Opportunities In: Middle East Capital Markets

Publication Date	February 2007
Publisher	IFR Market Intelligence
Product Type	Report
Pages	200
ISBN Number	not applicable
Product Code	IFR00008

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Summary

The Middle Eastern capital markets are in the process of an extraordinary transformation that will create some of the most exciting investment opportunities anywhere in the world.

The ongoing influx of international investors, the region's intrinsic dynamism and continuing financial strength, and a growing inclination among local investors to keep their money closer to home, are combining to create a powerful new player on the world stage.

This report provides international financial institutions and investors with the key market intelligence required to develop strategies for success by:

Weighing-up the scale of opportunities balanced against the political risk for the region's economies.
Pinpointing what expertise and know-how is required to further expand local financial structures
Highlighting new products likely to appeal to wealthy local investors and institutions
Profiling the products, structures, strategies and opportunities of the fast-emerging financial centres of Dubai, Bahrain and Qatar

By reading this report you will know the answers you need to accelerate your participation in this lucrative region, including:

What private equity investment opportunities exist across 14 countries in the region?
What are the assets and strategies of the national institutions investing each country's oil wealth?
Which banks look likely to emerge as the winners, and why?

Content

01 Executive Summary
- The Middle East: A New World Player
- Development Drivers
  - Regional Markets
- Currency Harmonisation
- The Oil Factor
  - Moves Towards Diversification
- The Wider Region
- Ready For Take-Off
- Key Points
Section01
Countries Of The Middle East Region: Economic And Political Fundamentals
Chapter
Bahrain
- Overview
  - History
  - Economy
  - Industry
  - Banking
  - Stock Exchange
  - Gulf Co-Operation Council
- Economic Analysis
  - Macro-Economic Performance
  - Government Policy
  - Government Finance And Debt
  - Commercial Banks
- Chapter
- Kuwait
  - Overview
    - Economy
    - History
    - Government
    - Stock Exchange
  - Economic Analysis
    - Macro-Economic Performance
    - Government Finance And Debt
    - External Vulnerability And Liquidity
Chapter
Oman
- Overview
  - History
  - Economy
  - Stock Exchange
  - The State General Reserve Fund (Sgrf)
  - Foreign Investment
  - Future Objectives
- Economic Analysis
  - Macro-Economic Performance
  - Government Finance And Debt
  - External Finances
Chapter
Qatar
- Overview
  - Economy
  - Industry
  - Foreign Investment
  - Stock Exchange
  - Future Objectives
- Economic Analysis
  - Macro-Economic Performance
  - The Domestic Economy
  - Government Finance And Debt
  - State Assets
  - External Current Account
Chapter
Saudi Arabia
- Overview
  - Economy
  - Saudi Arabian Monetary Agency
  - Stock Exchange And Economy
  - Future Objectives
- Economic Analysis
  - Macro-Economic Performance
  - Changing Fundamentals
  - Government Finance And Debt
  - The External Economy
Chapter
United Arab Emirates
- Overview
  - History
  - Economy
  - Oil
  - Stock Exchange
- Economic Analysis
  - Macro-Economic Performance
  - The Domestic Economy
  - Government Finance And Debt
  - The External Economy
Section02
Investing Institutions
Chapter
Future Generations Funds
- Overview
  - Guiding Principle
- How Future Generations Funds Work
- The Western Fund Managers Perspective
  - Demanding Investors
  - The External Manager Mix
Chapter
Saudi Arabian Monetary Agency (Sama)
- Overview
- Samas Functions In Modern-Day Saudi Arabia
  - Samas Size
  - Management
  - Links With Foreign Banks And Consultants
  - Links With The Saudi Government
  - Investment Strategy
Chapter
The Abu Dhabi Investment Authority (Adia)
- Overview
- Adias Functions In Modern-Day Uae
  - Adias Size
  - Management
  - Links With Banks And Consultants
  - Links With The Uae Government
  - Investment Strategy
Chapter
The Kuwait Investment Authority (Kia)
- Overview
- Kias Functions In Modern-Day Kuwait
  - The Kuwait Investment Office (Kio), London
  - Kias Size
  - Management
  - Links With Banks And Consultants
  - Investment Strategy
Section
Macro-Economy And Ratings
Chapter
Economic Background
- Overview
- The History Of Middle East Borrowing
Chapter
Debt Issuance And Ratings
- Overview
  - Petrodollar Liquidity Management
- Bahrain
- Rating Outlook
- Kuwait
  - Rating Outlook
- Oman
  - Rating Outlook
- Qatar
  - Rating Outlook
- Saudi Arabia
  - Rating Outlook
- United Arab Emirates
  - Macro-Economic Performance
  - Government Finance And Debt
  - External Vulnerability And Liquidity
Section
Regional Financial Markets
Chapter
Middle East Fund Management Since 11 September 2001
- Bringing The Petrodollars Back Home
- Infrastructure
- Regional Markets
- Fund Management
- Local Investment Firms
- New Trading Trends
- Regulation And Market Practice
- The Role Of Consultancy
- Conclusions
Chapter
The Oil Price Effect
- Overview
- Economic Growth Record
- Investment Opportunities
- Investor Euphoria
- Drivers Of The Middle East Boom
- The Decline Of The Markets
- Conclusions And Predictions
Chapter
Real Estate
- Overview
  - Dubais New Stability
- Real Estate Investment Trust (Reit) Developments
- Case Study: Bahrains Real Estate Boom
  - Attracting Foreign Investment
  - Investor Demand
  - Financial Implications
  - Tourism In Bahrain
Chapter
Initial Public Offerings
- Overview
- Emaar Economic City, Saudi Arabia
- Gulf Navigation Holding, Uae
- Telecom Egypt, Egypt
- Albaraka Banking Group, Bahrain
Section
Key Products
Chapter
Equities
- Overview
  - Causes Of Strong Equity Performance
- How The Bubble Bursts
  - Government Response
- Outlook
  - The Possible Impact Of Us Markets
  - Investor Prospects
- Gulf Stock Exchanges
  - Tadawul All Share Index (Saudi Arabia)
  - Dubai Financial Market (Uae)
  - Bahrain All Share Index
  - Doha Securities Market Index (Qatar)
  - Kuwait Stock Exchange
  - The Gulf Markets Overall
Chapter
1bonds
- Overview
- Five-Year Floating Rate Notes
- Bond Details
  - Bonds Listed On The Bahrain Stock Exchange
  - How To Issue Bonds On The Bahrain Stock Exchange
  - How To Issue Bonds On The Muscat Stock Market (Oman)
  - How To Issue Bonds On The Dubai Financial Market (Uae)
Chapter
Funds
- Overview
- The Fund Markets
  - Saudi Arabia
  - Kuwait
  - Oman
  - Bahrain
  - The Uae
- Islamic Funds
- Hedge Funds
Chapter
Project Finance
- Overview
- Saudi Arabia
- Bahrain
- Oman
- Uae
- Qatar
- Project Finance Data
Chapter
Private Equity
- Overview
- Economic Buoyancy In The Gcc
- Large Investment Institutions
  - International Limited Partners
- Geographical Focus
- International/Local Partnerships
- Bahrain
- Saudi Arabia
- Qatar
- Building On Property
- Investment From Europe And The Us
- Shariah Compliance And Private Equity
- Future Prospects
Chapter
Islamic Finance
- Overview
  - Financing Options
  - Market Development
- Basic Principles
- Shariah Banking
- Islamic Finance Products
- Sukuks
  - Landmark Sukuk Deal
  - Growth Of The Sukuk Market
  - Securitisation And The Sukuk
- Case Study: Caravan I
  - Challenges For Islamic Securitisation
  - Accounting Issues
- Other Islamically-Compliant Products
  - Derivatives
  - The Concept Of Islamic Hedge Funds
- Shariah-Compliant Funds And Companies
- Funds
- Financial Leverage
- Buyouts And Recapitalisations
- Permitted Lending
- Case Study: Bahrain - The Islamic Finance Capital
  - Market Size And Regulation
  - The Accounting And Auditing Organisation For Islamic Financial Institutions (Aaoifi)
- Opportunities For Global Banks
  - Deutsche Bank
  - Hsbc
  - Islamic Bank Of Britain
- Future Developments In Islamic Finance
  - Non-Gulf Centres
- Islamic Finance Glossary
Section
Middle East Financial Centres
Chapter
Dubai
- Dubai International Financial Centre
  - The Difcs Aims
  - Key Components Of The Difc
  - Functions Of The Difc Authority
- The Market Opportunity
- The Dubai Financial Services Authority
  - Dfsa Powers And Functions
- The Difc Judicial Authority
  - The Difc Registrar Of Companies (Roc)
- The Dubai International Financial Exchange
  - Benefits Of Listing On The Difx
- Difc Investments
- Hawkamah Corporate Governance Institute (Cgi)
- Difc Laws And Regulations
- Banking Services
- Doing Business In The Difc
Chapter
Bahrain
- The Financial Sector In Bahrain
- Bahrain Monetary Agency
  - Functions Of The Bma
  - Capital Markets Supervision Directorate
- Licensing And Policy Directorate
  - Licensing Categories
- Monetary Policy
- Banking Operations
  - Banking Success
Chapter
Qatar
- Development
- Economy
- Financial Centre
  - History And Structure Of The Qatar Financial Centre
  - Doing Business In The Qfc
  - The Application Process
- The Qfc Regulatory Authority
- Qfc Tribunal And Appeals Body
- Supervision Of Financial Institutions Division
- Doha Securities Market
Section
Banking: International And Regional
Chapter
International Banks
- Overview
- Hsbc
  - Regional Player By Tradition
  - Oil Fund Clients
  - Project Finance
  - Capital Markets Development
  - Equity Capital Markets
  - Mergers And Acquisitions
  - Shariah-Compliant Products
  - East To East
  - Private Wealth Management
  - New Centres Raise The Competitive Stakes
- Deutsche Bank
  - Changing Role
  - Learning From Asian Markets
  - International Investment
  - Saudi Arabia Opens Up
  - Consolidation
  - Shariah-Compliant Products
  - The Gulf Region
- Other International Banks
  - Project Financing
  - M&A
  - Regional Expansion
Chapter
Regional Banks
- Taking A Lead Role
- Sector Strengths And Limitations
- Opportunities For Consolidation
- Market Developments
  - Real Estate Boom
- Banking Regulation
  - Caution On Loans
- Growth Areas For Banking
  - Retail Services
- Future Prospects
  - Loan Growth
  - Debt Financing
  - Long-Term Capitalisation Concerns
Section
Conclusion
- Period Of Opportunity
  - The Investment Tranche
- Rebalancing Portfolios
  - Corporate Risk
  - Cash Flow Is King
- East To East
- Preparing For A Post-Oil Future
  - Private Sector Role
  - Opening Up
  - Too Many Centres?
- New Products
- Monetary Union: The Way Forward?
- Opportunities And Challenges
- Appendix
Other Mena Countries
- Algeria
  - Economy
  - Outlook
- Egypt
  - Economy
  - Outlook
- Iran
  - Economy
- Iraq
  - Economy
  - Outlook
- Jordan
  - Economy
  - Outlook
- Lebanon
  - Economy
  - Outlook
- Libya
  - Economy
  - Outlook
- Morocco
  - Economy
  - Outlook
- Syria
  - Economy
- Tunisia
  - Economy
  - Outlook
List Of Tables
- Table 1.1: Bahrain - Financial Statistics, 1998-2007f
- Table 2.1: Kuwait - Financial Statistics, 1998-2007f
- Table 3.1: Oman - Financial Statistics, 1997-2006f
- Table 4.1: Qatar - Financial Statistics, 1998-2007f
- Table 5.1: Saudi Arabia - Financial Statistics, 1997-2006f
- Table 6.1: Uae - Financial Statistics, 1997-2006f
- Table 10.1: Kia Share Dealing, 1986-2003 (Kd)
- Table 11.1: Middle East Countries By Type Of Economy
- Table 11.2: Mena External Debt And Aid Flows, 1990-2003 (Us$Bn, %)
- Table 11.3: External Debt Of Middle East Countries, 2005e (Us$Bn)
- Table 12.1: Bahrain Banks - Moodys Ratings & Outlook
- Table 12.2: Bahrain - S&P Credit Ratings
- Table 12.3: Bahrain - Fitch Ratings
- Table 12.4: Kuwait Banks - Moodys Ratings & Outlook
- Table 12.5: Kuwait - S&P Credit Ratings
- Table 12.6: Kuwait - Fitch Ratings
- Table 12.7: Oman Banks - Moodys Ratings & Outlook
- Table 12.8: Oman - S&P Credit Ratings
- Table 12.9: Oman - Fitch Ratings
- Table 12.10: Qatar Banks - Moodys Ratings & Outlook
- Table 12.11: Qatar - S&P Credit Ratings
- Table 12.12: Qatar - Fitch Ratings
- Table 12.13: Saudi Arabia Banks - Moodys Ratings & Outlook
- Table 12.14: Saudi Arabia - S&P Credit Ratings
- Table 12.15: Saudi Arabia - Fitch Ratings
- Table 12.16: Uae Banks - Moodys Ratings & Outlook
- Table 14.1: Daily Crude Oil Production Based On Secondary Sources, 2004-3q06 (000 B/D)
- Table 16.1: Selected Gulf Ipos, 2004-05 (Us$M)
- Table 17.1: Key Stock Market Indicators, May 2006
- Table 17.2: Gulf Capital Markets, 2006
- Table 17.3: Gcc Stock Markets Performance, 2003-05
- Table 18.1: Middle East Floating Rate International Bonds, 1996-2006 (Us$M)
- Table 18.2: Government Bonds Listed On The Muscat Stock Market
- Table 18.3: Commercial Bonds Listed On The Muscat Stock Market
- Table 20.1: Middle Eastern Project Finance Loans, Jan-Sep 2006 (Us$M)
- Table 20.2: Middle Eastern Project Finance Loan Volumes, 2000-06 (Us$M)
- Table 20.3: Middle Eastern Project Finance Loan Volumes By Domicile Nation, 2005, 2006 (Us$M)
- Table 20.4: Middle Eastern Project Finance Loan Volumes By Sector, 2005, 2006 (Us$M)
- Table 21.1: Private Equity Firms In The Middle East
- Table 21.2: Traditional Private Equity Funds In The Middle East Table 22.1: Caravan I Ltd Transaction
- Table 22.2: Ftse Difx Shariah Index Series - Top Five Constituents, July 2006 (Us$M)
- Table 22.3: Ftse Difx Shariah Index Series - Country Breakdown, July 2006 (Us$M)
- Table 23.1: Financial And Ancillary Services Permitted And Regulated By The Dfsa
- Table 23.2: Difc Licensing And Registration Steps By Business Activity
- Table 24.1: Bma Licensing Process
- Table 24.2: Bma Annual Licensing Fees
- Table 25.1: Firms Licensed By The Qfc Authority, Nov 2006
- Table 25.2: Firms Authorised By The Qfcra, Nov 2006
- Table A1: Algeria - Key Data, 2005
- Table A2: Egypt - Key Data, 2005
- Table A3: Iran - Key Data, 2005
- Table A4: Iraq - Key Data, 2005
- Table A5: Jordan - Key Data, 2005
- Table A6: Lebanon - Key Data, 2005
- Table A7: Libya - Key Data, 2005
- Table A8: Morocco - Key Data, 2005
- Table A9: Syria - Key Data, 2005
- Table A10: Tunisia - Key Data, 2005
List Of Figures
- Figure 8.1: Saudi Arabia Stock Market Indicators, 1990-2001
- Figure 8.2: Sama Organisational Chart
- Figure 8.3: Sama Reserve Management Structure
- Figure 14.1: Opec Reference Basket, Weekly Spot Crude Prices, 2004-06 (Us$Bn)
- Figure 14.2: Weekly Average Basket Price, 2006 (Us$Bn)
- Figure 14.3: Crude Oil Overlaid With The Saudi Tadawul Stock Market Index, 2002-2q06
- Figure 15.1: Dubai Real Estate Investment Yields, 1h2005-1h2006 (Capitalisation Rates)
- Figure 17.1: Middle Eastern Equity Markets Versus Msci Emerging Markets, 2000-06
- Figure 17.2: Market Index Performances, Pre And Post-Bubble
- Figure 17.3: Tadawul Stock Exchange Turnover, May 2004-Sep 2006 (Us$M)
- Figure 17.4: Dubai Financial Market Turnover, Dec 2004-Aug 2006 (Us$M)
- Figure 17.5: Abu Dhabi Securities Market Turnover, Dec 2004-Aug 2006 (Us$M)
- Figure 17.6: Bahrain Stock Exchange Turnover, Dec 2004-Sep 2006 (Us$M)
- Figure 17.7: Doha Securities Market Turnover, Jan 2005-Oct 2006 (Us$M)
- Figure 17.8: Kuwait Stock Exchange Turnover, June 2004-Oct 2006 (Us$M)
- Figure 17.9: Change In Gulf Capital Markets Indices, Jan 2005-Apr 2006 (%)
- Figure 22.1: Caravan I Ltd Structure
- Figure 22.2: Alternative (Simple) Structure
- Figure 22.3: Alternative (Simple) Structure
- Figure 23.1: Difc Structure
- Figure 24.1: Structure Of The Bahrain Monetary Agency
- Figure 25.1: Structure Of The Qfc
- Figure 25.2: Structure Of The Qfcra
- Figure 27.1: Bank Credit/Gdp Ratios - Gulf Economies Vs Western Europe, 2005 (%)
- Figure 27.2: Major Gulf Banks - Assets And Equity, 2005 (Us$Bn)
- Figure 27.3: Share Of Top Three Local Banks In Total National Banking Assets And Deposits, 2005 (%)
- Figure 27.4: Gulf Bank Ratings, 2000-06
- Figure 27.5: Gulf Bank Loan Exposure To Real Estate/Construction, 2004, 2005 (%)
- Figure 27.6: Major Gulf Banks - Aggregate Asset/Liability Maturity Profile, 2005 (Us$Bn)
- Figure 27.7: Gulf Banking Revenues, 2005 (%)
Section
Conclusion