Silver lining for the Arab world

ArabianMoney editor, Peter Cooper said that the outcome of the Syrian uprising could be a blessing in disguise for the regional economy.

“Actually there are reasons to be positive about the eventual outcome. The new administration is going to have to accelerate its reform programme that has moved at a snail’s pace over the past decade.“

He mentioned that some regional stocks will emerge as a good buy during any the crisis, be it political or financial. “When the Dubai Financial Market finally bottoms out sometime after July, the first share ArabianMoney will be recommending is Emaar Properties.

“Probably the best time to pick up Emaar stock will be over the hot summer months, especially if global financial markets are hit by fresh turmoil before then. However, it could be that the market low in Dubai was the dip just before the Saudi ‘Day of Rage’ that flopped earlier last month. That would almost certainly prove to be the case if global markets remain resilient but we just don’t expect that to happen.”

Winners and losers in the regional unrest

In the April edition of ArabianMoney’s newsletter, Cooper mentioned that the winners will be those nations that have little or no unrest but still profit from the very high oil price. “The fact is that high oil prices may become a permanent feature of the global economy due partly to new supply challenges, as well as rising demand from the emerging economies.”

He added that the losers would be the nations that collapse into anarchy and chaos with nobody in charge, as well as those who ‘experiment with democracy only to find it unleashes the power of the mob to the detriment of civil liberties and economic growth’.

“Post revolutionary countries most typically enter a very long recession, as their productive capacity is severely disrupted and business confidence is shot to pieces, whatever public utterances made by those with vested interests.”

The advice

Cooper firmly believes that it is more sensible to use the depression in general equity prices across the whole of North Africa and the Middle East to cherry pick the countries with the best potential for future economic growth and the best companies within those countries. “Egypt might have some very large industries with depressed share prices right now but the growth prospects are not nearly as good as in the Oil States,” he concluded.