The Middle East and North Africa (Mena) region is set to benefit from its dollar link as the US eyes options to slow its bond-purchasing programme, Michael Harris, head of EEMEA Equity Strategy at Bank of America Merrill Lynch (BofAML) told journalists at a roundtable on 21 November.

“We’re in a world where tapering is a concern. There is a clear point of differentiation within the dollar-linked Middle Eastern markets that I think gives people some comfort,” said Harris. “It’s a tactical advantage that could be there for quite some time if the US is the only meaningful economy that’s growing over the next few years.”

In May, the US’ Federal Reserve announced plans to taper its monetary stimulus programme once it is satisfied the US economy is showing steady signs of growth.

That has led to volatility in emerging markets as investors try to anticipate when that might actually happen. With tapering expected to lead to a stronger dollar, emerging markets countries face their currencies weakening. Mena countries, however, will be excluded from that, as many are either pegged to the dollar or to a basket of currencies mainly exposed to the dollar.

Regional economies are already witnessing a recovery, leading to the GCC’s stock markets growing exponentially over the past nine months. Globally, the UAE is the world’s second best-performing market with a year-to-date increase of 61 per cent, and 2013 earnings growth estimates rising by about 100 basis points year-to-date to 9.6 per cent. Saudi Arabia’s stock market has risen 21 per cent year-on-year, while Qatar registered an increase of 22 per cent.

“I think we’re going to see a continuation of the strong trends in 2013, but we must not forget we’ve come out of a three, four-year bear market. [Compared with] what we’ve seen in 2013, it may not be in the same percentage terms, but I think strengths in these markets will continue throughout 2014,” adds Talal Ghandour, head of Mena Equities at BofAML.