In Egypt, trading on the stock exchange was suspended after dropping another six percent on Thursday in response to escalating protests in the region. This was the second day of declines, with the Egyptian EGX 30 Index down 16 percent as a result.Shares in other regions in the Middle East and North Africa (MENA) were also affected however, shares in the Gulf Region were trading higher yesterday. Political uncertainty is troubling investors who had recently returned in droves to the region due to its economic prospects and low correlation to other markets. In fact, some of the region's indexes had risen during the 2008-2009 period.The majority economies in the Middle East are considered ‘frontier' markets for investors. The International Monetary Fund cites that 17 of the 20 fastest growing economies in the ‘frontier'. These include Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Oman, among others in the Middle East such as Pakistan. Emerging Asian and East European countries are also included. Merrill Lynch has created a Frontier Index to track the 17 markets. Financial Institutions and oil companies dominate the companies in the Index.The oil rich region of the Gulf is tracked in a separate Gulf Co-operation Council (CGG) Index by Bloomberg. The BCGG 200 Index tracks 200 companies in the region. Most investors are familiar with the Morgan Stanley Country Index for the Emerging Markets or MSCI EM.There is a subset dedicated to the Middle East & Africa EMEA, which includes Czech Republic, Hungary, Poland, Turkey, Egypt, Morocco and South Africa. All of these regions suffer from problems with absorbing large investment inflows when times are good and large outflows when the tides turn. Now is no exception.Frontier and Developing markets are as the names suggest, not stable. They are typically countries without full democracies and in many cases authoritarian states or fiefdoms. In such cases there is no voice for the populace and violence can erupt when living conditions become intolerable, such as the lack of food, water, and fuel. This is what has been occurring in Egypt, Tunisia and Pakistan. Operating conditions for companies can also be uncertain, especially foreign companies. Nonetheless, the regions can offer compelling investment opportunities if taken in small doses.The MENA region is dominated by the Gulf States. At current oil/gas prices, the region's energy reserves approach $60 trillion, which is close to the total value of all companies trading on stock markets around the world, according to Irfan Chaudhry of Seeking Alpha. Oil trading has resulted in massive current account surpluses that fund huge infrastructure projects, such as roads and power plants. The GCC GDP is expected to grow by nine percent in 2011 which will make it the eight largest in the world. The GDP is supported by a predominance of high-net-worth individuals with an estimated wealth of $2 trillion in USD. The region also has a younger educated population however, domestic spending is still low on a GDP per capita basis. These statistics point to a strong economic base, built mostly on oil.Saudi Arabia has by far the bulk of the region's oil reserves, followed by UAE and Kuwait. The Saudi Arabian stock market is also the 25th largest in the world but not recognised as such by institutional investors. It represents half of the GCC's total market capitalisation, with trading starting in the 1980s. The earliest stock market in the area was established in the 1960s. Many of countries in the region have created stock markets as late as in the 2000s. However, market operations and regulations are still being developed. There has been talk of consolidating several of the UAE country exchanges in order to make regional investing more efficient for investors.The reliance on oil means the countries lack industrial diversification. This makes them vulnerable to oil shocks. They also carry debt burdens that range from 14 percent to 59 percent of GDP. The debt issued by Dubai was facing default in 2009 until rescued by its neighbouring UAE leading country Abu Dhabi which has its own pressures. Yet most of the region is not considered risky as gauged by credit default swap spreads. The countries rated in the region are rated AA/stable or A/stable by major credit rating agencies. Egypt is not part of the CGG but part of the MENA grouping of investors. It has been struggling with inflation, which is a source of stress for an under-employed populace and resulted in political unrest. The industrial emphasis on oil, some regional inflation, and political unrest are the primary risks for investors.Nonetheless, the region's equity markets have been treading upward. The combined GCC markets increased by 11 percent in 2010. However, the volume of trading has been low. The UAE markets retracted modestly, in area of five percent, after a volatile year of trading. The smaller MENA market of Tunisia had posted a 17.5 percent growth in 2010. The Egyptian market had slipped by two percent, prior to sliding another 16 percent this month.There are a variety of ways to invest in the region. The Vanguard Emerging Market ETF (VWO) and the iShares MSCI Emerging Market Index (EEM) both posted a 19 percent return last year. Fidelity and Templeton Funds also have offerings in the region. The Templeton MENA Fund gained 18 percent last year. In that these are ‘frontier' markets, it is important to keep the amount of investment from the overall portfolio under five to 10 percent. Uncertainty and foreign cash flows will keep the markets volatile.Patrice Horner holds an MBA in Finance, a FINRA Series 7 Licence, and is a Certified Financial Planner (CFP-US). Any opinions expressed in this article are not specific recommendations, or endorsements of any products. Individuals should consult with their banker, insurance agent, lawyer, accountant, or a financial planner for advice to address their personal situations.