??? A few investors look at the Arab Spring -- the wave of protest and revolution that began last December when a Tunisian street vendor set himself on fire to protest his harassment by police -- and don't see a particularly big deal. Franklin Templeton emerging markets guru Mark Mobius, a longtime bull on the economies of the Middle East, has called the tumult just a "bump" in the road towards more democracy and freer markets in the area.
????The rest of the investing world is not so sure. Khaled Abdel Majeed runs a small London-based hedge fund that invests in the countries of North Africa, and he says his clients, mostly U.S. and European pension funds and endowments with plenty of trouble in their home economies, are nervous.
????These institutional investors worry about what kind of post-Qaddafi government might emerge in Libya and about the elections and ongoing violence in Egypt. They worry about tensions between Muslims and Coptic Christians in Egypt and between Sunni and Shia Muslims in Saudi Arabia. They worry about the how long the brutal Assad government can hang on in Syria and at what cost. They worry about a nuclear Iran and what Israel may decide to do about it.
????"There is no appetite for risk and we are in a part of the world that has historically been thought of as risky," Majeed says. Majeed started his MENA Admiral fund in 2004 with $22 million and then built it up to $120 million by June 2008. Now he's down to $15 million. "It's been a round trip and then some," he says.
????Indeed, foreign capital has been fleeing the region since December 2010 when protests began in Tunisia. The Dow Jones MENA index ("MENA" is an acronym for Middle East-North Africa and usually means the Arab countries and sometimes Turkey) plummeted from 558 in late 2010 to a low of 460 in March. Lately it's been around 470. The S&P Pan Arab Composite Index is down about 13% on the year. The stock market of Egypt, the region's most populous country, was closed for 55 days during tumult there early this year. The EGX 30 stock index has fallen about 40% on the year from about 7000 to 4000 currently. The index had stabilized around 4500 before crowds returned to Tahrir Square late in November to protest moves by the Egyptian army to consolidate its control in advance of the first round of parliamentary elections. Roubini Global Economics estimates foreign direct investment in Egypt, only about $6 billion in the 2009-2010 fiscal year, has dropped by 68%.
