets, visit our frontier market category.

• Claymore/BNY Mellon Frontier Markets (NYSEArca: FRN): up 57.2% year-to-date

• PowerShares MENA Frontier Markets (NYSEArca: PMNA): up 24% year-to-date

• Market Vectors Gulf States (NYSEArca: MES): up 24.9% year-to-date

• WisdomTree Middle East Dividend (NYSEArca: GULF): up 17.4% year-to-date

• SPDR S&P Emerging Middle East & Africa (NYSEArca: GAF): up 49.8% year-to-date

• Market Vectors Africa (NYSEArca: AFK): up 43.5% year-to-date

Foreign direct investment (FDI) has pushed Israel’s Tel Aviv 100 (TA100)  into positive territory in the past 12 months, and the index is now outperforming the S&P 500 by more than 20%, writes Daniel Harrison for IndexUniverse. Between May to July, FDI made up $1.02 billion of share purchases, which allowed TA100 to experience 60% in value year-to-date.

Many investors see the potential in Israel’s high-tech, chemical, metal and service industries. Some index investors are uncertain whether the country should be categorized as an emerging market or a developed country, although it was upgraded to developed by FTSE Group last year.

There are also more broad-based ETFs that include a small weighting of Israel, but these portfolios tend to have volatile, high-growth countries that overshadow Israel’s exposure. There are two ways to invest in Israel: The ETF iShares MSCI Israel Cap Invest Mkt Index (NYSEArca: EIS) or the closed-end fund (CEF) First Israel Fund Inc. (AMEX: ISL). Both invest in Israel-listed securities.

• ISL trades at a discount to its net asset value (NAV), which makes it more attractive to bargain seekers. The fund, however, contains a 10.4% exposure to venture capital projects, which could make the fund riskier but potentially more profitable.
• ISL is seen as more diversified, with 49% of its capital invested in the fund’s top 10 holdings. The largest holding is Teva Pharmaceutical Industries (NasdaqGS: TEVA) at 12.6%. The fund is also more heavily weighted in financials, with 31.9% focused on commercial banks, venture capital investment funds and insurance.
• EIS has a higher stack in TEVA at 23%. It should be noted that pharmaceutical companies are more defensive plays compared to higher-growth sectors. Financials make up around one-fifth of EIS’s weightings.

• iShares MSCI Israel Cap Invest Mkt Index (NYSEArca: EIS): up 59.4% year-to-date; expense ratio of 0.63%
• First Israel Fund Inc. (AMEX: ISL): up 69.5% year-to-date; expense ratio of 1.7%

For more information on Israel, visit our Israel category.

Max Chen contributed to this article.

International Monetary Fund Chief Dominique Strauss-Kahn stated that there is “no need now” for Turkey to agree on a loan deal, but the IMF is open to dealings if the case presents itself, writes Ibon Villelabeitia for Reuters. Turkey is rapidly developing and has a strong economy, with no indication that the economy needs aid from the IMFat this point, Strauss-Kahn said.

An increase in investor confidence has allowed the Turkish government to revise growth and budget targets. Economists are doubtful on whether Turkey is capable of reaching the new targets without IMF financing.

The Economy Ministry revised Turkey’s 2009 economic contraction to 6%. Growth in the economy could likely accelerate in 2011 after a return to growth in 2010.

Turkey’s Central Bank cut its refinancing rate to a record low of 7.25%, reports Laura Mandaro for MarketWatch. The accompanying statement made by the monetary policy committee was “dovish” and included remarks that easing bias may remain.

• iShares MSCI Turkey Invest Mkt Index (NYSEArca: TUR)

For more stories on Turkey, visit our Turkey category.

Max Chen contributed to this article.

India’s economy is forecast to see “definite signs of recovery” in the second half of the current fiscal year, reports The Economic Times. Growth is predicted to be in the 6% to 6.5% range. But there are a number of investors who want to expand their horizons beyond the BRIC countries.

While BRIC countries have been growing and moving, the expansion of other developing nations is widening the choices investors have. For instance, Vietnam, Thailand and Turkey have all gone through growth that is every bit as significant, explains Don Dion for TheStreet.

While the idea of Vietnam or South Korea may appear refreshing if you’re looking for some fresh blood for your portfolio, it’s key to remember that emerging markets entail risk. The best thing to do is watch on the sidelines for the moving averages, then get in slowly. If you enter with a discipline and a sell point, you’ll check your emotions at the door.

As Don Dion for The Street explains, these funds can be volatile, so a small asset allocation to these funds is appropriate if you plan to take a buy-and-hold approach.

The consideration that goes into single-country ETFs is that as an investor, you are subject to politics, social traumas and reforms, and of course, concentration in a particular sector. This re-iterates the need for every investor to brush up and do some research before going in.

A sample of BRIC ETFs, and a couple alternatives:

• iShares MSCI BRIC (NYSEArca: BKF): up 66.9% year-to-date
• Claymore/BNY BRIC (NYSEArca: EEB): up 66.1% year-to-date
• Market Vectors Russia (NYSEArca: RSX): up 104.3% year-to-date
• iShares MSCI South Korea (NYSEArca: EWY): up 67.3% year-to-date
• Market Vectors Vietnam (NYSEArca: VNM): up 10% since Aug. 14 inception
• iShares MSCI Turkey (NYSEArca: TUR): up 84.3% year-to-date
• iShares MSCI Thailand (NYSEArca: THD): up 73.6% year-to-date

For more stories about BRIC ETFs, visit our BRIC category.

As per the prospectus, the funds will target six Chinese industries: consumers, financials, energy, industrials, materials and technology. What’s unique about these funds is that they will enable investors to specifically invest in specific Chinese sectors, as opposed to choosing a broader emerging market or China ETF that’s heavily invested in a range of sectors.

Luisa Beltran for Inites notes that 80% of the assets will be invested in an underlying index, while another 20% will go to futures, swaps and options.

Global X also filed for a line of single-country ETFs that will be passively managed and enable investors to grab exposure to emerging markets that can be difficult to access.  These markets include Denmark, Africa, Finland, Norway, Pakistan, Poland and the United Arab Emirates.

Global X was founded in March 2008, and they currently have 12 ETFs in registration with the SEC. Another seven are “effective,” which means that they are cleared for launch. Right now, the firm has two available ETFs that launched this year:

• Global X/InterBolsa FTSE Columbia 20 (NYSEArca: GXG): up 80.1% since Feb. 9 inception
• Global X FTSE Nordic 30 (NYSEArca: GXF): up 10.7% since Aug. 19 inception

For more stories on new ETFs, visit our new ETF category.

Kevin Grewal contributed to this article.

Frontier markets are not stable enough to be named “emerging,” but these markets do have more potential to deliver higher returns to compensate for the greater risk, remarks Will McClatchy ETFZone. Frontier markets are defined as suffering from extreme volatility, poor trading, corruption, dismal accounting and a tendency to expropriate foreign capital.

What’s so appealing about frontier investments? First, the fastest-growing countries are currently the ones that are “economically delayed.” Second, risk in frontier markets is greatly reduced when added in small amounts to a portfolio.

Some frontier market regions to consider include:

• Africa is a prime example of a frontier market. During the financial debacle, Africa did not suffer as much from the credit crunch since it was lightly leveraged. The continent also has a great amount of natural resources.
• States of the Persian Gulf and Middle East hare developing into emerging status. The oil-rich states are raking in the benefits of increasing wealth, transparency and infrastructure development.
• Eastern Europe, former Soviet satellite states and Asian countries do have some ready supply of natural resources, but some regions are corrupt and home to organized crime.
• Smaller Latin American countries like Bolivia, Ecuador and Peru are sometimes categorized as “frontier.” However, most Latin American ETFs are more weighted toward advanced economies, and single-country ETFs don’t cover all the nations.

A few of the frontier market ETFs out there include:

• Claymore/BNY Mellon Frontier Markets ETF (NYSEArca: FRN): up 42.7% year-to-date; expense ratio is 0.65%; country samplings include: Egypt, Colombia, Kazakhstan, Chile and Poland

• Market Vectors Gulf States ETF (NYSEArca: MES): up 18.2% year-to-date; expense ratio is 0.98%

• SPDR S&P Emerging Europe (NYSEArca: GUR): up 58.3% year-to-date; expense ratio is 0.6%; note that GUR has a high allocation to Russia

• Market Vectors Africa ETF (NYSEArca: AFK): up 32.2% year-to-date; expense ratio is 0.83%; country samplings include: South Africa, Nigeria, Morocco and Egypt

Fore more information on frontier markets, visit our frontier markets category.

Max Chen contributed to this article.