FUND VIEW-Schroders bullish on Middle East stock markets

By Rafael Nam

HONG KONG (Reuters) - For investors concerned about the global credit crunch and worried about a bubble in emerging markets such as China and India, a Schroders (SDR.L) fund manager has a solution: the Middle East.

Strong economic growth, rising foreign investment, and most importantly, less correlation with other global markets are making countries such as the United Arab Emirates attractive, said Allan Conway, head of global emerging market equities for the British fund manager.

"If you are worried, the Middle Eastern markets are fantastic diversifiers. They tend to go up when other markets go down," Conway told a news briefing in Hong Kong after listing potential concerns such as a U.S. economic slowdown.

The fund manager said Schroders had just added UAE to its list of Middle East overweights, which also includes Egypt and Turkey, according to press materials given to reporters.

The increased weight of the Middle East in the global economy is most acutely demonstrated by its sovereign wealth funds, which, flush with money from an oil boom, are going on a shopping spree in developed economies.

The UAE made headlines last month when the Abu Dhabi Investment Authority invested $7.5 billion in Citigroup (C.N), while Dubai made an undisclosed investment in Japan's Sony Corp

(6758.T).

Schroders in August launched a fund geared towards the Middle East, with the aim of investing in 30-70 companies in the region.