MANAMA: Financial experts are of the view that many global investors are choosing to invest in Europe, the US and emerging markets as opposed to the Arab region due to a lack of supporting legislation to ensure investors get a secure return on investment.

Panellists in a discussion entitled Identifying returns through alternative investments and private asset classes during the 18th Arab Businessmen and Investors Conference (ABIC), were in agreement that banks in the Arab region are tightening their lending operations after the 2008 financial crisis.

They said the region needs to develop legislation in order to grow alternative or non-traditional investments.

Bahrain Bourse chief executive Shaikh Khalifa bin Ibrahim Al Khalifa said Bahrain Investment Market (BIM) will be officially opened next month.

Market details will be announced soon once registration formalities are finalised, he said.

He announced plans for all Bahraini commercial banks to join Bahrain Trade to reach out to citizens and residents in order to expand their banking choices.

The Family Office founder and chief executive Abdulmohsin Al Omran said that investment companies are benefiting from technology in designing programmes and applications that allow the investor to view the investment portfolio and see the direction of the funds invested and the benefits achieved.

“Investment companies in the region usually target between six and seven per cent of profits, but conventional investments may not achieve this goal in the foreseeable future, so alternative investments are needed,” he said.

The countries of the region still need to improve the legislation related to access to finance. Although legislation regarding bankruptcy has been brought in by Bahrain, the UAE and Saudi Arabia, it is still far from the US Chapter 11 rules, which better address the issue of bankruptcy of institutions, said Mr Al Omran.

Bahrain’s social security and pension fund investment arm Osool’s chief executive Shaikh Abdulla bin Khalifa Al Khalifa said, “The traditional means of investment are still completely unregulated and contain some risk compared to conventional methods.”

He pointed out that the direction of alternative investments depends on decisions.

Some investors are interested in alternative investments, said Shaikh Abdulla stressing the importance of the government to encourage investors, especially with the presence of competition between the countries of the world.

Union of Arab Banks secretary general Wissam Fattouh said, “The alternative investment sector is now opening up to retail investors, after being restricted to institutions and private equity.”

He said that alternative investments have become the best place to invest in recent years, and that the risk factor is the decisive factor in the investor’s decision to go to non-traditional means of investment.

On the future direction of investments, Investcorp co-chief executive Hazem Ben-Gacem said that investment priorities should be set for the next 10 years.

The focus should be on infrastructure investment, which is becoming more developed in the region with more than 20 programmes in place, he said.

“There is a promising future in emerging financial markets such as Vietnam, China, India and East Asia, with hundreds of millions becoming consumers, and finally the US, which has placed itself at the heart of the Fourth Industrial Revolution,” added Mr Ben-Gacem.

The discussion was moderated by news anchor and presenter Aaron Heslehurst.

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