From a foreign policy perspective, the MENA region was once considered predictable. That is no longer true, and investors have taken notice. They cannot afford not to, as the notable absence of key players at the so-called “Davos in the desert” forum – the Future Investment Initiative conference held in Riyadh, Saudia Arabia in October – highlighted.
Turkey, the former darling of foreign investors, had a turbulent 2018 that at the height of the crisis saw its currency plunge 40% in value against the US dollar.
It has since recovered, but these incidents show that geopolitical risks are ingrained in the DNA of the region. It is not for the timid investor, but then that is often the trade-off for access to attractive returns.
Few emerging markets are driven up or down by one simple theme or story. Instead, there is often a complex mix of different moving parts, and the MENA region is no exception.
Both Iran and Turkey have experienced heightened tensions with the US – something other countries will find familiar. Whereas Turkey has experienced a respite following the release of a US pastor, Iran has been faced with yet more sanctions and the European Union is scrambling to keep the nuclear deal with Tehran on track.
The question every investor will be asking is: what’s next?
Romil Patel, editor, Funds Global MENA
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