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Global Funds Eye Middle East

Posted April. 15, 2008 03:08,   


“The Persian Gulf states are tomorrow’s emerging markets.”

Finance columnist Jane Bryant Quinn predicted that six Arab states will grow as tomorrow’s emerging markets, after BRICs (Brazil, Russia, India and China) and Southeast Asia. She is a personal financial planner who appears in a variety of media including the Washington Post, Newsweek and MSNBC.

In her column for the Washington Post released on Sunday, Quinn chose Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates as emerging markets. All of the six nations are members of the Gulf Cooperation Council (GCC).

Some of the six nations including Saudi Arabia are opening up their capital markets, while easing regulations on foreign stock ownership.

Recently, global investors have shown increasingly more interest in the Middle Eastern nations. For example, the U.S. mutual fund T. Rowe Price International released its own Middle East funds in September 2007.

In line with its effort to turn itself into the world’s emerging market, the GCC just started a free trade agreement negotiation with Singapore, its first with a country outside the Middle East.

These Middle Eastern countries are emerging as a new magnet of global funds since they have made much effort to diversify industries and change their images. Quinn pointed out that the Persian Gulf nations had long been associated with oil, desert, camel and war in the past, but that they have changed a lot.

As skyscrapers, stunning hotels, golf courses and high-end shopping malls appear in the UAE’s city states of Abu Dhabi and Dubai, the Middle Eastern nations are growingly considered as modern ones.

She also analyzed that Arab nations are very conservative and religious but that the GCC nations have cosmopolitan culture and embrace commercial modernity.

They are investing massive oil money into creating jobs for youths and nurturing the latest technology industries to prepare for the day when they run out of oil. Abu Dhabi is proactively nurturing culture and arts by hosting braches of the Guggenheim and Louvre museums and building various centers for the performing arts.

Certainly, part of the region, including Dubai, is already considered as the center of tourism and finance.

The global stock market has a keen interest in the region. In January 2006, the Morgan Stanley Capital International Index (MSCI), a benchmark of investment for large-scale funds, launched a separate GCC index for the six countries.

Some experts have expressed their concerns over the market’s serious fluctuations. The GCC stocks, excluding Saudi Arabia, bubbled in 2005, crashed in 2006, and surged 40 percent last year.

Nevertheless, lots of investors believe that the Middle Eastern nations are stable and safe investment destinations. Quinn predicted that “global funds will flow into the Gulf states for the upcoming 25 years.”