Gulf must use cash to buy foreign assets

Dubai: Gulf countries should use their strong cash reserves to buy foreign assets as there will be many investment opportunities in the next one to two years as a result of the global financial crisis, Dubai International Capital chief executive officer Sameer Al Ansari said.

"Asset prices are falling. We have a great opportunity to diversify," he told a forum in Dubai on Tuesday.

"There will be phenomenal opportunities in the next 12 to 24 months," he said.

Dubai International Capital, which has taken stakes in companies such EADS, ICICI Bank, HSBC Holdings and Sony, sees potential acquisition targets in many new sectors as a result of the global economic crisis.

"There are some great opportunities now in sectors that we did not look at before," Al Ansari said, adding that these assets will be available not only in the West but also in other large economies such as Russia, China and India.

However, the company wants to wait before going on a hunt for potential assets.

Uncertainty remains

"There is still too much uncertainty out there," Al Ansari said and described the global financial troubles as "the worst crisis anyone has ever seen."

He said the GCC with its "firepower" of huge cash piles can create a "win-win situation for the region and the word" by investing both within the Arab world and elsewhere.

Al Ansari said the Gulf region did not make use of opportunities in the past but should not miss a chance to take advantage of the situation now.

Launched in 2004, Dubai International Capital is one of several investment vehicles used by the government of Dubai.

It has three divisions - Private Equity, Public Equities and Emerging Markets - and managed assets in excess of $13 billion (Dh47.71) in 2007, according to a recently published review.

Al Ansari also called for China, India and the Middle East to work together in the new economic environment.

Participating in the same discussion, Victor Chu, chairman of the Hong Kong-based First Eastern Investment Bank, advocated stronger links between the GCC and China, saying that the Arab group and the Asian giant had many common interests.

He said the two will represent a bigger voice together from the emerging economies.

Chinese companies are expanding their presence in the Gulf region with 40 major engineering and construction firm working on projects in Saudi Arabia, according to Chu.

Combining capital and resources by China and Arab countries would also provide a recovery strategy in the current economic crisis, he added.