Financial institutions with an existing physical presence and established relationships in the Middle East region are set to benefit most from emerging opportunities created by the Arab Spring, financial experts said Saturday. In a panel discussion at the 51st ACI Financial Markets World Congress, currently taking place at the Dubai International Convention and Exhibition Centre, leading finance experts discussed rising financial market opportunities in the wake of the Arab Spring, sparking lively debate on what the best strategies are going forward. Said Hirsh, the Middle East Economist for Capital Economics, London UK, and one of the panelists, said the opportunities beyond the initial period of unrest in certain countries could be significant, particularly in the poorer countries in need of capital investment. "Emerging financial market opportunities created by the Arab Spring varies across countries," he said. "For the resource-poor countries, particularly those hit hard by the turmoil, the opportunities beyond the initial period of unrest could be huge. "If these countries end up pursuing market-friendly economic reforms, along with legal and regulatory reforms, this would boost their growth and incomes in the medium and long-term, which would in turn attract foreign capital," he said. "If fiscal reforms are also pursued, this could transfer some of the banking assets into the private sector, which also benefits the economy," he added. Hirsh further said global and regional financial institutions should begin to think of their exposures beyond solely extending credit to major corporations and sovereign funds in the region, with those that don't take the region seriously likely to miss out. "If large countries such as Egypt and Morocco grow rapidly in the next 10 years as we expect, then there is likely to be a marked acceleration in demand for financial products, both in wholesale and retail markets," he said. "Those financial institutions that already have a physical presence and relationships in the region are set to benefit most. Others will lose out if they don't begin to take the region more seriously, in spite of the current difficulties." Farah Foustok, CEO ING Investment Management, Middle East and Africa, said the Arab Spring acted as a catalyst for Arab people to appeal to regional governments for an overhaul of the economy and increased levels of prosperity, but warned significant policy reforms still need to be implemented to attract foreign capital. "As the eyes of the global investors focus on the region, an improvement in the framework supporting governance, compliance, and risk is needed," Foustok said. "Improved transparency, communication and increased local participation in the work force will also be essential to attract foreign investment."
