EQUITY CAPITAL MARKETS
Right Time, Right Place The region’s markets are in a good place at this time says Arjun Mittal Founder and CIO, Abbey Road Investment Group, reflecting good fundamentals with many reasons that this success will continue
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espite heightened volatility in the equity markets this year, the Middle East has seen growth in investor confidence. Why?
I would assign the growth in investor confidence this year to three broad themes. Firstly, the region has been a beneficiary of rising energy prices, rebounding tourism and generally excellent covid management leading to an influx of capital, liquidity and talented labour. This has helped key sectors like energy, hospitality, banks and real estate to post good results and importantly point to a positive outlook going forward. This is in sharp contrast to other parts of the world where companies and governments face stern challenges. Secondly, regional equity markets did not see valuations reach the same euphoric levels witnessed in the USA and other markets. This meant they were less susceptible to a large correction or bouts of irrational investor panic. Even after the recent increase in regional indices, price-to-earnings ratios, as an example, are still showing reasonable levels of 10-15x, versus 20-25x for US indices. Finally, the Middle East has also seen some excellent IPOs in recent times - year to date approx. $13bn has been raised – and there remains a healthy pipeline of listings
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Arjun Mittal, Founder and CIO, Abbey Road Investment Group
to come. This has helped to retain regional investor confidence and also bring in new international investors. We find this all the more impressive considering it has generally been a tough year for equity markets and IPOs around the world.
Banking and Finance news in the MEA market
How do you judge the underlying fundamentals of the region in terms of the markets? Markets tend to be a good reflection of the underlying economic fundamentals, and I don’t believe the Middle East is any