By Daliah Merzaban
DUBAI (Reuters) - Gulf Arab investors are increasingly looking to Asia to invest windfall oil revenue, eager to ride the rise of China and India and diversify away from their traditional ties with the United States.
"If you look at some of the big investment houses in the region, their appetite for Chinese is high," Nasser al-Shaali, chief executive of the Dubai International Financial Center (DIFC) Authority, told the Reuters Middle East Investment Summit this week.
Public and private companies in the world's largest oil-exporting region want to take luxury hotel and resort brands to Beijing and Shanghai, invest in Indian power stations and funnel billions of dollars into Pakistani real estate.
"What you are going to see is a capital moving eastward from the Middle East," said Shaali, whose dollar-based investment zone in the Arab world's commercial hub hopes to eventually rival financial centers in London, New York and Hong Kong.
Gulf Arab investors have spent around $94 billion on foreign mergers and acquisitions since 1997, about two-thirds of that in 2005 and 2006.
But only 10-15 percent of the $1.1 trillion surplus regional oil producers accumulated between 2003 and 2007 has entered regional economies, Shaali said.
The United States, a traditional home for parking petrodollars, may be falling out of favor as investors count the risk that assets in the U.S. could be targeted over security concerns since the September 11, 2001 attacks.
"We try to avoid deals that have a political angle to it," said Atif Abdulmalik, chief executive of Arcapita, a Bahrain-based Islamic investment bank.
Dubai Ports World was forced to relinquish six U.S. assets that were part of its $6.8 billion buy of British ports operator P&O in 2006 following a political furor stemming from concerns over national security.
The move brought talks for a U.S.-UAE free trade deal to a standstill, and made regional investors cautious.
"In two relatively short sweeps we've damaged in the minds of people a reputation built up over 200 years," said David Jackson, chief executive of Dubai government investment agency Istithmar.
"The U.S. talks about how 'We are the greatest capital market in the world and we are open to everybody' but the evidence is against that, whether Unocal or DP World," Jackson said.
SURPLUS LIQUIDITY
DP World's expansion into India and China and Istithmar's purchase of around 2.7 percent in Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) last year to tap the London-based bank's strong focus on Asia indicate that Asia stands to benefit from this reticence.
"We have a lot of surplus liquidity and people don't know what to do with it," said Sarmad Zok, chief executive of Kingdom Hotel Investments, owned by Saudi billionaire Prince Alwaleed bin Talal. Continued...
© Thomson Reuters 2009. All rights reserved.
| India Investment | Nov 23 - 25, 2009 | Country Summits |
| Global Finance | Nov 16 - 19, 2009 | Financial Services / Exchanges |
| Health | Nov 09 - 12, 2009 | Health |
| Autos | Nov 02 - 4, 2009 | Autos |
| Middle East Investment | Oct 26 - 28, 2009 | Country Summits |
