$900bn and climbing - value of GCC's foreign assets

Abu Dhabi Investment Authority bought the Chrysler Building earlier this year. (Getty Images)

More than $900 billion worth of foreign assets have been acquired by the Gulf Cooperation Council (GCC) in the five years to June 2008, according to latest figures.

And the US has been the destination for the bulk of GCC capital, according to a report by Samba Financial Group with highlights including Abu Dhabi Investment Authority's purchase of the Chrysler Building in New York.

Interest in the US market has remained strong in recent years, accounting for almost half the foreign assets accumulated during the past five years, Arab News reported on Thursday.

Elsewhere, favoured areas for investment have been Europe, the Middle East and North Africa and East Asia while GCC foreign asset accumulation in 2008 is likely to reach around $390 billion, the report added.

“The onset of the credit crunch in the second half of 2007 triggered increased GCC demand for US Treasury bills and, more surprisingly, US corporate securities,” Howard Handy, chief economist at Samba, told the paper.

The report said that GCC countries have been running large and increasing external current account surpluses since the onset of the oil boom in 2003.

From mid-2003 to mid-2008 oil prices more than quadrupled, from just over $30 a barrel to $140 a barrel.

The price surge, in conjunction with incremental additions to export volumes, boosted the GCC’s cumulative export earnings over the period to about $2.2 trillion.

Because of surging oil prices, the current account surplus swelled dramatically from around $50 billion in 2003-04 to almost $400 billion in 2007-08, the report added.

With oil prices slipping back to near $50 a barrel, Handy added: “A slight increase to around $75 a barrel is envisaged for 2010 as global demand begins to recover. Given this, we expect that GCC capital outflows will amount to about $430 billion between June 2008 and June 2010."

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READERS' COMMENTS

to ajmaani
Posted by Mujtaba, Dubai, UAE on Thursday 27 November 2008 at 18:06 UAE time


its about looking at the big picture.

would you rather not have the funds remain in the region

to Mujtaba.
Posted by ajmaani on Thursday 27 November 2008 at 14:35 UAE time


please read again the article.. it clearly stated up to june of 2008.

but up to now. i think it is decreasing so that is why we are having liquidity crisis.

oh my
Posted by Mujtaba, Dubai, UAE on Thursday 27 November 2008 at 08:41 UAE time


and we have a liquidity crisis at home

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