MEIC PRE-CONFERENCE SURVEY: MIDDLE EAST & NORTH AFRICA MARKET ISSUES March 2013

CFA Institute

SURVEY RESULTS

CFA Institute

POLITICAL STABILITY & GOOD GOVERNANCE WOULD HAVE THE MOST POSITIVE IMPACT ON ECONOMY

50%

19%

6% 6% 6% 5% 4% 4%

0%

10%

20%

30%

40%

50%

60%

Politicalstability and

goodgovernance

Increasedinvestment ininfrastructure

Increasedinvesting in

SMEs

Developmentof a private

sector

Improvedcapital

marketsregulation

Regionaleconomic

integration

Increasedinvestment in

education

Other

What do you think would have the most positive impact on the Middle East and North Africa (MENA) economy in 2013?

(N=188)

CFA Institute

SAUDI ARABIA AND QATAR LIKELY TO EXPERIENCE THE STRONGEST ECONOMIC GROWTH IN 2013

34% 33%

23%

3% 2% 2% 1% 1% 1% 1% 1% 0% 0% 0%

10%

20%

30%

40%

50%

60%

Which of the following countries in the MENA region do you think will experience the strongest economic growth in 2013?

(N=187)

CFA Institute

49% PREDICT DECREASED ECONOMIC GROWTH RATES FROM THE ARAB SPRING OVER THE NEXT FIVE YEARS

Increased economic growth rates

38%

Decreased economic growth rates

49%

No change in economic growth rates

13%

What do you think the economic impact of the political change occurring from the Arab Spring will be for the MENA region over

the next five years? (N=188)

CFA Institute

CHINA TO HAVE THE MOST POSITIVE FOREIGN ECONOMIC INFLUENCE ON THE REGION OVER THE NEXT FIVE YEARS

46%

24%

12% 9%

3% 2% 0%

3%

0%

10%

20%

30%

40%

50%

60%

China United States EuropeanUnion

India Russia Japan Brazil Other

Which country or region do you think will have the most positive foreign economic influence on the MENA region over the next

five years? (N=188)

CFA Institute

FREEDOM OF LABOUR & CAPITAL AND REGULATORY ALIGNMENT WOULD HELP STIMULATE INVESTMENT

56%

47%

34%

19%

11% 11%

4%

0%

10%

20%

30%

40%

50%

60%

Freedom oflabour and

capital across theregion

Regulatoryalignment acrossthe MENA region

Creating aneconomic trading

union

A single capitalmarket

A single currency Other None

Which of the following, if any, do you think would stimulate investment in the MENA region? Select all that apply.

(N=188)

CFA Institute

57% THINK THE PRIMARY FOCUS FOR REGULATORS IN 2013 SHOULD BE THE PROTECTION OF INVESTORS

Protection of investors 57%

Reduction of systemic risk 35%

Other 8%

What should be the primary focus in 2013 for regulators of securities markets in the MENA region?

(N=187)

CFA Institute

ONE-QUARTER OF RESPONDENTS THINK EQUITIES ARE THE MOST UNDER-VALUED OVER THE NEXT 12 MONTHS

25%

18% 15%

11%

5% 2% 2%

22%

0%

10%

20%

30%

40%

50%

60%

Equities MENA MarketEquities

GCC MarketEquities

Real Estate Commodities Corporatebonds

Governmentbonds

None of theabove

In the MENA region, which of the following, if any, do you think is currently most under-valued (as of February 2013), when looking

ahead over the next 12 months? (N=186)

CFA Institute

SEVERAL AREAS OF THE INDUSTRY ARE EXPECTED TO EXPERIENCE GROWTH IN EMPLOYMENT IN 2013

39% 38% 35%

28% 26% 24% 22%

18%

5% 2%

6%

0%

10%

20%

30%

40%

50%

60%

Which area(s) of the financial services industry in the MENA region, if any, do you think will experience growth in employment opportunities

over the next 12 months? Select all that apply. (N=187)

CFA Institute

INVESTOR TRUST & CONFIDENCE WOULD INCREASE WITH IMPROVED CORPORATE GOVERNANCE PRACTICES & TRANSPARENCY OF FINANCIAL REPORTING

1%

30%

33%

41%

43%

46%

46%

46%

47%

70%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Increased levels of industry knowledge for those working infinancial services but outside investment roles

Improved regulation and oversight of global systemic risk

Improved auditing practice and standards

Adoption of a code of ethics and professional conduct for allprofessionals managing investments

Improved enforcement of existing laws and regulations

Improved market trading rules on transparency and frequencyof trades

Stronger deterrents to prevent market and investor abuses

Improved investor education among clients

Improved transparency of financial reporting and othercorporate disclosures

Improved corporate governance practices

What do you think would improve investor trust and confidence across markets in the MENA region? Select all that apply.

(N=188)

CFA Institute 12 Global Market Sentiment Survey 2013

ABOUT THE STUDY

CFA Institute

ABOUT THIS SURVEY To coincide with the 2013 Middle East Investment Conference held in Dubai on 20-21 March 2013, CFA Institute, in collaboration with member societies in the Middle East, conducted a survey to gather opinions on market issues in the Middle East and North Africa (MENA) region to raise the profile of members, societies, and CFA Institute and build meaningful dialogue within the region.

METHODOLOGY An online survey was conducted from 19 February to 3 March 2013. CFA Institute members, those with charters pending, and June 2013 Level III CFA Program candidates in 11 countries across the Middle East and Northern Africa were invited to participate in the survey, totaling 2,248. 188 responded, for an overall response rate of 8% and a margin of error of ±6.8%. The survey consisted of nine questions in total.

CFA Institute

RESPONDENT PROFILE

Middle East 91%

North Africa 9%

Region COUNTRY

UNITED ARAB EMIRATES 41%

SAUDI ARABIA 15%

BAHRAIN 9%

KUWAIT 9%

LEBANON 9%

EGYPT 7%

JORDAN 4%

OMAN 3%

QATAR 3%

MOROCCO 2%

TUNISIA 1%

CFA Institute

RESPONDENT PROFILE

No Charter 55%

< 2 years 17%

2-5 years 12%

6-10 years 9%

> 10 years 7%

Years with the CFA Charter

4%

4%

6%

6%

9%

10%

0% 10% 20%

Relationship Manager

Risk Manager

Consultant

Research Analyst

Chief-Level Executive

Portfolio Manager

Top Job Functions

CFA Institute

ABOUT CFA INSTITUTE CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 110,000 members in 138 countries and territories, including over 103,000 CFA charterholders, and 138 member societies. For more information, visit www.cfainstitute.org.

QUESTIONS? Media inquiries: Nicole Haroutunian Public Relations Manager nicole.haroutunian@cfainstitute.org Survey inquiries: Melissa Looney Director, Market Intelligence melissa.looney@cfainstitute.org

CFA Institute

APPENDIX

QUESTIONNAIRE 1. What do you think would have the most positive impact on the Middle East and North Africa (MENA) economy in 2013?

[RANDOMIZE] • Regional economic integration • Development of a private sector • Increased investment in education • Increased investment in infrastructure • Increased investing in SMEs • Political stability and good governance • Improved capital markets regulation • Other (please specify): [text]

2. Which of the following countries in the region do you think will experience the strongest economic growth in 2013? Drop down: Full list of MENA countries

3. What do you think the economic impact of the political change occurring from the Arab Spring will be for the MENA region over the next five

years? • Increased economic growth rates • Decreased economic growth rates • No change in economic growth rates • Not sure

4. Which country or region do you think will have the most positive foreign economic influence on the MENA region over the next 5 years?

[RANDOMIZE] • United States • China • Russia • Japan • India • Brazil • European Union • Other (please specify): [text]

5. Which of the following, if any, do you think would stimulate investment in the MENA region?

Select all that apply [RANDOMIZE] • A single capital market

• Creating an economic trading union • Regulatory alignment across the MENA region • A single currency • Freedom of labour and capital across the region • Other (please specify): [text] [ANCHOR] • None [CLEARS ALL OTHER] [ANCHOR]

6. What should be the primary focus in 2013 for regulators of securities markets in the MENA region?

[RANDOMIZE] • Protection of investors • Reduction of systemic risk • Other (please specify): [text]

7. In the MENA region, which of the following, if any, do you think is currently most under-valued (as of February 2013), when looking ahead over

the next 12 months? [RANDOMIZE] • Equities • Government bonds • Corporate bonds • Real Estate • Commodities • GCC Market Equities • MENA Market Equities • None of the above [ANCHOR]

8. Which area(s) of the financial services industry in the MENA region, if any, do you think will experience growth in employment opportunities

over the next 12 months? Select all that apply [RANDOMIZE] • Sovereign Wealth Funds • Private Equity • Commercial Banking • Investment Banking • Insurance • Real Estate • Hedge Funds • Asset Management • Alternative Asset Management • Other (please specify): [text] [ANCHOR]

• None [CLEARS ALL OTHER; ANCHOR] 9. What do you think would most improve investor trust and confidence across markets in the MENA region?

Select all that apply [RANDOMIZE] • Improved enforcement of existing laws and regulations • Improved regulation and oversight of global systemic risk • Improved transparency of financial reporting and other corporate disclosures • Improved market trading rules on transparency and frequency of trades • Improved corporate governance practices • Improved auditing practice and standards • Stronger deterrents to prevent market and investor abuses • Improved investor education among clients • Increased levels of industry knowledge for those working in financial services but outside investment roles • Adoption of a code of ethics and professional conduct for all professionals managing investments • Other (please specify): [text box] [ANCHOR] • Not sure [CLEARS ALL OTHER; ANCHOR]

OPEN-END COMMENTS 1. What do you think would have the most positive impact on the Middle East and North Africa (MENA)

economy in 2013? (Other-specify) Country

Political stability LEBANON liquidity and foreign ownership OMAN Don't see anything positive SAUDI ARABIA Less Imperialist Meddling UAE Increased credit to various sectors UAE clear immigration policy UAE a one year timeframe is completely random UAE

4. Which country or region do you think will have the most positive foreign economic influence on the MENA region over the next five years? (other-specify)

Country

Asia Pacific ex Japan BAHRAIN None of the above KUWAIT none UAE irrelevant UAE Africa UAE

5. Which of the following, if any, do you think would stimulate investment in the MENA region? Select all that apply. (other-specify)

Country

when they stop mixing politics with religion BAHRAIN Political Stability EGYPT

its the political stability again for a country like Egypt (also Tunisia, Iraq, Syria, Lebanon). for GCC, it’s the government, so oil prices

EGYPT

Political stability JORDAN Decreased government and donor crowding out and participating in markets JORDAN Transparent regulation that favors foreign capital flows KUWAIT

Political stability KUWAIT Stability LEBANON allowing foreign ownership of capital assets OMAN Decreased political risk QATAR Freedom of capital SAUDI ARABIA aiming for more foreign involvement in the capital markets SAUDI ARABIA Reduced Imperialist Meddling UAE Legislative improvements UAE Increased transparency UAE Increase markets transparencies and corporate governance UAE immigration policy UAE Foreign Ownership limits relaxed/removed UAE Foreign Ownership Laws (land, enterprise) UAE End to hostilities UAE

6. What should be the primary focus in 2013 for regulators of securities markets in the MENA region? (other-specify)

Country

Markets Stability BAHRAIN Reduction of restrictions to investment while enforcing equitable rules to all types of investors EGYPT better corporate governance, BOD authorities and responsibilities JORDAN corporate disclosure and governance OMAN Improved Market Liquidity QATAR Refining Regulations SAUDI ARABIA Open up some of the closed markets for foreign investments SAUDI ARABIA reducing trading costs, enabling easier access for smaller firms UAE Prevent: Derivatives, Short Selling, Margin Trading, Excessive Corporate Debt UAE need more listed securities UAE Issue licenses for IFAs. This will promote portfolio management by individuals which currently is zero. UAE Increase markets efficiencies by allowing free foreign capitals to flow in and out freely UAE

improved governance and transparency UAE implementing the current laws UAE Amending IPO rules to encourage new listings UAE

8. Which area(s) of the financial services industry in the MENA region, if any, do you think will experience growth in employment opportunities over the next 12 months? Select all that apply. (other-specify)

Country

Microfinance JORDAN non-banking Fin. Inst. SAUDI ARABIA Private banking UAE Brokerage UAE

9. What do you think would improve investor trust and confidence across markets in the MENA region? Select all that apply. (other-specify)

Country

Reduced Imperialist Meddling UAE enact ability to conduct hostile takeovers UAE

Please provide any additional comments related to MENA market issues: Country MENA stock markets lacks liquidity and suffers from high bid ask spread. BAHRAIN

Major threat, market instability due to political turmoil making government dysfunction and ineffective to provide for needed favorable environment to support economic growth and social stability of its citizens.

KUWAIT

low liquidity, deterrence to foreign ownership in the domestic economy, weak regulation and corporate governance, large concentration of ownership by govt. and hence low free float.

OMAN

Move to semi-annual dividend payments to break strong seasonality in markets which should also improve liquidity and investor participation in markets year round. / Lower issuance thresholds for smaller business in debt and equity finance to build a deeper listed securities market, this may involve some disintermediation of the banking sector. / Improved market access by streamlining account processes for international investors. It should take no more than 3 days to establish and begin trading an account if there is a passport system for recognition out of well-established jurisdictions.

QATAR

One possible announcement in the Saudi exchange market (Tadawul) can provide substantial liquidity this year; that is allowing foreign investors to enter the market.

SAUDI ARABIA

Curbing speculation and inclusion of UAE and Qatar to Emerging market indices would improve investor confidence.

SAUDI ARABIA

Predominantly oil economies and those with untapped consumer potential should continue to be attractive for foreign investors (leading among them being Saudi Arabia). Those with limited / diminishing oil reserves but that enjoy strong foreign linkages (such as Qatar and UAE) will flourish if alternative industry sectors continue to be encouraged and perform well and profitably. Governance is obviously a key issue (the UAE being an exception - which has been hailed for its good governance practices). Investor participation (especially the retail investor's participation) in the equity markets is constrained by a number of factors such as limited knowledge, lack of sufficient public issues, limited marketing of issuances, lackluster performance of some of the stock market heavyweights (which are mostly huge public sector / royal family owned companies) whose ratings and performance are inextricably linked to the strength and fortunes of their respective governments / rulers. More private sector participation is also needed in some of the economies.

UAE

Political stability, well regulated labor market, protection of human rights, maintaining rule of law, well regulated debt & equity markets, etc. will ensure a sustainable growth in MENA region.

UAE

need to have more listed companies for equities / UAE

MENA region is really plagued by corporate governance issues. Whistle blowers are not only at risk of being isolated, they can be threatened due to political regimes' lack of freedom. Arab spring has just been a step backward.

UAE

MENA markets are promising region when the political instability resolve, the heavily oil dependent economies might face a challenge with more alternative energy sources are being developed. / Those countries with less oil concentrated economies (especially Arab Spring countries) might offer a good chance to invest for long term. / Political risk is an issue in the meanwhile, but stability in the years to come might reward those who held positions now

UAE

MENA market has huge potential among local populations. Islamic investments would be of great appeal to this segment of the market. I feel this is an untapped market, which has huge potential.

UAE

Investor protection and transparency are key UAE