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Albena Georgieva, Executive
Producer of the marcus evans
Middle East Investments Summit
2011, shares her views on key
investment trends for 2012 and
looks behind the curtain of the
region’s most respected event for
local institutional investors.
As the Arab Spring enters its second
year, Middle East equity markets are
down substantially. Adding to the
pressures on the region are declining
commodity prices and the contagion
effects of the eurozone crisis. What
would 2012 hold for Middle East
institutional investors?
The fifth annual marcus evans
Middle East Investments Summit
2011, which took place on 23 - 24
November 2011 in Dubai, UAE,
provided a closed-door platform for
over 80 carefully selected Middle East
family offices, insurance companies
and private banks. Participants had an
opportunity to discuss asset allocation
trends for 2012, as well as update
themselves on the latest in risk
management and Islamic finance.
Understanding that the world is not
going through a cyclical crisis is
the most crucial piece of knowledge
Middle East investors would need
to survive the turmoil, agreed
summit attendees. There is very little
idiosyncratic risk left in global
markets, and with a prevalence of
systematic risk, MENA institutional
investors must assess the size of their
risk positions, acquire an accurate
liquidity view and ensure effective use
of leverage.
Not far behind in importance is
systemic risk. If general distress in
MENA capital markets is paired with
the potential externalities of financial
institutions, a disruption in the real
economy would be unavoidable. It is
therefore paramount for Gulf
economies to gauge the impact of large
defaults, as well as monitor
fundamentals and fund flows to
determine systemic hot spots.
Risk management would remain high
on the agenda of Middle East
institutional investors, it was
highlighted in summit discussions. It is
imperative to limit downside risk by
using various floors. Diversification is
no longer a free lunch for all – it gives
no benefit in the short term, as shown
in recent studies of correlation.
One solution suggested at the marcus
evans Middle East Investments
Summit is to invest conservatively for
short periods of time. According to
another speaker, the current reality is
one of passive aggressive investing.
Investors tend to hold cash and invest
small amounts in very risky assets. If
Middle East investors can reverse this
mindset, they would be able to take
advantage of other people’s loss
aversion. According to a behavioural
finance expert who presented at the
summit, people hate losing twice more
than they like winning. MENA
institutional investors should therefore
aim for slow and steady returns.
Short-sightedness is a cause of risk,
most attendees agreed, because it
creates illusory wealth. Islamic finance
promises to remove “imaginary”
products by relying on the two pillars of
realism and ethicality. Islamic finance
can without doubt bring diversification to
Middle East institutional portfolios, but it
must deliver to value chain expectations.
While Sharia’a investing can easily
complement conventional finance,
Islamic finance experts must work to
resolve the form and substance issue.
For a big part of the audience at the
marcus evans Middle East
Investments Summit, real value can
be found in investing for the 80 per
cent economy, focusing on job creation
and the daily well-being of ordinary
people during times of turmoil.
Social development, transportation and
healthcare in the MENA region were
highlighted as main themes for 2012,
but governance transparency
re main s an issue, as man y
management boards usually do not
change for years. With the private
sector largely underdeveloped,
domestic demographic demand is key
to capital growth for Middle East
investors. Market players should aim to
add value and stay away from sectors
with extra supply – the broker’s
business model is bust.
While a majority of the audience at the
summit was oriented towards long-
term investing, opportunistic
behaviour seems to be catching on
according to part of the speaker panel.
Fear for inflation is irrational, some
economists said, because there are no
real pressures for inflation at the
moment. However, chronic sources of
volatility are still driving up gold prices,
even though its production cost does
not justify its current value. If Middle
East institutional investors would like
to flourish in 2012, they should find a
way to take less risk and get similar
returns. Suggestions on how to achieve
this delicate balance included emerging
market bonds, investing in education,
and even distressed secondary private
equity, if there was better fee
transparency.
B. C. Forbes once said: “It is only the
farmer who faithfully plants seeds in
the spring, who reaps a harvest in the
autumn.” Middle East investors should
use the difficult transition of the Arab
Spring and global economic uncertainty
to plant those seeds in 2012 that would
bring them prosperity in the years to
come.
Should Understand
This is Not a Cyclical Crisis
Middle East Institutional Investors
The Investment Network –
marcus evans Summits group
delivers peer-to-peer information
on strategic matters, professional
t r e n d s a n d b r e a k t h r o u g h
innovations.
Please note that the Summit is a
closed business event and the
number of participants strictly
limited.
About the marcus evans Middle East Investments Summit
2011
This unique forum will take place at the Park Hyatt Dubai, UAE, 23 - 24 November
2011. Internationally acclaimed as the leading event for Middle East institutional
investors, the Summit offers much more than any conference, seminar or trade
show. This exclusive meeting will bring together esteemed institutional investing
experts and market leading solution providers for a highly focused and interactive
networking event. The Summit includes presentations on seizing attractive
investment opportunities, gearing up for new regulatory regimes, and securing
portfolio performance.
www.mei-summit.com
About marcus evans Summits
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss
strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to
individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings.
For more information, please visit: www.marcusevans.com
Upcoming Events
APAC Investments Summit - www.apacinvestmentssummit.com
Elite Summit - www.elitesummit.com
Private Wealth Management Summit - www.privatewealthsummit.com
UK Pensions & Investments Summit - www.ukpensions-summit.com
US Pensions Summit - www.uspensions-summit.com
To view the web version of this interview, please click here: www.mei-summit.com/AGPostEventPressRelease
Contact
Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits
Division
Tel: + 357 22 849 313
Email: press@marcusevanscy.com
For more information please send an email to info@marcusevanscy.com
All rights reserved. The above content may be republished or reproduced. Kindly
inform us by sending an email to press@marcusevanscy.com

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Middle East Institutional Investors Should Understand This is Not a Cyclical Crisis - Interview with: Albena Georgieva - Middle East Investments Summit

  • 1. Albena Georgieva, Executive Producer of the marcus evans Middle East Investments Summit 2011, shares her views on key investment trends for 2012 and looks behind the curtain of the region’s most respected event for local institutional investors. As the Arab Spring enters its second year, Middle East equity markets are down substantially. Adding to the pressures on the region are declining commodity prices and the contagion effects of the eurozone crisis. What would 2012 hold for Middle East institutional investors? The fifth annual marcus evans Middle East Investments Summit 2011, which took place on 23 - 24 November 2011 in Dubai, UAE, provided a closed-door platform for over 80 carefully selected Middle East family offices, insurance companies and private banks. Participants had an opportunity to discuss asset allocation trends for 2012, as well as update themselves on the latest in risk management and Islamic finance. Understanding that the world is not going through a cyclical crisis is the most crucial piece of knowledge Middle East investors would need to survive the turmoil, agreed summit attendees. There is very little idiosyncratic risk left in global markets, and with a prevalence of systematic risk, MENA institutional investors must assess the size of their risk positions, acquire an accurate liquidity view and ensure effective use of leverage. Not far behind in importance is systemic risk. If general distress in MENA capital markets is paired with the potential externalities of financial institutions, a disruption in the real economy would be unavoidable. It is therefore paramount for Gulf economies to gauge the impact of large defaults, as well as monitor fundamentals and fund flows to determine systemic hot spots. Risk management would remain high on the agenda of Middle East institutional investors, it was highlighted in summit discussions. It is imperative to limit downside risk by using various floors. Diversification is no longer a free lunch for all – it gives no benefit in the short term, as shown in recent studies of correlation. One solution suggested at the marcus evans Middle East Investments Summit is to invest conservatively for short periods of time. According to another speaker, the current reality is one of passive aggressive investing. Investors tend to hold cash and invest small amounts in very risky assets. If Middle East investors can reverse this mindset, they would be able to take advantage of other people’s loss aversion. According to a behavioural finance expert who presented at the summit, people hate losing twice more than they like winning. MENA institutional investors should therefore aim for slow and steady returns. Short-sightedness is a cause of risk, most attendees agreed, because it creates illusory wealth. Islamic finance promises to remove “imaginary” products by relying on the two pillars of realism and ethicality. Islamic finance can without doubt bring diversification to Middle East institutional portfolios, but it must deliver to value chain expectations. While Sharia’a investing can easily complement conventional finance, Islamic finance experts must work to resolve the form and substance issue. For a big part of the audience at the marcus evans Middle East Investments Summit, real value can be found in investing for the 80 per cent economy, focusing on job creation and the daily well-being of ordinary people during times of turmoil. Social development, transportation and healthcare in the MENA region were highlighted as main themes for 2012, but governance transparency re main s an issue, as man y management boards usually do not change for years. With the private sector largely underdeveloped, domestic demographic demand is key to capital growth for Middle East investors. Market players should aim to add value and stay away from sectors with extra supply – the broker’s business model is bust. While a majority of the audience at the summit was oriented towards long- term investing, opportunistic behaviour seems to be catching on according to part of the speaker panel. Fear for inflation is irrational, some economists said, because there are no real pressures for inflation at the moment. However, chronic sources of volatility are still driving up gold prices, even though its production cost does not justify its current value. If Middle East institutional investors would like to flourish in 2012, they should find a way to take less risk and get similar returns. Suggestions on how to achieve this delicate balance included emerging market bonds, investing in education, and even distressed secondary private equity, if there was better fee transparency. B. C. Forbes once said: “It is only the farmer who faithfully plants seeds in the spring, who reaps a harvest in the autumn.” Middle East investors should use the difficult transition of the Arab Spring and global economic uncertainty to plant those seeds in 2012 that would bring them prosperity in the years to come. Should Understand This is Not a Cyclical Crisis Middle East Institutional Investors
  • 2. The Investment Network – marcus evans Summits group delivers peer-to-peer information on strategic matters, professional t r e n d s a n d b r e a k t h r o u g h innovations. Please note that the Summit is a closed business event and the number of participants strictly limited. About the marcus evans Middle East Investments Summit 2011 This unique forum will take place at the Park Hyatt Dubai, UAE, 23 - 24 November 2011. Internationally acclaimed as the leading event for Middle East institutional investors, the Summit offers much more than any conference, seminar or trade show. This exclusive meeting will bring together esteemed institutional investing experts and market leading solution providers for a highly focused and interactive networking event. The Summit includes presentations on seizing attractive investment opportunities, gearing up for new regulatory regimes, and securing portfolio performance. www.mei-summit.com About marcus evans Summits marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings. For more information, please visit: www.marcusevans.com Upcoming Events APAC Investments Summit - www.apacinvestmentssummit.com Elite Summit - www.elitesummit.com Private Wealth Management Summit - www.privatewealthsummit.com UK Pensions & Investments Summit - www.ukpensions-summit.com US Pensions Summit - www.uspensions-summit.com To view the web version of this interview, please click here: www.mei-summit.com/AGPostEventPressRelease Contact Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division Tel: + 357 22 849 313 Email: press@marcusevanscy.com For more information please send an email to info@marcusevanscy.com All rights reserved. The above content may be republished or reproduced. Kindly inform us by sending an email to press@marcusevanscy.com