Middle Eastern growth remains a long way behind Asia, but there are positive signs for the region, according to panelists at Private Banking World Middle East 2012.
An increase in capital inflows to the region is expected, said Stuart Croker, global head of the private banking group, ADIB, with money coming from local families, expatriates, and a growth in demand for investment products from the region, such as Shariah funds.
"A lot of money that was offshore has been repatriated," he said. A number of international banks have shut down their regional offices and returned home. This has left investors disillusioned with them and looking more locally, he added.
"There is money in the system," he said, with a large number of ultra high net worth individuals in the region. They are increasingly looking for ethics, not just mathematics, in their investment decisions, he said.
Another positive factor is that it is getting easier to do business in the Middle East, according to Crocker. The UAE now ranks as the 40th easiest place to do business globally, he said.
Trade with Asia is growing considerably, added Arnaud Leclerq, head of the Middle East, Eastern Europe, and Central Asia, at Lombard Odier. China is now the second largest trade partner of Saudi Arabia, he said, and could become number one. Around 6.4 percent of Middle Eastern wealth is overseas, he said, and the return of this to the region depends on stability. Typically, Middle Eastern investors have been older patriarchs, but now younger family members are beginning to take over as the decision-makers. This has caused something of a "back-to-basics" shift, he said.
© MENA Fund Review 2012
