The world’s biggest investors are hungry for the region

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KUWAIT CITY, Dec 27, (Agencies): This year, the Gulf states played a significant role on the global stage, engaging in prominent deal-making worldwide and contributing to discussions on the energy transition at the UN Climate Change Conference COP28.

Fueled by sovereign wealth funds capitalized by the oil price boom in 2022, the region’s economic diversification efforts have been robust, giving rise to massive green hydrogen projects and substantial investments, such as Saudi Arabia’s billion-dollar football spending spree.

A recent Al-Monitor report highlighted a temporary decline in regional stocks following the outbreak of conflict in the Gaza Strip, but subsequent recovery suggests resilience. However, the Gaza war has created regional uncertainties that could deter some investors, though deal-making in the Gulf remains robust.

The report emphasized the dynamism of deal-making in the Gulf, exemplified by the success of the investment forum “Davos in the Desert” in Saudi Arabia. Despite concerns expressed by Wall Street figures about the conflict’s potential impact on the global economy, the summit garnered strong interest, with notable deals, including a UK-based asset manager announcing plans for a billion-dollar fund to attract foreign investments to Saudi Arabia.

Saudi deal-making continued amid geopolitical tensions, exemplified by ACWA Power’s agreement to develop a $4 billion green hydrogen project in Egypt. Additionally, regional airlines strengthened their fleets, with Emirates signing a $52 billion deal to purchase Boeing aircraft in November.

The report highlighted that the threat of war did not diminish investors’ appetite for initial public offerings (IPOs) in the Gulf. The Dubai Taxi Company’s late-November IPO received over $41 billion in investor requests, setting a record for IPO demand in Dubai. Despite potential risks, the report anticipates IPO activity in the Gulf to persist until 2024.

However, the report acknowledged that the conflict may pose risks to the Gulf states and complicate economic reforms, impacting regional economic integration, foreign direct investment, tourism, and trade. The Gulf region faces a reality check, and while the specter of conflict looms, regional capitals aim to rebound in 2024.

Despite challenges, the report affirmed the Gulf as one of the most active deal-making markets globally, with global financial players expressing continued interest in the region. The first half of 2023 witnessed 318 deals in the Middle East and North Africa, totaling $43.8 billion, with Gulf countries accounting for approximately 98% of the value. IPO activity remained strong, making the Gulf a standout in the global IPO market.

Looking ahead, the World Bank expects the Gulf countries to grow by 3.7% in 2023, with non-oil growth offsetting declines in the oil sector. While challenges persist, the Gulf remains a key player in global finance, with efforts to deepen regional ties and attract foreign investment continuing in 2023.

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