Practical analysis for investment professionals
06 November 2014

Malak Fares, CFA: To Understand the Middle East, Read News from the Region Itself

A finance professional and a CFA charterholder, Lebanese-born Malak Fares, CFA, switched from mainstream finance to television presenting in the United Arab Emirates (UAE) when the opportunity beckoned to align her passion and her work. Currently, she is a business presenter for Sky News Arabia. As the Middle East continues to make headlines because of geopolitical developments, CFA Institute interviewed Fares to get her thoughts on how best to interpret news from the Middle East and the longer term business and finance themes in the region.

CFA Institute: You have worked in both mainstream finance and financial journalism — tell us how you arrived at your current role as a TV business presenter.

Finance is my area of expertise. It is what I studied for several years during college and towards the CFA charter. On the other hand, journalism and TV presenting, in particular, have been a passion since childhood. I guess what they say about making something happen because you really want it is true. I relocated to the UAE a few years ago and accidentally ran over a job posting by a business TV channel looking for a presenter with an economic and financial background. I applied though I had never done anything similar to this type of job before. But it worked and it was then when the story started.

What are some of the key longer term themes in business and finance in the Middle East?

There are many factors shaping the economy and business environment in the Middle East. One of the main themes that is and will be a major characteristic of Middle Eastern economies for a long time is the large presence of family businesses in these economies.

Studies show that family firms are more dominant in the MENA region compared to other regions in the world. In the [Gulf Cooperation Council (GCC)], for instance, 70% of businesses are either family-owned or controlled, demonstrating that this business model is the essence of local societies and regional economies. As such, they play a vital role in economic development.

Establishing the proper corporate governance frameworks and succession planning are key challenges for these institutions, some of which have turned into huge conglomerates, having reached a stage where a more structured governance process is necessary.

Entrepreneurship and small business is a growing sector in the Middle East and is expected to be one of the job creation solutions in a region suffering from one of the highest unemployment levels worldwide — needing to create tens of millions of jobs during the next decade. Small businesses, however, face a lot of obstacles relating to high start-up costs, bureaucracy, and lack of financing. Fostering entrepreneurship and supporting small businesses, thus, are expected to top policymakers’ economic agendas.

Are there any false stereotypes and generalizations about business and finance in the Middle East that foreign investors should be aware of?

Geopolitical risks make doing business challenging in many countries in the Middle East. This, however, does not apply to the region as a whole. Most GCC countries, for instance, offer advanced infrastructure in addition to a safe and secure business environment. The Middle East also enjoys a wealth of human capital represented by a growing number of well-educated young men and women. A number of universities in some of the region’s oldest cultural cities like Beirut have always been known to produce highly competitive graduates. Countries like the UAE have empowered women in various industries as well as the public sector.

The true potential embedded in the region is unfortunately usually overshadowed by preconceptions of political instability and misconceived stereotypes of Middle Eastern working cultures and attitudes.

Currently which issues seem to be the most pressing on the minds of portfolio managers investing in the region?

Again geopolitical risks top the list. Regional financial markets tend to overreact to these risks even in countries not directly involved, as do they overreact to bad news coming from international markets. This is due to the fact that regional markets, including those of the GCC, are dominated by individual investors who have short-term investment horizons and resort to panic selling upon any news about negative indicators or events, even if they don’t have a real impact on the fundamentals of local economies or companies.

Quality and timeliness of disclosures remain also an area of concern despite improvement seen in recent years in a few regional markets.

It is also worth mentioning that portfolio managers investing in the region are usually stuck with two investment options — real estate and stock markets — due to inactive, sometimes nonexistent, secondary bond markets as well as derivative and other alternative investment markets apart from real estate.

What would be your advice to those outside the Middle East who are interested in following Middle Eastern business and finance news?

The best way to have a clear notion of a region’s news is to follow media sources from the region itself and discuss queries with professional experts from the region also. A lot of media output in the Middle East is broadcast or printed in Arabic, but there are a good number of local publications in English. Some of the international organizations also have physical presence in the region. Foreign investors can follow these sources. Cross-checking news from different sources is always useful. Finally, if you are interested in investing in the Middle East, make sure you visit the region several times, get accustomed to doing business here, and build good relationships with local experts and leaders.

You often interact with leaders in business and finance as part of your work. Any career-related advice you would like to offer young finance professionals in the Middle East?

As a finance professional, you need to have a strong background in economics, statistics, and accounting — in addition to mastering various financial analysis skills. So make sure you leave no knowledge gaps. You are not supposed, though, to think exactly the same way an accountant or economist does. It is this that makes your analysis and decision-making approach unique.

Financial concepts can be difficult to explain and demonstrate, so make sure you work hard to build strong communication and presentation skills. Don’t get trapped in the purely technical aspect of finance, but always understand and explain financial themes in terms of how they are expected to affect and change people’s lives.

Last but not least, remember that ethics are an integral part of any successful career and don’t be afraid of change as long as it serves your ambitions. Have no doubt that your analytical skills and knowledge will work and are needed in any medium — not only the traditional financial sector.

Investment professionals interested in learning more about financial issues in the Middle East can also attend the 2015 Middle East Investment Conference, hosted by CFA Institute and CFA Society Kuwait on 10 February, 2015, in Kuwait City.

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Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: Courtesy of Malak Fares, CFA

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About the Author(s)
Usman Hayat, CFA

Usman Hayat writes about sustainable, responsible, and impact investing and Islamic finance. He is the lead author of "Environmental, Social, and Governance Issues in Investing: A Guide for Investment Professionals," and the literature review, "Islamic Finance: Ethics, Concepts, Practice." He is interested in online learning and has directed three e-courses for CFA Institute: "ESG-100," "Islamic Finance Quiz," and "Residual Income Equity Valuation." The other topics he writes about are macroeconomics and behavioral finance. Previously, he was a content director at CFA Institute. He is a former executive director at the Securities and Exchange Commission of Pakistan (SECP). He has experience working in securities regulation and as an independent consultant. His qualifications include the CFA charter, the FRM designation, an MBA, and an MA in Development Economics. His personal interests are reading and hiking.

2 thoughts on “Malak Fares, CFA: To Understand the Middle East, Read News from the Region Itself”

  1. Ted Basset says:

    An assignment for a Western-educated financial journalist would be to explore how lessons from Israel’s “Startup Nation” could be applied to the nearby Arab countries, and how they might work together for mutual benefit. Israel has more NASDAQ listings than any country but the United sates, and is home to major technology investments by the likes of Intel, Microsoft and others. Surely there is something to be gained by all for such co-operative efforts.

  2. Ted Basset,

    Thank you for visiting our blog and leaving a comment.

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