Arab tycoons are putting funds in Middle East capital markets and other investments, in the aftermath of the tech market bust and 9/11, asserted a senior official of the Bahrain Monetary Agency (BMA), Bahrain’s central bank.
Investment in Bahrain-registered mutual funds, focused on regional markets, has grown dramatically in the past 18 months, said Abdul Rahman Al-Baker, director of Financial Institutions Supervision at the BMA.
“Investment in locally-incorporated funds has grown 180 percent to $504 million, from $180 million in March 2002,” he said. Prior to 9/11, the year-on-year growth averaged about 20 percent. “For this year, we are expecting growth in the range of 60 percent,” said Al-Baker.
New regional funds, with a total investment of over $400 million, have already been incorporated in Bahrain so far this year, with applications for several more under consideration by the BMA.
The new fund registrations this year have included the first Iran fund, enabling investment by foreigners in the Tehran Stock Exchange. Al-Baker said the Bahrain Stock Exchange (BSE) and other regional capital markets are reaping the fruits of this new interest by Arab investors, whose collective wealth is estimated at $1.3 trillion.
“We are now seeing greater diversification of investment portfolios of Arab investors, to include regional opportunities,” he said, on the sidelines of the 13th annual Fund Forum International, which opened this week in Nice, France. The two-day event, organized by UK-based International Center for Business Information (ICBI), focuses on key business issues affecting the fund industry.
The Kingdom of Bahrain is a Middle East financial hub, hosting the largest concentration of banks and other financial institutions in the region. The BMA, the Kingdom’s central bank and sole regulator for the financial system, currently regulates a total of 347 institutions, of which 180 are banks and banking-related institutions, 154 insurance and insurance-related firms and 13 capital market brokers.
In addition, 1,478 collective investment schemes (mutual funds) are authorized and approved by the BMA. Total investment in these funds, as of March 31, 2003, was four billion dollars. This compares with $2.9 billion at the same time last year.
The Bahrain Stock Exchange (BSE) is the most open capital market in the Gulf Cooperation Council (GCC) region. Foreign investors are allowed to acquire up to 49 percent of listed companies, while nationals of other GCC countries can acquire 100 percent ownership.
Foreign brokerage firms are also allowed to operate at the BSE, which currently has a market capitalization of $7.6 billion, with 42 listed companies, 29 mutual funds and eight bonds. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
