Investing In The Middle East 101
So the "Middle East".... that place with a lot of camels and terrorists, right?
NO! Before even thinking of investing in the Middle East, you have to stop calling it the "Middle East".
It's Iran, Iraq, Turkey, Syria, Lebanon, Jordan, Israel/Palestine, Egypt, Saudi Arabia, Kuwait, Bahrain, Qatar, UAE (Americans call it Dubai), Oman, and Yemen.
Each country has it's own traditions, Languages (Arabic, Turkish, and Persian), and Markets.
Catch my drift? Great, now we can continue on to the Investing stuff.
First, geographically speaking there are 3 regions in the Middle East.
Egypt: it's that country with pyramids and camels (yes some of them ride camels), and their 90 million population, it has the Nile river, and the Seuz Canal, the most important waterway in the region and probably the world, great culture, and food.
Egypt has A GDP of 537 billion dollars! and imports worth of 30 billion dollars.
It's main industries are:
Textiles, Food Processing, Tourism, Chemicals, Pharmaceuticals, Hydrocarbons, Construction, Cement, Metals, and Light Manufactures.
The Second region is The Northern Middle East.
This region includes Iran, Iraq, Syria, Lebanon, Turkey, Jordan, And Palastine/Israel.
Why did I include all these different countries in one region?
Because even though they speak different languages (Arabic, Turkish, Persian, Kurdish, Syriac/Aramaic, and Hebrew), they share a common history, traditions, religious believes (Different kind of Islam from their Southern neighbors, Orthodox Christianity, And Judaism), and mostly they look and act and dress nearly the same.
The GDP of this region combined is 1.85 trillion dollars.
The main industries of this region are Agriculture, Oil and Gas, Banking (Lebanon), Tourism, Transport, Real estate, and Construction.
And then the third region in the Middle East, is the Arabian Peninsula, with Saudi Arabia, Qatar, Bahrain, Kuwait, UAE, Oman, and Yemen.
This region shares one history, one Language (Arabic), one religion (Wahhabi Islam in exception for Oman and some Shia muslims), common traditions, and They are full of sand and deserts.
The total GDP of this region combined is 2 trillion dollars.
The main industries in this region are Oil and Gas, Agriculture, Tourism, Financial Services, Pharmaceuticals, Textiles, and much more actually. This region doesn't necessarily count on Oil. For example 71% of UAE total GDP comes from non-oil sources!
So this concludes the first lesson about investing in the Middle East, this was just an introduction, more lessons are coming soon.
I'm actually curious about this kind of thing, because there's so much more than GDP that goes into making an emerging economy viable. it's totally fine to have one industry (Israel is big in pharma, Saudi Arabia big in oil), but how sophisticated are your capital markets? how's liquidity? how much of the money is individual money versus institutional? domestic vs. foreign? how trustworthy are the numbers you read from an accounting standpoint? how stable are governments? how's the financial system?
so yeah, Egypt could have a great economy with diverse businesses, but if most of the liquidity in their top stocks is a few families and you can't trust pricing or earnings reports, you're going to get fucked. I'm not saying that's how it is, I'm posing the question because I truly don't know.
Well, taking UAE as an example, the GDP per capita is 63k$.
for stability, the Arabian Peninsula is 100% stable (except for Yemen, and there's some problems happening in Bahrain as well, but not as nearly as bad as Yemen), Egypt is stable right now as well, Israel, well you know I admit it, this guys are stable, and I don't see them shaken anytime soon, Iraq and Syria are not stable at all, and Lebanon is A democratic country, stability depends on what politics can bring with it, but they are going to be better soon, Iran and Jordan are the most stable in the northern region, and no one really knows what is going to happen in Turkey, not even the best political analysts.
for market sophistication, l think you should be more specific about which industry and country we are talking about, but generally speaking the region isn't sophisticated enough, and unless we are talking about detergents, Oil, clothing, or Agriculture products, the markets are not even close to sophisticated.
And about the financial sector in the Middle East, you have Lebanon (which is called the Arab's Switzerland, because of it's Banks), with a western-type capitalist economic system.
Saudi Arabia, Oman and Kuwait, they have Islamic Financial sector, that itself needs a whole topic about.
UAE, Qatar, Bahrain, All have strong capitalist financial sectors, growing steadily more and more important regionally and worldwide.
Syria and Iraq, are Socialist countries, banks mostly are Limited by governmental regulations, they also have Islamic banks, and investment banks there shouldn't be named that.
and Jordan have a weak financial sectors, even though Jordan is somewhat capitalist, but still it's a poor country.
Israel, they have a stable and strong financial sector, nothing more needs to be said.
Turkey, Iran, and Egypt, all have stable financial sectors, diversed between normal banks and Islamic banks, they have also have free markets (with some limits in case of Iran).
liquid money can be found in all those countries, but mainly in The Gulf countries, Turkey, Israel, Egypt, and Iran.
for Egypt, they have a 90 million population, most Famous brands, market themselves in Egypt, most Arabic TV ads are made in Egyptian dialect, yes some families have a lot of money, but you can't be wrong with such a huge market, if you know what are you selling, and who are you selling to.
ask me more questions if you have any, I'll be happy answering them.
AFAIK Iran is NOT a middle eastern country and Iranians take offence when you refer to them as middle eastern.
Coming to the topic , Saudi Arabia is trying to diversify its economy and trying to move away from having Oil as its base. Think the listing of Aramco is proof of that. But still the ISIS conflict and the radical wahabbi ideology must still be a turn off I imagine
I don't think Iranians get offended by calling them Middle Easterners, because the Middle East is a more of a geographic location, and the Middle East is Geographically wider than the countries I mentioned, it actually reaches out to Libya and Somalia, and Afghanistan And Pakistan, and Sudan.
What they actually get offended by is calling them Arabs, call them that, and you'll get yourself shot (Just kidding though).
For many reasons.
First, Iranians are Persians mostly, and historically Iran is Persian, and Persians are Aryans (Iran's name is derived from Aryan), and arabs are semitic, so those are two different races.
Second, The Persians are historically the Arab's regional rivals, and after long wars, the Persian land was eventually conquered by Arab's (muslims).
Third, Iranians are Shia, while majority of Muslim arabs are Sunni, which if you heard of the Sunni-Shia conflict you'll understand the problem.