The Middle Eastern countries have seen investors are scaling back, as the region and exchange traded funds (ETFs) lose capital flows.
Arab Gulf capital inflows are essential for these economies to continue their growth spurt. As investors’ appetites for the region are waning, so are the banker and analyst predictions for the near future.
Suleiman al-Khalidi for Reuters reports that cash-rich Arab Gulf countries had poured billions of dollars in Egypt, Jordan, Lebanon and Syria as they invested in mega-real estate projects, equities and energy and telecoms companies beyond their domestic markets.
The global credit crisis has left local Middle East investors partnered with Gulf Arab investors uncertain about the changing credit terms for the financing of large real estate projects already underway, or infrastructure projects in the pipeline that rely on higher debt than equity.
Although the capital inflows are dramatically sparse and the near future depends on how deep the financial crisis reaches, longer term fundamentals are set up for a slow recovery.
- Market Vectors Gulf States (MES), down 34.6% since Aug. 21 inception
- WisdomTree Middle East Dividend Fund (GULF), down 33.4% since July 22 inception
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.