(For other news from Reuters Middle East Investment Summit,
click on http://www.reuters.com/summit/MiddleEastInvestment12)
* Says Saudi market opening will see wave of investment
* Fund manager sees Egypt rallying into 2013
* Mobius says bullish on Dubai's property market
* Says more institutions looking at frontier mkts
* Likes banking, oil and gas, consumer stocks
DUBAI, Nov 19 (Reuters) - Mark Mobius, one of the world's
best-known emerging market investors, will increase his exposure
to Saudi Arabia once the largest Gulf Arab state opens its
markets to foreigners.
Saudi Arabia, the top OPEC producer, has been considering a
wider opening of its market for several years; currently
foreigners have only very limited opportunities to invest
through indirect ownership and exchange traded funds.
"Right now, we don't have much in Saudi Arabia as the
current system opens us up to counterparty risks. Once the
market is fully open, we probably will increase our exposure,
provided all things remain equal," Mobius, executive chairman of
Franklin Templeton's emerging markets group, said in a telephone
interview as part of Reuters' Middle East Investment Summit.
With the Gulf state rolling out a $400 billion
infrastructure programme - the world's biggest stimulus relative
to GDP - foreigners are keen on the Saudi stock market and the
biggest Arab economy. The bourse has risen 5.4 percent
year-to-date, compared with a 6.2-percent rise for MSCI's
emerging market index.
Saudi's opening of its stock market to foreigners will be
gradual, its capital markets regulator has said, although it has
not given a date. Analysts and traders expect the move to come
next year.
Mobius, who helps oversee $48.2 billion in emerging market
funds, expects the opening up of the Saudi exchange to have
wider benefits as the event will drive a wave of foreign
investment into the Middle East.
Saudi Arabia currently ranks sixth in country weightage for
Templeton's $1.1 billion Frontier Markets Fund, lagging behind
Nigeria, Kazakhstan, Vietnam and its Gulf peers, Qatar and
United Arab Emirates.
The fund manager said institutional investors are
increasingly buying into the idea of investing in frontier
markets - regions seen as riskier and less developed than
emerging markets - in the current low interest rate environment
and at a time of low growth in developed markets.
"We now have $2 billion in frontier markets which means that
there is a group out there which is interested in generating
real alpha," he said. The excess return of a fund relative to
the return of the benchmark index is a fund's alpha.
Mobius is bullish on banking, oil and gas, mining and
consumer-related stocks within the frontier space.
ARAB SPRING IMPACT
Political uprisings in the region during 2011 will have a
positive impact in the long-term, Mobius said.
Governments across the region have announced billions of
dollars worth of projects to boost infrastructure and create
jobs after protests demanding more open political structures and
better standards of living shook several Gulf Arab countries.
"We looked at the Arab spring in a very positive light. We
thought that it was going to open up the markets and lead to an
expansion of the market capitalisation of companies in this
region," Mobius said.
That bet seemed to have paid off with Egypt's benchmark
stock market index rising 51 percent so far this year -
making it among the world's best-performing markets.
Mobius expects the trend to continue as the North African
country's Islamist-dominated government embarks on a plan to
boost the battered economy.
"In an Islamic style of finance, equity is very important. I
think it's going to be very important for them to expand the
stock market further," Mobius said.
Templeton's frontier fund counts Egypt's Orascom Telecom
Holding among its top holdings, with a 3.38 percent
weightage at end-September.
Mobius is also bullish on real estate in Dubai as the
emirate's main sector shows signs of recovery following a
60-percent plunge in prices from its peak in 2008.
"They have a long way to go on the debt issue, but we took a
position in the property area when things were in bad shape
because we believed that this market is going to recover,"
Mobius said.
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(Editing by Louise Heavens)