This is going to be a huge issues, as we see more of of stock markets and financial companies bought by Kuwait and others. The monitoring of the types of investments made under Shariah control should be of concern, as the laws of Shariah will dictate the investments. Especially troubling will be the pork, entertainment, tabloid, music,sex and industries that supply products that are considered “non halal”. This type of ban will also affect the trucking industries that carry these products, the stores that retail or wholesale these products, the packaging companies, and will have an impact on employment and loss of jobs. This is much more than Walmart not carrying bacon in their meat department. The far reaching and long term inplications of this sell off to the Middle East will have an impact on our society not just now, but down the road, and can and will change the face of the US and Europe as we know it.
Anyone who invests large amounts of dollars into firms like Och-Ziff and Goldman Sachs should be concerned, and calls should be made to your investment counselor and requests for “terror free” investments should be stressed. Also, making the brokers aware of concerns about the sell off to the Middle East, should be on everyone’s agenda who sees the threat to civil society and the breakdown if we continue to allow Shariah investments to take control of our lives.
comments by Allyson Rowen Taylor
By Will McSheehy
Jan. 7 (Bloomberg) — The economies of the six Gulf Cooperation Council states will expand at a faster rate in 2008 than last year, giving their governments bigger surpluses to spend on overseas investments, EFG-Hermes Holding SAE said.
Saudi Arabia’s real rate of gross domestic product growth will jump to 5.2 percent in 2008 from 3.1 percent in 2007 on higher oil prices and state spending, EFG, Egypt’s biggest investment bank, said in a report e-mailed today. Kuwait’s growth will rise to 5.1 percent from 3 percent and Qatar’s to 9.8 percent from 8.5 percent.
“Higher oil and gas production is at the root of the forecasts,” Monica Malik, EFG senior economist, said in a phone interview from Dubai. “Bigger fiscal surpluses will undoubtedly boost the GCC’s development of overseas assets as they seek to diversify their holdings.”
Gulf investors almost doubled their overseas acquisitions to $64 billion last year as oil prices rose to more than $90 a barrel, helping the region’s governments earn more than $1.3 billion a day from crude sales. State-controlled Saudi Basic Industries Corp. in May agreed to buy General Electric Co.’s plastics unit for $11.6 billion in the Gulf’s biggest acquisition, and Abu Dhabi’s sovereign wealth fund said it would inject $7.5 billion into Citigroup Inc. after mortgage losses wiped out almost half the U.S. bank’s market value.
Subprime Bargains
State-backed investors including Dubai’s Istithmar PJSC and the Qatar Investment Authority have said they may buy U.S. financial and real estate companies this year after the credit market slump cut share prices. Dubai International Capital LLC in November said it bought a “substantial” stake in Sony Corp., its first investment in Japan.
“We could easily see those M&A figures double this year with all the liquidity in the region now,” Shailesh Dash, head of strategic investment for Global Investment House KSCC, Kuwait’s biggest investment bank, said in a phone interview today. “Everyone’s looking at U.S. and European assets affected by the subprime crisis, as well as showing interest in Asian companies.”
Kuwait City-based Global manages about $1.6 billion of client money that’s invested in Middle East and Asian companies, according to Dash. The bank sees “a lot of sense” in using some of the $2 billion it has reserved for investment to buy into U.S. and European finance companies this year, he said.
Domestic Projects
While increasing overseas spending, Gulf governments will also boost funding for domestic development projects including roads, airports and business parks, according to the EFG report. Some states “such as Kuwait, Saudi Arabia and Abu Dhabi have only recently embarked on their investment drives,” and of $1.6 trillion of projects that have been announced, construction work has begun on fewer than 20 percent of them.
Abu Dhabi yesterday said it aims to spend $200 billion on development projects over the next five years, with the government funding 40 percent of the cost. Kuwait plans to spend $51 billion in the same period to increase oil and gas production, Saad al- Shuwaib, chief executive officer of state-run Kuwait Petroleum Corp., said in a Dec. 18 interview.
Shrugging of a credit slump that helped cause the first drop in European bond sales since 2000, Gulf borrowers sold a record $17.9 billion of Islamic bonds last year, data compiled by Bloomberg show.
Gulf companies may sell a record $50 billion of conventional and Islamic bonds this year as they seek money to fund expansion and acquisitions, Philipp Lotter, senior credit analyst for Moody’s Investors Service in Dubai, said last month.
Bahrain’s economy will expand 6.5 percent this year, up from 6.2 percent in 2007, according to EFG. Oman’s growth will accelerate to 5 percent from 4 percent and that of the United Arab Emirates to 9 percent from 8.6 percent.
The forecasts are based on an average oil price of $77.2 a barrel, a 6.2 percent increase from last year, EFG said. Crude traded in New York averaged $72.36 per barrel in 2007, 20 percent higher than the $60.15 it fetched in 2006, Bloomberg data show.
To contact the reporter on this story: Will McSheehy in Dubai at [email protected]
Last Updated: January 7, 2008 08:09 EST
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