For more information contact: emailus@marcusevans.com An interview with: Albena Georgieva, Executive Producer of the marcus evans Middle East Investments Summit 2011, shares her views on key investment trends for 2012 and looks behind the curtain of the region’s most respected event for local institutional investors. Join the 2014 Middle East Investments Summit along with leading regional investors in an intimate environment for a highly focused discussion on the latest investment strategies in the market. For more information contact: emailus@marcusevans.com

1. Albena Georgieva, Executive
Producer of the marcus evans
Middle East Investments Summit
2011, shares her views on key
investment trends for 2012 and
looks behind the curtain of the
region’s most respected event for
local institutional investors.
As the Arab Spring enters its second
year, Middle East equity markets are
down substantially. Adding to the
pressures on the region are declining
commodity prices and the contagion
effects of the eurozone crisis. What
would 2012 hold for Middle East
institutional investors?
The fifth annual marcus evans
Middle East Investments Summit
2011, which took place on 23 - 24
November 2011 in Dubai, UAE,
provided a closed-door platform for
over 80 carefully selected Middle East
family offices, insurance companies
and private banks. Participants had an
opportunity to discuss asset allocation
trends for 2012, as well as update
themselves on the latest in risk
management and Islamic finance.
Understanding that the world is not
going through a cyclical crisis is
the most crucial piece of knowledge
Middle East investors would need
to survive the turmoil, agreed
summit attendees. There is very little
idiosyncratic risk left in global
markets, and with a prevalence of
systematic risk, MENA institutional
investors must assess the size of their
risk positions, acquire an accurate
liquidity view and ensure effective use
of leverage.
Not far behind in importance is
systemic risk. If general distress in
MENA capital markets is paired with
the potential externalities of financial
institutions, a disruption in the real
economy would be unavoidable. It is
therefore paramount for Gulf
economies to gauge the impact of large
defaults, as well as monitor
fundamentals and fund flows to
determine systemic hot spots.
Risk management would remain high
on the agenda of Middle East
institutional investors, it was
highlighted in summit discussions. It is
imperative to limit downside risk by
using various floors. Diversification is
no longer a free lunch for all – it gives
no benefit in the short term, as shown
in recent studies of correlation.
One solution suggested at the marcus
evans Middle East Investments
Summit is to invest conservatively for
short periods of time. According to
another speaker, the current reality is
one of passive aggressive investing.
Investors tend to hold cash and invest
small amounts in very risky assets. If
Middle East investors can reverse this
mindset, they would be able to take
advantage of other people’s loss
aversion. According to a behavioural
finance expert who presented at the
summit, people hate losing twice more
than they like winning. MENA
institutional investors should therefore
aim for slow and steady returns.
Short-sightedness is a cause of risk,
most attendees agreed, because it
creates illusory wealth. Islamic finance
promises to remove “imaginary”
products by relying on the two pillars of
realism and ethicality. Islamic finance
can without doubt bring diversification to
Middle East institutional portfolios, but it
must deliver to value chain expectations.
While Sharia’a investing can easily
complement conventional finance,
Islamic finance experts must work to
resolve the form and substance issue.
For a big part of the audience at the
marcus evans Middle East
Investments Summit, real value can
be found in investing for the 80 per
cent economy, focusing on job creation
and the daily well-being of ordinary
people during times of turmoil.
Social development, transportation and
healthcare in the MENA region were
highlighted as main themes for 2012,
but governance transparency
re main s an issue, as man y
management boards usually do not
change for years. With the private
sector largely underdeveloped,
domestic demographic demand is key
to capital growth for Middle East
investors. Market players should aim to
add value and stay away from sectors
with extra supply – the broker’s
business model is bust.
While a majority of the audience at the
summit was oriented towards long-
term investing, opportunistic
behaviour seems to be catching on
according to part of the speaker panel.
Fear for inflation is irrational, some
economists said, because there are no
real pressures for inflation at the
moment. However, chronic sources of
volatility are still driving up gold prices,
even though its production cost does
not justify its current value. If Middle
East institutional investors would like
to flourish in 2012, they should find a
way to take less risk and get similar
returns. Suggestions on how to achieve
this delicate balance included emerging
market bonds, investing in education,
and even distressed secondary private
equity, if there was better fee
transparency.
B. C. Forbes once said: “It is only the
farmer who faithfully plants seeds in
the spring, who reaps a harvest in the
autumn.” Middle East investors should
use the difficult transition of the Arab
Spring and global economic uncertainty
to plant those seeds in 2012 that would
bring them prosperity in the years to
come.
Should Understand
This is Not a Cyclical Crisis
Middle East Institutional Investors

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About the marcus evans Middle East Investments Summit
2011
This unique forum will take place at the Park Hyatt Dubai, UAE, 23 - 24 November
2011. Internationally acclaimed as the leading event for Middle East institutional
investors, the Summit offers much more than any conference, seminar or trade
show. This exclusive meeting will bring together esteemed institutional investing
experts and market leading solution providers for a highly focused and interactive
networking event. The Summit includes presentations on seizing attractive
investment opportunities, gearing up for new regulatory regimes, and securing
portfolio performance.
www.mei-summit.com
About marcus evans Summits
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