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Equity markets in the Middle East, especially oil-producing Arab Gulf nations with dollar pegs, should perform better than other developing countries next year against a backdrop of higher U.S. interest rates and rising crude prices. That's the view of Bassel Khatoun, chief investment officer for Middle East and North Africa equities at Franklin Templeton Investments, who manages $87 million of stocks from the region. His fund had a return of 4 percent in the past three months, compared with a loss for the MSCI Emerging Markets Index.As a second point, for foreign investors that want to buy asset classes that are tied to the dollar, this region becomes quite attractive.The U.S. economy is resuming growth, inflation is finally back in, interest rate increases are appropriate. In the region, we have an opposite growth trajectory. The region weighs about 2 percent in MSCI EM today.
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