Middle East ETFs: A Good Area to Invest? | ETF Trends

The Middle East seems to be unfazed by the global economic crisis and investors are putting more money into the region. But has near-term sentiment toward the region’s exchange traded funds (ETFs) turned bearish?

In a survey conducted by the Foreign Investment Office of the Dubai Department of Economic Development, Dubai is still attracting maximum foreign direct investment, writes Babu Das Augustine for Gulf News. A preliminary study report also showed that international companies see Dubai as a essential stepping stone into the Middle East and north Africa region. [The Vast Appeal of Frontier Market ETFs.]

Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy, stated that they are enacting new laws and updating regulations to increase investor confidence. Investors are attracted by Dubai’s economic maturity, the ability to build a strong infrastructure and the country’s business-savvy approach and innovations.

Saudi Arabia is still the largest foreign direct investment location for the region, followed by the UAE.

However, equity funds that invest in the region are holding around a quarter of their assets in cash, which suggests that there may not be enough viable opportunities for sustainable growth, reports Dinesh Nair for Reuters. Some asset managers comment on the dearth of sophisticated market strategies and techniques in the region.

Observers remain bullish on the region for the long-term, pointing to the fact that Africa/Middle East region is on the verge of becoming a collective of industrial economies. [Frontier Market ETFs: Growth With a Side of Risk.]

For more information on the Middle East, visit our Middle East category. ETFs aimed at the Middle East and Africa have been faring well in recent months, as you can see below:

  • Claymore/BNY Mellon Frontier Markets ETF (NYSEArca: FRN): Up 14.6% in the last three months; holds 14.5% in Egypt and 6.4% in Lebanon
  • SPDR S&P Emerging Middle East & Africa ETF (NYSEArca: GAF): Up 9.9% in the last three months; holds 23.3% in Israel; 6.5% in Morocco; 5% in Egypt
  • Market Vectors Africa Index ETF (NYSEArca: AFK): Up 6.7% in the last three months; holds 18.6% in Egypt; 18.6% in Nigeria; 12.1% in Morocco
  • WisdomTree Middle East Dividend ETF (NYSEArca: GULF): Up 5.1% in the last three months; holds 31.9% in Kuwait; 24.2% in Qatar; 18.4% in UAE; 10.1% in Egypt; 1.2% in Dubai
  • Van Eck Market Vectors Gulf States ETF (NYSEArca: MES): Up 12% in the last three months; holds 40.7% in Kuwait; 24.1% in Qatar; 16.8% in UAE

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.