MENA

What is MENA?
Term MENA, for "Middle East and North Africa", is an acronym often used in academic, military planning and business writing. covers an extensive region, from Morocco to Iran, incl. majority of Middle Eastern and Maghreb countries. Roughly synonymous with the term Greater Middle East (also sometimes taken to include Pakistan, Afghanistan, or both). Population of the MENA region at its least extent is about 381 million people, about 6% of the total world population. At its greatest extent, its population is roughly 523 million Basic States (19 countries / states): Algeria Bahrain Egypt Iran Iraq Israel Jordan Kuwait Lebanon Libya Morocco Oman Palestine Qatar Saudi Arabia Syria Tunisia United Arab Emirates Yemen Could also include (13) Armenia Azerbaijan Cyprus Djibouti Malta Mauritania Nagorno-Karabakh Northern Cyprus Sahrawi Arab Democratic Republic Somalia Somaliland Sudan Turkey MENA region has 60% of the world's oil reserves and 45% of the world's natural gas reserves

Frontier Markets?
The term frontier markets was coined by the International Finance Corporation (IFC), a private sector arm of the World Bank Group, in 1992 to reflect a subset of emerging market economies In 2000, Standard & Poors (S&P) bought the IFC Emerging Markets Database and has continued to use the term frontier markets. Subset of these emerging markets that are smaller and less liquid than the more advanced emerging markets. The list of countries in each frontier markets index changes based on a variety of issues, such as those described above MSCI index includes 31 countries as Frontier markets FTSE has 25 countries and criteria are: Must be a formal and independent stock market authority that actively monitors the market. Should be no objection to or significant restrictions or penalties applied on repatriation of capital and income. Transparency: should be market depth information, visibility and a timely trade reporting process and a requirement of international price dissemination. Settlement: should be rare incidence of failed trades. Clearing and Settlement period shorter than T+7 (and greater than T+1).

Frontier Markets?
Country Argentina Trinidad & Tobago Jamaica Bosnia Herzegovina Bulgaria Croatia Estonia Lithuania Kazakastan Romania Serbia Slovenia Ukraine Bangladesh Pakistan Sri Lanka Vietnam MSCI Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y FTSE Y Country Botswana Ghana Kenya Mauritius Tunisia Nigeria Zimbabwe Bahrain Jordan Kuwait Lebanon Oman Qatar UAE Cote DIvoire Cyprus Jordan MSCI Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y y Y Y Y Y Y FTSE Y Country Macedonia Malta Slovakia FTSE Y Y Y

Current environment
Four main channels for MENAs vulnerability to the global economic scenario 1. Uncertainty in oil price trajectory 2. Weakening external demand from US/European markets (weakening demand for non-oil exports & downward trend in tourism) 3. Adverse re-pricing of Middle East risk (Rising yields in distressed developed markets and a decrease in global risk appetite could affect regional economies which import capital. Portfolio flows into North Africa, particularly Egypt, have negatively impacted. Companies and economies facing large refinancing requirements, such as Dubai, will also likely find financial conditions less accommodative) 4. Volatility and weakness in global asset markets (The Middle East as a whole and the GCC in particular is a major exporter of capital, and regional sovereign wealth funds (SWFs), whose combined assets estimated to US$1 trillion are heavily invested in global asset markets, including those of the developed economies. As valuations tumble, the balance sheet impact on Middle East sovereigns is potentially large. although transient with SWF strategies being largely long-term investors, sovereign liquidity may suffer as a result, reducing their near term spending power Best line of defense for the region Wealth: GCC countries have ample fiscal space to pursue counter-cyclical fiscal policy. Countries have ability to de-link expenditures from volatile oil revenues given fiscal surpluses of ~USD 1 Trillion

Trade with Asia

Trade between ME and Asia has grown 700% in past decade: Share of Asia is now 50% (from 10%) Talk of New Silk Road & potentially reducing the dependency of ME on the industrialised world Asia as source of food, consumer goods, labour, investment and services (construction) Asia is largest oil market (60% of total oil) but at par with Europe & US for non-oil exports (~25%) Potential non-oil trade: Dubai is well positioned to act as a transport and logistics centre for South-South trade, and a hub for services to launch into western and southern Asia. Developing downstream industries, such as petrochemicals, plastics and fertilizers, which should give them greater non-oil market share in Asia in the future. Investments from oil-rich countries into Asia are increasing, giving these a greater equity stake in Asian growth.

UAE
Key macro drivers Abu Dhabi fiscal strength supportive of long-term growth Dubais hub position to drive long-term growth Dubai exposed to turn in global conditions

Abu Dhabi
Key macro drivers Abu Dhabi fiscal strength supportive of long-term growth Dubais hub position to drive long-term growth Dubai exposed to turn in global conditions Current conditions Many projects put on hold in construction sector. E.g., TDIC, Abu Dhabis state-owned tourism and real estate development company, has reportedly cancelled tenders for the planned Guggenheim Museum on Saadiyat Island According to MEED data, Abu Dhabi has put on hold around US$75bn worth of projects since April 2010, 91% of which are in the real estate/construction sectors. According to MEED, new contract awards in the second quarter of the year fell by 81%, to US$843mn, compared with the first three months of the year Government is shifting focus away from high-end real estate and tourism towards delivering on housing for its citizens In April of this year, the Abu Dhabi government announced a major Emirati Housing initiative, with 7,500 new homes being built for Emirati families across the emirate.