ABU DHABI, 12 September — Gulf investments abroad are still resisting nostalgic feelings and staying where they are despite the political fallout from the Sept. 11 attacks in the US last year and subsequent losses from the crash in most Western stock markets.
Experts, quoted by the Dubai-based daily Gulf News yesterday, said part of the overseas funds controlled by the Gulf Cooperation Council countries has returned but their size remained a fraction of the total assets — and the transfers were triggered mostly by an improvement in the investment climate within reforms carried out by some members.
A year after the attacks, it became clear that the entire world suffered economically, but the impact was mixed for the GCC.
"There were losses in several fields for the GCC ... as you know travel activities worldwide ware badly hit and so were the GCC airlines.... The US economy received a strong blow from the September events and this had a depressing effect on the dollar, which in turn raised the GCC’s import bill," said Gulf economist Mohammed Al-Asoomi.
"The biggest loss is in the GCC’s investments abroad...billions of dollars have vanished because of the ensuing stock market crash.... The positive impact from those events was that some of the overseas funds are slowly coming back.... This is evident in the growing investment activity in the region although the returning funds seem not large enough."
Bankers estimated that around $2 billion have returned to the UAE this year while in Saudi Arabia, nearly SR10 billion ($2.66 billion) were repatriated in the first half.
While part of them were pumped into local investment funds and other projects in Saudi Arabia, another part was reinvested in Western markets, according to Nadia Taher, senior economist at the National Commercial Bank.
Taher told Gulf News that recent reports about the withdrawal of more than SR200 billion from the US by Saudi investors were incorrect.
"It is impossible because the bulk of Gulf assets abroad are long-term investments... our estimates through the net foreign assets point to a return of around SR10 billion in the first half of this year, some of which were redirected to other Western markets," she said.
"As you see, it is not a substantial capital repatriation considering the size of the GCC’s overseas assets... the reasons are that the investment climate is still not encouraging enough, the market is small and there are no legal guarantees for such investments."
Asoomi said he had no figures on the losses in the GCC’s overseas investments, which are independently estimated at between $800 billion and $1.4 trillion.
"I can only say the losses are huge, but it is too early to know their exact size.... The main losers are those who liquidated part of their funds and repatriated them," he said.
