Page 231 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

CHAPTER 8

Capable Capital: The GCC as a

Source of Capital

INTRODUCTION
If dollar bills could talk, a lot of them would speak Arabic. The
economies of the Gulf have long been exporters of capital, denomi-
nated in US dollars, because energy markets are dollar-based. GCC
investors—both public investment arms and private institutions—
hold massive amounts of international investments, including hun-
1
dreds of billions in US Treasury bills. As the US economy runs
record-breaking budget and trade deficits, Gulf economies are
running unprecedented surpluses and investing those surpluses
both at home and abroad. Together, the Gulf states enjoyed a com-
bined budget surplus of about $120 billion in 2006. That’s around
2
$3,000 per person who lives there.
The GCC has seen boom times before, but this time its invest-
ment strategies are different. In addition to traditional assets like US
Treasury bills and OECD equities, Gulf investors are putting more
money into alternative investments, such as IPOs and private equity,
than ever before. They have also been investing in their home mar-
kets with unprecedented enthusiasm: local stock markets increased
in value many times over in the first half of the 2000s before a

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