Al Badran

http://www.globalalliancetrdg.com

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Sat Mar 1st 01:04 AM | Rating: 0 0
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Credit Crisis Losses Will Put Black Monday in the Shade

As an Arab-American, Few months ago I was presented with a consulting position and have moved into Kuwait to work as an Investment Banker/Business Developer consultant for Kuwaiti/GCC clients. Approx., 5 months ago I've warned my clients about the fall out of the subprime credit ripple effect and it's impact on GCC market. One key addressed factor they've taken lightley 'Short term liquidity'.

There are several factors to the credit squeeze and the increased cost of raising capital in the regional and global market. The regional market is suffering from short term liquidity concerns that are due to several trends such as the increased pricing of the upcoming securitizations in the MENA region and the hyper activities of an active GCC investment houses.

Financial turmoil has not hit GCC market as hard as mature markets but weakening credit risk has increased vulnerabilities with some of the regional banks. Persistently high oil prices continue to ensure a high rate of nominal GDP growth in the GCC region, but escalating inflationary pressures are putting pressure on real growth rates.

In a nut shell and according to market trends the ripple effect of the sub prime fall out will be short-lived in theory as demand for capital funds for investment projects in the GCC region is increasingly strong. Add to that the aggressive drive and support for project financing/infrastructu... development by GCC governments remain aggressively strong.

For example Saudi Arabia is courting local banks to participate by upfronting 20% cash capital in order to entice participation. Nevertheless, the impact of the subprime fall out would still be 'Short term' liquidity as a result a new opprtunity would emerge and we will need to capitalize on that.
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