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Gulf investment outflows is down, UAE Foreign Trade Is Up
Unrest-led outflows in the Gulf is next to minimal as foreign trade increases, with lenders looking to boost local business and new accounts being opened by conservative investors
April 18, 2011 4:00 by Eva Fernandes
Foreign investor outflows from Gulf Arab markets during recent political unrest have been significantly lower than those seen during the financial crisis, the regional head of custody at HSBC told Reuters.
“I have seen far less money going out of markets here than what I saw during the financial crisis. Maybe the reason that money is not flowing out is in anticipation of something good that will happen,” said Arindam Das, who is also deputy head of the UK lender’s securities services for the Middle East and North Africa (MENA) region.
Most Gulf Arab markets have shrugged off initial losses when unprecedented political unrest in countries like Egypt and Bahrain led to stock market sell-offs. Dubai’s flagship index, for instance, has risen over 12 percent in the last month.
Improved settlement systems in countries like the United Arab Emirates (UAE) and Qatar will result in more interest from institutional investors, the executive added.
Gulf markets have been traditionally dominated by retail investors who tend to follow a herd mentality, resulting in panic-driven selling when negative events unfold.
The executive said HSBC, which handles about 25 percent to 30 percent of all the institutional money flow in the region, was now turning towards local institutions in the region to boost its business.
Among the local institutions, the bank is mainly focusing on mutual funds and family offices, Das said.
At present about 80 percent of clients are foreign institutions and the remaining are local firms.
And this political and economic stability is spiking, if not maintaining, the non-oil economy for the UAE.
Non-oil trade on the rise
Shaikha Lubna Al Qasimi, Minister of Foreign Trade was all smiles when she was inaugurating the fourth Malaysia Service Exhibition (MSSE 2011). The reason being, UAE foreign trade is up, up, up.
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