ArabianBusiness.com - Middle East Business News
Sunday, 05 July 2009 06:56 UAE time

YOUR DIRECTORY /

| Share |

Gulf appetite for Middle East investment 'slowing'

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Tuesday, 04 November 2008
CAIRO CASH: Countries such as Egypt could see a fall in the amount of investment from Gulf region, it is claimed. (Getty Images)

Middle Eastern economies reliant on Arab Gulf capital inflows for booming economic growth are seeing a drop in investment as the global financial crisis has curtailed investors' appetite for the region, bankers and analysts said on Tuesday.

Cash-rich Arab Gulf countries had poured billions of dollars in Egypt, Jordan, Lebanon and Syria as they invested in mega-real estate projects, equities and energy and telecoms companies beyond their domestic markets.

"There are visible signs that intra-regional capital flows are tapering off, which will put a dampener on the accelerating momentum that we've been witnessing over the past several years," said Omar Masri, director of the Edgo Group, a regional oil and gas company.

Story continues below
advertisement

Masri echoed worries across the region about a drop in Gulf capital inflows that had contributed to the region's economic transformation as countries adopted investment friendly policies to attract projects to ease unemployment and rising poverty.

"These economies have become more susceptible to regional financial turmoil given their growing dependency on Gulf investment. Such countries have high birth rates and must maintain a robust GDP growth rate of at least 5-6 percent just to absorb the new entrants into the labour force," Masri added.

The IMF's latest report projected that growth could decelerate to 6 percent in 2009 from 6.5 percent in 2008 in emerging markets countries such as Egypt, Tunisia, Jordan Morocco and Lebanon as a result of the global slowdown.

The global credit crisis has left local Middle East investors partnered with Gulf Arab investors uncertain about the changing credit terms for the financing of large real estate projects already underway, or infrastructure projects in the pipeline that rely on higher debt than equity.

"Investments in the region that are partly financed by debt will be affected especially if international banks are involved, as they are deleveraging," said Talal Samhouri, head of MENA Asset Management, at Kuwait-based Global Investment House.

Although bankers already cite a drop in inflows and delays in future projects in the Middle East, they say the future will depend on how pronounced the impact of the global crisis will be on the oil-fuelled boom in the Arab Gulf.

"Investments will be shaken in the short term because of fears of exposure and lack of credit, but in the longer term positive fundamentals should set the tempo for a gradual recovery," Tarek Aqel, deputy CEO of Jordanian subsidiary of Bahrain-based Arab Banking Corporation Bank said.

Some savvy Gulf funds have used the turmoil to engage in bargain hunting through longer-term private equity deals in the Middle East as they shy away from turbulent Western markets.

"Arab Gulf investors will be more conservative and now they will look out for much safer investments than capital markets. With what's going on, banks are not giving loans as much as they used so companies will go to private equity deals that add value," said Rita Mahfouz of Beirut-based Capital Trust Group. (Reuters)


For news updates sign up for our newsletter
| Share |


READERS' COMMENTS

Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.

Click here to post a comment


Add your Comment
All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *
(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments


Please click post only once - your comment will not be published immediately.


MORE FROM ARABIANBUSINESS.COM

SHARE PRICE CHECK

 EMAIL ALERTS

  1. Politics & Economics



READER COMMENTS

Reader Comments (24 hrs)

  1. UAE raises minimum salary limit for expats with family 16
    04 Jul ' 09 at 20:24
    Why would anyone ever subject his family to so much indignity and humiliation by sharing a house, bathroom, kitchen with other...  More »
  2. Canada seeks to save man from Saudi death sentence 3
    04 Jul ' 09 at 18:10
    I always wondered how Islam promotes itself as a peaceful religion. With local laws in a place like Saudi alongwith the numerous...  More »
  3. Bankruptcy law shake-up call after Dubai boss flees 2
    04 Jul ' 09 at 19:32
    @GilbertBy what you say in when you compare your style of business operations with that of Simons, it seems you are convinced that...  More »
Read all user comments >

BUSINESS FEATURES

Kuwait’s democracy troubles Gulf Arab rulers

Kuwait's partial democracy rings alarm bells for Kuwait's rulers.

Arab states gloat at Iran strife, but wary of its spread

US-allied Arab states enjoying the violent protest over president Ahmadinejad's re-election, fear its fallout.

Gunmen stalk diamond diggers in Congo

Diggers in Congo's biggest diamond mine fear encountering the gunmen known as ‘suicidaires'.

BUSINESS INTERVIEWS

Wild Wadah

Being Al Jazeera is no easier today than it was when it launched, the network's director general Wadah Khanfar tells Arabian Business.

The optimist

Veteran diplomat and Nobel Prize winner Martti Ahtisaari makes the case for peace in the Middle East.

'The worst is yet to come'

Former World Bank chief James Wolfensohn warns that the global economy is facing a long road to recovery.

MORE FROM ARABIANBUSINESS.COM