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Gulf investors have incurred huge losses from foreign assets. Sameer Al Ansari of DIC plans to focus on Mideast and emerging markets.

It has already moved to reduce its exposure to global stock markets by shifting assets into short-term cash funds. KIA has disclosed it lost $30.9bn in foreign investments between March and December last year, having bought into US banks including Citigroup and Merrill Lynch before shares in both crashed and the latter filed for bankruptcy protection.

Al Ansari, of DIC, the international investment arm of state-owned Dubai Holding, said in an interview last month that conditions in the US and UK were "challenging" and it would instead focus on emerging markets such as India and the Mideast. Its estimated $10bn fund had included stakes in UK bank HSBC Holdings and US hedge fund Och-Ziff Capital Management.

The actions of other regional SWFs since the credit crisis hit has been less clear. Abu Dhabi Investment Authority lost as much as $125bn from cut asset prices, according to a report by the Council on Foreign Relations last month.

The impact of the economic turmoil on the Saudi Arabian Monetary Agency and the Qatar Investment Authority, which according to the report had $501bn and $58bn under management at the end of last year respectively, is uncertain.

But one thing that does seems sure is that the days of the big bets made by these funds abroad are over.

"Even if oil stabilises at $75 a barrel over the next five years, the pace of foreign asset accumulation in the Gulf will slow substantially," Brad Setser and Rachel Ziemba wrote in the Council on Foreign Relations report.

With fear continuing to stalk local markets, analysts say individual investors from the region can bargain hunt for assets well below their true value.

"Most of the investors and funds who had investments overseas have incurred huge losses and when they see regional markets trading almost to their bottoms they become very attractive for investment," says Shiv Prakash, technical equity investment analyst for MAC Capital Advisors. "I see fresh investments coming soon in the region and increasing by at least by mid-2009."

Prakash expects a gradual flow of funds into GCC markets over the coming months, with a particular focus on utilities, transportation and logistics, which have opportunities for growth in the long term. He advises that real estate is a sector best avoided as the market needs time to stablise.

Earlier this month, the ADCB Macquarie Infrastructure Fund (AMIF), a joint venture between Abu Dhabi Commercial Bank and Australia's Macquarie Group, announced a $188m investment, giving investors exposure to government-commissioned infrastructure projects in the UAE.

The Arab Investment and Export Credit Guarantee Corporation (Dhaman), which oversees the promotion of inter-Arab capital, strongly believes that Gulf funds should be repatriated. In its latest monthly bulletin, the Kuwait-based organisation urged investors to reduce their dependency on global markets to allow them to avert risks from the continuing downturn.

"The Gulf will not be able to take all the amounts that have been invested around the world, we would just like to see a small amount repatriated," says Ismail Botan, director of investment for Dhaman. "Only time will tell how much the markets will need to recover."

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