Investors who want greater diversification in their portfolios need to think globally. Keeping that in mind, investors may want to consider investing in the “Islamic Triangle” or exchange traded funds (ETFs) that cover the Middle East North Africa (MENA) area.
First off, countries in the Middle East, around half of the 20 in the Islamic Triangle area, have tied their currencies to the U.S. dollar, and the low interest rate environment in the U.S. reflates these countries faster as a result of little or no structural problems, remarks Douglas Clark Johnson for Advisor Perspectives. [Middle East ETFs: A Good Area To Invest?]
Before the crisis, countries in the region enjoyed healthy gains that were backed oil prices and liberalization of the markets. Current sideways trading may have set a stock-price floor that is ready to support any optimistic sentiments, adds Johnson. [Africa ETFs: Dogged by the Past.]
Rebalancing of local economies or strengthening activity in Europe – Europe is a major trading partner for some Mid East countries – may bring investors back to the Islamic Triangle markets. Egypt, with its strong asset quality as supported by its stronger banking sector, seems to be leading the region. Higher commodity prices, more notably oil, will also help support investor sentiment for the area. [Emerging Market ETFs Raking in Assets.]