Even in the best of times, the Arab World is not a place you’d normally think of as a red-hot investment opportunity.
Yet, I bet you’d be surprised to learn that the Market Vectors Egypt ETF (EGPT) is the single-best-performing stock market in 2014 among the 46 global markets I track on a daily basis.
Given the political chaos in that country, investing in Egypt is clearly a contrarian call, much like, say, investing in Russia.
Yet, there is a group of Arab countries — the Gulf States — that are attracting investors’ attention because they are among the fastest growing and most successful economies in the world. In fact, the Gulf States collectively are the #4 ranked global markets in 2014 and are up 22.22% this year.
No wonder that investor interest in the Gulf States is growing steadily.
In May, iShares launched the iShares MSCI Qatar Capped ETF (QAT) and the iShares MSCI UAE Capped ETF (UAE), the first single-country funds devoted to these red-hot stock markets, after they were upgraded from “frontier market” status.
And Saudi Arabia’s stock market also just surged to six-year highs, after the government announced that foreign investors will be allowed access by the middle of 2015.
Introduction to the ‘Gulf States’
The Arabian Gulf States of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) make up the Cooperation Council for the Arab States of the Gulf — a political and economic union of Arab states bordering the Persian Gulf. Established in Abu Dhabi in 1981, they are still referred to as the Gulf Cooperation Council, or “GCC” states.
The Gulf States owe their initial economic success to winning the geographic lottery. A building and investment boom financed by decades of petroleum revenues has made some of these countries among the fastest growing and wealthiest in the world.
With a per capita gross domestic product (GDP) of around $100,000, Qatar is one of the five wealthiest countries on the planet, trailing only the European micro-states of Liechtenstein, Monaco and Luxembourg, and perhaps Norway.
According to the International Monetary Fund (IMF), growth rates in the Gulf States’ countries are set to remain strong in 2014, with Kuwait expected to grow at 3.1%, Qatar at 5.0% and the UAE at 3.6%. The Gulf States have also moved steadily up the ranks of the world’s most competitive economies, with both Qatar and the UAE now ranked in the top 20.
The Trust Fund Countries Make Their Mark
Nicholas Vardy is currently editor of the monthly investment newsletter, The Alpha Investor Letter, which provides longer-term global investments. He also writes two weekly trading services, Triple Digit Trader and Bull Market Alert, which focus on making short-term profits in the hottest markets in the world.