With Oil Prices Remaining Low, Where Are Middle East SWFs Finding Attractive Yields Locally? 2

Middle East countries are opening up to foreign investments

Investments in the technology sectors are rising in the Middle East as the region comes to terms with low oil prices. Traditionally driven by oil production, Middle East countries have been grappling with low oil prices in the past few years. Sovereign wealth funds in these countries are seeking new avenues to park their investments to lower their exposure to volatile oil markets.

In a recent interview, Barclays discussed how sovereign wealth fund investments into technology and bank mergers are driving dealmaking activity in the Middle East region as oil prices continue to stay low for longer.

Makram Azar of Barclays said in an interview with Bloomberg, “The type of deals sovereign wealth funds are looking for has changed over the years, but they continue to be active.”  These funds are looking for new avenues for investment where they can earn hefty yields. Investments in traditional sectors such as real estate and infrastructure as well as upcoming areas like e-commerce and technology related businesses are gaining traction.

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Rudolph Lohmeyer, Vice President of A.T. Kearney’s Global Business Policy Council said, “Investors clearly consider the UAE to be one of the strongest, most diversified economies in the region and value its position as a regional and global gateway.”

Foreign investors are looking for new avenues to invest in countries across the Middle East as growth expectations remain sizable. FDI inflows to Saudi Arabia have remained stable in recent years, and climbed to $11 billion in 2015. The International Monetary Fund expects GDP growth of 2.5% in 2017 and 3.1% in 2018 in the United Arab Emirates backed by government reforms promoting foreign investments and decreasing the reliance on oil.

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