ABU DHABI, United Arab Emirates — In a turbulent global environment, hedge fund titan Ray Dalio sees one particular part of the world as promising for investors: the Middle East’s Gulf states.
The Bridgewater Associates founder highlighted the United Arab Emirates in particular while speaking during a CNBC panel discussion at Abu Dhabi Finance Week.
“We are talking today about how the world order is changing and how the region, the GCC region (Gulf Cooperation Council), is becoming an important region. That’s very classic. It is a renaissance state. We’re talking about a renaissance now.” “What we’re saying here is that this is happening in this larger geopolitical and economic environment,” Dalio told CNBC’s Dan Murphy on Tuesday.
Dalios Bridgewater Associates is the world’s largest hedge fund, which had $97.2 billion in assets under management as of September 2023, according to Pensions & Investments’ latest annual report. The billionaire financier opened a new branch of his family office, the Dalio Family Office, in Abu Dhabi in April, expanding his foray into the Middle East and complementing the company’s existing locations in the United States and Singapore.
The UAE “is a renaissance state,” Dalio said. “What I mean is, I’m basically asking myself: Are you making more than you’re spending? So [do] Do you have a good profit and loss statement? Do you have a good track record? Are your assets greater than your liabilities?”
He added: “Is there a culture where people evolve and work together to be productive?”
“And No. 4 would be: Are you outside of a great power conflict? Are you in the middle of a war? “Invest in the places I want to be. And this region is very, very attractive and is at the starting point for the reasons that were discussed in the other meetings.”
Many economic observers have pointed out that the Gulf states, particularly the United Arab Emirates and Saudi Arabia, are leveraging their oil wealth, their geographical location between eastern and western markets, and their long-term development plans to become highly attractive locations for both foreign investment and the to become fundraising.
According to the Dubai International Financial Center, Dubai, the glittering commercial capital of the United Arab Emirates, was home to 40 registered hedge funds in July, with more than a third of those arriving in the past 12 months. The vast majority settled in the years following the Covid-19 pandemic, when relatively relaxed rules and financial liberalization reforms ushered in a new wave of foreign investment. Most of these funds are regional subsidiaries of companies based in London or New York.
With oil prices rising in recent years, the region’s huge sovereign wealth funds have more and more money at their disposal.
According to the Sovereign Wealth Fund Institute, the region’s ten largest sovereign wealth funds managed around $4 trillion at the beginning of 2023. That’s more than the gross domestic product of France or Great Britain – and it doesn’t include private money. According to SWFI, Saudi Arabia’s Public Investment Fund alone manages more than $700 billion in assets.
These numbers and the funds’ willingness to make large investments in advanced industries around the world are generating visible interest among venture capitalists and startup founders in sectors such as fintech, digital transformation and renewable energy technology.
Rise of the “Central Powers”
Geopolitically, the United Arab Emirates and Saudi Arabia are also among the so-called middle power countries that maintain good relations with both the Western world and heavyweights such as Russia and China. This allows them to leverage these relationships to maximize trade advantages and political influence.
The countries have played a mediating role in the war between Ukraine and Russia and are in contact with both the rest of the Muslim world and, officially or unofficially, with Israel, without becoming involved in the war between Israel and Hamas in the Gaza Strip.
The rise of these middle powers in mediating such a large conflict signals a new world in which actors outside the United States and the West are in charge and smaller states are not forced to align themselves with the United States, Russia or China.
The lure of high dividends has been a big draw for global investors given the recent wave of mega listings across the Gulf region.
Rustam Azmi | Getty Images
This is also crucial for global positioning as US influence in the world and region wanes, Dalio said.
“More broadly, you now have a major war in Europe, you have a major war in the Middle East and you have a change of control,” Dalio said. “It used to be that you had a dominant power… the United States would have more influence over things. Now we are faced with a test of strength. And this happens in different ways. And so we find ourselves in a time where I think of greater disorder, and then it has its economic impact.”
The Gulf states’ financial status, regulatory environment and past political stability – particularly their ability to stay away from major conflicts – are crucial for institutional investors, Dalio said.
“I would like to emphasize that it is important for me as an investor, first of all, to know how to diversify well in order to be in the places that have those four qualities that I mentioned before – the good profit and loss statement, “the good record, the politeness of the people and the renaissance states that lie outside the major conflict states,” he said.
“You’re seeing this renaissance with the Gulf states and so on to be able to move forward and have…prosperity in the region.”
Source : www.cnbc.com