The MENA region rebounded in tandem with global markets during the second quarter with Saudi (+11%) pulling the region higher. However, the rebound was less sharp in the region and some peripheral markets (Morocco -1%, Oman +2%) failed to join in the rally. The positive mood on the Saudi exchange was supported by foreign flows, as the last tranche (estimated at USS$ 1 billion) of inclusion by FTSE in its Emerging Markets index was implemented. Performance was also strong in Dubai (+17%) as the Emirate was fast tracking its re-opening process and announced plans to allow tourists into the country from July. Dubai was expected to receive around 20 million tourists in 2020 and the sector accounts for over 10% of its GDP. Kuwait staged a strong rally at the end of the quarter, as MSCI confirmed the country’s inclusion in its Emerging Markets index by November this year.

It is interesting to note that much of the recovery that has taken place in equity markets has been concentrated in the developed markets and China. We have not yet seen this effect follow through fully to smaller frontier and emerging markets.  A potential scenario would be that we see a catch up effect in the coming quarters, and this would certainly benefit the FMG MENA Fund.


Domicile: Malta

Sources: Bloomberg LP, MSCI