Investments running into several hundred billion dollars in the US by the UAE and other Gulf investors are likely to return home in view of the terrorist attack and fears of a freeze on assets, top bankers said Sunday.
While UAE investors are nervously awaiting the resumption of trading in New York's financial markets on Monday, bankers and analysts predict only a temporary slump, reported the Gulf News.
"We will see a natural repatriation of UAE money into the UAE due to a combination of factors," said Terrence Allen, head of treasury and investment banking at the National Bank of Abu Dhabi.
"The uncertainty in the US after the attack, the fear of a freeze on assets and lower interest rates may lead to a large-scale influx of money. Besides, the local stock markets are improving in the Gulf, luring investments back," he said.
GCC investments in the US are estimated at around $400 billion.
Bankers were unanimous that the US markets will fall at the opening when trading resumes, but will recover quickly.
"The markets in the US will go back to fundamentals," said Ahmed El Shall, senior vice-president for strategic planning and financial control at Abu Dhabi Islamic Bank.
"Based on historical experience and going by leading economic indicators we foresee a pick-up in US activity by this year-end. Long-term investors will hold their own. Overall, stocks have performed better than cash and bonds despite events that disrupt the markets, although the latest was something unprecedented leading to some uncertainty," he told the paper.
High net-worth individuals and institutional investors in the UAE have invested in mutual funds and other investments in the US, and these investors could be hit if the market does not recover, said Mani Swaminathan, financial controller at First Gulf Bank – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)
