Author: Nigel Dudley
There are positive signs for the investment community. Senior Arab Figures, such as Bahraini Finance minister Abdullah Saif, are calling for the creation of a 'capital-markets culture' in the region. All the stock exchanges are buying state-of-the-art computerized technology. Saudi Arabia has introduced changes in its investment laws designed to attract more foreign capital and the United Arab Emirates (UAE) is, after years of prevarication, edging toward a formal exchange which will replace the lottery of the over-the-counter market. Even the Palestinian Authority has an exchange and was the fastest growing market in the region last year.
Local fund managers are increasingly positive about opportunities, citing the combination of political and economic stability, the relaxation in foreign investment laws, the new-found readiness to privatize state industries, the waiving of taxes and currency stability against the dollar.
According to Maha Al-Ghunaim, managing director of the Kuwait-based investment bank Global Investment House (GIH), "the Gulf Co-operation Council [GCC] equity markets are the last frontier in emerging markets. We believe this area is undergoing a major restructuring.
Foreign investors' laws are currently being approved and implemented in almost all GCC countries."
However, bankers and politicians are well aware that it will take several years to make significant progress.