THE POPULARITY OF Baby Dior boutiques is just one indication of the amount of cash that is once again being generated in the Gulf region. The range for babies by French fashion house Christian Dior sells, among other things, $265 Dior logo teddy bears and $570 cashmere blankets.
Another sign is the amount of money chasing every investment opportunity. IPOs are seen as a particular delicacy and the enthusiasm of the investing public for them makes outbreaks of IPO fever elsewhere look healthily restrained. Half the population of Saudi Arabia has turned out to buy shares in recent IPOs. By comparison, no more than 3 million out of a population of 60 million were gripped by the UK's IPO craze of the late 1980s and early 1990s. In the UAE the 800 times oversubscribed $134.8 million IPO for Aabar Petroleum Investments Company, an operation with little more than a business plan, attracted $107 billion of demand, an amount equivalent to the country's GDP.
The appetite for IPOs in the region is huge not only because the mountain of cash looking for a home keeps getting bigger as oil prices continually break records but also because negative real interest rates mean that leaving money in the bank is an unsatisfying strategy.