Gulf Finance House (GFH) was one of a few select financial institutions specially invited to take part in JP Morgan’s annual European Emerging Markets Winter Conference, which took place in Flims, Switzerland, from 12 to 15 March 2006.. This prestigious three-day event brought together specially invited economic and political analysts, government authorities, institutional investors, and JP Morgan professionals. Attendance was limited to 60 leading emerging market institutional investors, comprising dedicated emerging market fund managers, cross-over portfolio managers, hedge funds, and insurance companies.
JP Morgan is one of the world’s largest investment banks and is part of the JP Morgan Chase group. The agenda for this year’s event included sessions on the global economic outlook, including monetary policy, energy and commodity prices, as well as major emerging markets like China, South Africa, Turkey and Russia. The event also included special focus sessions on Eastern Europe, Latin America, Asia and the Middle East. The latter is gaining greater attention from international institutional investors because of the world’s growing dependence on the region’s oil, and the opportunities that it is providing for exporters and investors alike.
GFH Chief Economist Dr. Ala’a Al-Yousuf was personally invited as one of three regional experts for a session entitled ‘The Middle East – Boom or Bust?’. He noted that the Middle East’s political and economic landscape is changing and that the GCC states are experiencing a broad-based economic boom. “The elements of the economic boom in the GCC are rapid growth in consumption and investment (both by the private and public sectors), fast growth in bank credit to the private sector, a strong pick up in construction activity, high property prices and sharp increases in regional stock market indices,” Dr. Al-Yousuf told delegates
Dr. Al-Yousuf pointed out that the GCC economic boom had strong economic foundations. “Unlike the Asian boom that ended in 1997, the GCC economic boom is based on sizeable balance of payments and fiscal surpluses, substantial government assets, sound banking systems and strong corporate profits. The GCC economies have substantial needs for public and private infrastructure investment after many years of a wait-and-see attitude,” he explained. “These infrastructure projects are financed through a mixture of sources, including bank credit and capital market debt but, more importantly, private equity. This is a key difference from earlier booms in the region or the Asian experience of the mid-1990s.”
Dr. Al-Yousuf added that the run up in stock market prices in the past three years reflected a combination of a fundamental strengthening of corporate performance and market exuberance that varied from one market to the next. He noted, however, that this did not mean that there were no risks to investors. “While there is now a correction to the most overvalued stock markets and imprudent investors may lose their money, the impact on the financial system and the macroeconomic performance will be limited. There are many sound investment opportunities in the GCC, especially in sectors such as oil, gas and petrochemicals, utilities, infrastructure, leisure and tourism, and also finance and asset management, particularly the Islamic niche. Leading regional financial institutions such as Gulf Finance House can help Middle Eastern and international investors work together to take advantage of these opportunities,” he added.
According to Mr. Esam Janahi, Chief Executive Officer and Board Member of GFH: As an organisation with a global focus, GFH was honoured to be invited to take part in this prestigious conference. This was an ideal opportunity to analyse the recent performance of the Middle Eastern economies, especially the GCC economies, and showcase the great investment opportunities in the region. Such prestigious gatherings help us to strengthen links between the Middle East and international financial markets.”
Commenting on the conference, Dr Ala’a Al-Yousuf said: “This was a unique opportunity to network with leading international specialists and investors. The session on the Middle East economic boom was well received and generated keen interest. At GFH, it is our constant endeavour to present a clear and analytical picture of the economic landscape of the Middle East to the international investment community.”
