3 Markets Brokers Should Eye for Growth in 2022 (Series II) — MENA & Southeast Asia

Previously, we have reviewed the African forex markets​. In this article, we further access another two regions where the FX trading industry also shows a great potential to grow.

MENA Region

The Middle East and North Africa (MENA) region's foreign exchange market has seen an acceleration over the past few years. "Handicapped by conflict and falling oil prices, the region's financial market continues to show resilience and steady growth."

"Although the MENA region has been grouped together at the regional level, it has two very different foreign exchange markets, separated by significant differences in population, wealth disparities, cultures, regulations, political systems, and more."

"However, Middle Eastern middlemen could extend their coverage to North Africa, or even sub-Saharan Africa, but the differences between markets are significant." However, the only thing joining these markets is their huge foreign exchange needs.

• Foreign currency markets in the GCC lead the way in the Middle East and North Africa

The Middle East is famous for its oil-rich countries, Islamic culture, and rich history. Although the region has been lagging in adopting foreign currency as an asset class, it has certainly picked up speed and in recent years has welcomed the Forex with open arms.

The road in the Middle East is led by the Gulf Cooperation Council, formerly known as the Gulf Cooperation Council. "The region is made up of all Arab states in the Persian Gulf, except Iraq - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)."

Regarding size, the top three countries in terms of foreign currency markets in the GCC region are Saudi Arabia, the United Arab Emirates, and Kuwait. Of the three, the UAE leads the way largely in terms of the size and maturity of the foreign exchange market, and thanks to investment in financial market infrastructure; The country now operates as a regional hub for retailers and enterprises.

Another prominent market in the Middle East and North Africa is Egypt, the largest Arabic-speaking country. "At one time, Egypt looked like it would be the region's currency hub." However, the market growth was hampered by the unrest.

• North Africa benefits growth in the Middle East

Tunisia, Jordan, and Lebanon have also been trying to emulate the Cypriot model by providing a more structured regulatory environment for mediators. However, due to the turmoil in the region, the development of financial systems has been given low priority.

In North Africa, foreign exchange markets are less developed than in the Middle East; "However, as foreign currency markets in the GCC and other Middle Eastern countries accelerate, intermediaries are increasingly expanding their operations to meet the needs of North African countries, a trend that is likely to continue."

In the new year, we expect to see continued growth and expansion of intermediary companies in the North African and Gulf region, and it is noticeable that there is a growing demand for expansion in this region.

Southeast Asia market

The forex trading industry and retail differentials contracts have grown significantly over the last decade. The industry is expanding rapidly in emerging markets such as Southeast Asia, where there is a growing demand for investment products in global markets - and for Forex and Commodities.

"Many international contract brokers, mainly from Europe and Australia, have started to offer their services in these areas."

The three most promising and underutilized countries in Southeast Asia are Malaysia, Vietnam, and Thailand.

"Most of the brokerage firms in Forex, Difference Contracts, and Brands are trying to attract new customers from these countries by using online advertising, social media marketing, and recruiting and building a local network of knowledgeable middlemen."

Singapore is the largest market in the region in terms of the daily trading volume. Indonesia, Malaysia, Thailand, and Vietnam are emerging markets with an estimated 3 million traders in contracts against spreads and faxes.

However, it was not a smooth trip for the mediators who intended to gain a foothold in the Southeast Asian market. Most international contract brokers have been reluctant to regulate in the majority of South-East Asian countries in which they operate, partly due to the lack of friendly, unclear, and often complex regulations in some countries that do not include all the tools used by these brokers.

Also, given the reason that many of these intermediaries prefer to work abroad without legal obligation in these countries, which reduces their operating costs.

But this growth has raised concerns about investors' safety - many traders have lost their money with foreign intermediaries and unregulated foreign investors because of unsafe trading conditions and a lack of regulatory oversight.

Even some of the most well-known Forex brokers organized with ASIC, CySEC, and FCA still operate in the SE Asian Market without local licenses and provide an unsafe lift to their customers through foreign affiliates.

All of this is causing a lack of confidence among traders in this growing industry and many traders are hesitant to start trading through CFD intermediaries.

There is a lack of awareness among traders about local regulations and licensed entities, where misleading information about the legal status of industry and intermediaries is often published.

A summary of the foregoing provides guidance for the development of activity for financial intermediaries:

• Spreading awareness creates a larger segment of traders in international financial markets

• Concern for laws and regulations gives companies more credibility

• The expansion of activity in the regions we have talked about will have positive results in the medium term

The New Year gives more opportunities to new markets to companies that have been operating regionally and are reluctant to expand.