FMG (EU) MENA Fund gained +2.6% in the 3rd Quarter of 2017

It was a relatively weak quarter for the MENA markets, underperforming emerging and frontier markets by a wide range. The broad MENA indices were basically flat throughout the month despite the price of Brent rallying by 20%. The Kuwaiti market was the only one to match this number, while Qatar lost 7% as the diplomatic dispute dragged on. Rating agency Fitch downgraded Qatar by one notch to AA, with a negative outlook. However, if the crisis drags on, Qatar’s financial situation may deteriorate faster than anticipated as the LNG price is still trading near recent lows. Central Bank reserves have fallen sharply and most of the huge SWF money is not liquid. The Fund´s allocation to Qatar has over the past years come down from a high of 19% to today’s 1%. The shift has been well timed and added both absolute and relative performance.

The news that Saudi women will be allowed to start driving from June 2018 was received as a joke by media, who mostly focused on the fact that today´s situation for Saudi women is absurd in a western view. But they fail to see the bigger picture; that this is part of a much broader social reform, in line with the country’s “Vision2030” objective. As part of the plan, the government wants to increase female participation in the workforce from 22% to 30% by 2030 in a modern and reform-friendly fashion.