Middle Eastern investors are likely to put far more money to work in emerging markets than in Europe, Japan or North America over the next three to five years, according to a recent article in the Financial Times.

A survey of more than 200 Gulf investors, ranging from sovereign wealth funds to advisers in retail banks, found 82 per cent planned to hold emerging market investments, while just 30 per cent wanted exposure to North America, 14 per cent to Europe and 8 per cent to Japan.

The survey found more than a third of institutional investors had a time horizon of 12 months or less and 12 per cent looked beyond five years, making the region “more short term” than most parts of the world. Saudi and Bahraini investors were found to be the most conservative, with a strong preference for local equities and a dislike of hedge funds, while those in Kuwait and the UAE favored global equities.

There is clearly growing demand for emerging market equities. This will likely impact global asset allocation as major investors seek to diversify from the West to the East.

Source: Financial Times