Page 20 - Aamir Rehman Gulf Capital and Islamic Finance The Rise of the New Global Players

Introduction 5

crisis and global recession. Unlike many other institutions,
however, Gulf investors (especially in the UAE, Qatar, and
Kuwait) can expect fresh infusions of capital as a result of
their ongoing budget surpluses.
3. Even at modest oil prices, key Gulf economies will accumulate
new capital. Assuming an oil price of $50, GCC economies
would gather $4.7 trillion between now and 2020. 13
4. Gulf investors enjoy sizable reserves and “dry powder” for
acquisitions in an environment of lower asset values
worldwide. In an increasingly capital-constrained world,
Gulf investors are a rare source of liquidity. Thus, they could
remain central to global investment markets for the
foreseeable future.

GAPS IN UNDERSTANDING
Despite the growing importance of Gulf capital and Islamic finance,
most business and finance leaders today have little understanding of
these areas. They acknowledge that these phenomena are influencing
the shape of global finance, but the drivers, forms, and implications of
Gulf capital and Islamic finance tend to be only partly understood
through headlines and news flashes.
These gaps in understanding are natural. The rise of the Gulf as
a business and financial center is, after all, a recent phenomenon.
Islamic finance, although present in its modern form since the 1970s,
came to the attention of global financial institutions in a serious way
only in the 1990s. In the corporate worlds in which most senior exec-
utives spent their formative years, the Gulf region and Islamic finance
were not central to global corporate or financial strategies. Senior
executives’ exposure to these topics tends, therefore, to be quite
limited. Schools of management have historically had little in their
curricula on these fields, although this is changing fast. Leading insti-
tutions have been steadily increasing their focus on this area through
initiatives such as the Islamic Finance Program at the Harvard Law
School and the Cass Business School’s MBA program with a focus on
Islamic finance.
At the same time, public information on these topics has often
been piecemeal, anecdotal, or hard for international audiences to
access. As with most emerging fields, participants have generally had
little time to analyze these phenomena holistically. In the field of