Facing American credit squeeze, Merrill Lynch looks towards the Middle East

21 October 2008

Faced with the greatest financial crisis since the Great Depression eight decades ago, American money managers are increasingly looking towards the Middle East to sustain their businesses. They feel, and not without reason, that the region would be somewhat protected, though not necessarily immune, to the ravages of the present squeeze on the strength of its oil revenues.

John Thain, chairman and chief executive of Merrill Lynch & Co. Inc, propounded these views at the Dubai International Financial Centre. Thain said the region's sovereign wealth funds had tremendous opportunities to take advantage of the financial difficulties around the world.

With reserves boosted by record oil prices, Thain said these funds have an ''opportunity'' to take advantage of the difficulties in financial markets that have made assets cheap. Over ''multiple years'' these investments could become ''very attractive,'' he added.

Gulf Arab sovereign funds include the Abu Dhabi Investment Authority, considered the world's biggest with assets of about $875 billion, the Qatar Investment Authority and the Kuwait Investment Authority.

Thain observed that that no country could be totally decoupled from the global economy.

''The region, despite its oil wealth, is not immune to the crisis and will certainly undergo an economic slowdown. The question is the degree and the duration of this slowdown,'' he said.