Financial Recovery & Growing Risk

[starlinggroup]

Hi

The year 2009 will test the patience of GCC investors as local economies are challenged to maintain the growth rates of recent years that were propelled by oil revenues. The UAE is likely to see a tightening while other countries, especially Saudi Arabia may follow suit. On the other side, leading global economies of the world are still showing no signs of recovery. The US, considered to be largest economy in the world, has been in recession since December 2007. The UK economy is even worse than the Euro zone. And in Asia, the Japanese economy stands on the edge of yet another lost decade.

Meanwhile, the GCC region has united more with the rest of the world since the correction in oil prices. International investors are asking themselves how well the GCC is prepared for such an environment, although the impacts of recession have been slow to reach the GCC. By putting these facts into viewpoint and we come across with an interesting revealing that the current financial measures may help some companies through these very difficult times. So what does that mean for investors? Most importantly, investors should remain careful in structuring new investment positions. Emerging markets not only need a stabilization of the global financial markets but also a significant recovery in investor appetite for risk. The integrated financial markets and lower financing costs have been vital drivers of economics expansion in the region. Meanwhile with situation like this, investors are sitting passively on the sidelines waiting & looking for probable signs of recovery.

David E Simpson is a Director Investment at Starling Group