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Tue 19 Oct 2010 01:09 AM

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Uncertainty lifts on Mideast investment outlook

Middle East investment summit speakers upbeat on region's prospects

Uncertainty lifts on Mideast investment outlook
UPBEAT PROSPECTS: Speakers at the Reuters Middle East investment summit were upbeat about the regions prospects

Uncertainty in the wake of the economic downturn, tight credit markets and Dubai's devastating debt crisis has begun to ease in the Middle East.

Speakers at a Middle East investment summit were upbeat on prospects for the region, buoyed by rising consumer sentiment and cash rich investors keen to make emerging market plays.

"In 2008, the whole world stopped - for good investments, bad investments, everything. And that has picked up again," said Ziad Makhzoumi, chief financial officer at Dubai's Arabtec, the UAE's largest listed contractor.

The signs of recovery have gone "beyond the green shoots stage" said Abdul Kadir Hussain, chief executive of Mashreq Capital. The pick up is evident in different sectors across the region.

In Egypt, the Arab world's most populous country, automobile assembler GB Auto sees a 50 percent jump in net profit this year over 2009 as consumers come back to the market.

"Consumer confidence was really shaken late 2008 and 2009. This is behind us now, and consumer confidence is back," Raouf Ghabbour, GB Auto chairman and chief executive, told Reuters.

In the property sector, state driven projects in places like Saudi Arabia and Abu Dhabi have generated work for some developers and contractors hit by the real estate collapse in the Gulf region.

Those private public partnerships - whether it is Qatar's spending on education infrastructure or Abu Dhabi's creation of more housing for its local citizens - have helped revive a sector in the doldrums since the global financial crisis, though it still remains a laggard.

Lending has begun to open up again albeit grudgingly while foreign banks are aggressively pitching for debt issuance mandates from companies.

And that issuance, already highly active in recent weeks as borrowers take advantage of low interest rates and abundant liquidity, is expected to rise further.

"The market confidence is coming back," said Haroon Nisar, senior manager for Islamic banking at Saudi Hollandi Bank, the Royal Bank of Scotland's affiliate in the kingdom.

Nisar said Saudi firms may launch up to 10 Islamic bonds, or sukuk, in 2011, more than double the number this year.

More attention is being lavished on Iraq, where rising infrastructure needs - against a backdrop of diminishing political violence and a strengthening currency - are luring investors, from private equity firms to sovereign investment vehicles.

"Iraq is a country emerging from a difficult period, it's getting back on track and it's a country that cannot be allowed not to succeed," said Mohammed al Hashemi, head of Invest AD's asset management arm. Invest AD is an Abu Dhabi government owned investment vehicle.

State owned conglomerate Dubai World's $25 billion debt deal last month has eased concerns over the Gulf emirate's debt woes, with developer Nakheel, builder of man made islands in the shape of palms, next in line to restructure.

Nisar said: "Investors are happy to be getting their money back (from Dubai). That was the most important thing for them ... The fundamentals of the region remain positive." (Reuters)

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