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Middle-East funds keen on Asian assets

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Points of Essence:

  • Investors from the Middle East are reportedly interested to venture out Asian assets.  The current global financial crisis has seen many shied away from the US and European markets to significantly diversify their investments and manage their risks accordingly.


They want to diversify investment portfolio and manage risk

PETALING JAYA: Some Middle Eastern investors are still keen to buy assets in Asia to diversify their investment portfolio despite the credit crunch across global markets.

CIMB Islamic Bank chief executive Badlisyah Abdul Ghani said most of the funds from the Middle East want to diversify and manage their risk.

“The need is acute as they have large exposures in the US and Europe,” he told StarBiz.

Kuwait Finance House Research Ltd managing director Baljeet Kaur Grewal concurred with Badlisyah, saying demand for good assets was still there.

“The GCC (Gulf Cooperation Council) countries’ money will come here (Malaysia) as this is a fertile Islamic launch pad for the region,” she said.

Badlisyah, who would not give any numbers or names of the funds, said the interest was “deep and strong” and it was coming from a mix of big and small players.

Even though the values of some of the investments made by the Middle Eastern funds earlier in Asia have dropped, they are not too drastic.

“We are actively bringing merger and acquisition deals, be it in the oil and gas, telecoms or property sectors, to the Middle Eastern investors.

“Whether they come now or later will depend on the customers but these funds still want to consider the proposals.

“The GCC is not just Dubai, there are other centres that have deeper pockets. Those which do not have much exposure will look aggressively at Asia,” Badlisyah said.

Dubai has been hit hard by the credit crunch as it has borrowed more than other emirates to finance its development but not all funds originated from Dubai.

A possible area where valued properties could be up for grabs is Japan.

Due to the demise of Lehman Brothers, which was one of the major financiers of property in Japan, there could be some assets sold at fire sale prices as getting funding for these assets could be an issue.

“Some of these assets are big and iconic. They are valued properties which, in normal circumstances, would be difficult to get. So it is a very good opportunity to look at such assets,” Badlisyah said.

Baljeet said syariah-compliant assets worldwide grew to about US$800bil as at end-2007 from US$150bil in the1990s.

She expects it to hit US$1 trillion by 2012, given the challenging credit environment.

Islamic banking is said to be still a good bet in the credit crisis.

A report, quoting Majeed al-Refaie, head of Bahrain-based Unicorn Investment Bank, recently said: “The beauty of Islamic banking and the reason it can be used as a replacement for the current market is that you only promise what you own.

“Islamic banks are not protected if the economy goes down – they suffer – but you don’t lose your shirt.”

Source: //

Written by Suapi Shaffaii

November 4, 2008 at 12:54 pm

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