As GCC equity markets suffered through another day of declines, business and economic leaders in Dubai expressed confidence, but said they would alter their corporate game plans as a global recession appears inevitable. "It's not a time to be brave, as 2009 will probably be even worse [than 2008]," said Sameer al Ansari, the executive chairman and chief executive of Dubai International Capital (DIC), referring to the global economy.
He said his company, the investment arm of the Dubai Government's Dubai Holding, would focus on investments closer to home and be more conservative. Referring to prospects outside the region, he said: "I don't want to invest now. We are heading into a recession." Many remain optimistic the region will avoid the worst of the coming downturn, relying on strong reserves of cash and oil revenues. They also argue that the region's economy does not have the deep-rooted structural problems of the US or Europe.
"These are grey days, but a story is not coming to the gulf," said John Sfakianakis, the chief economist for SABB, the former Saudi British Bank. "Asset bubbles tend to burst, but we do not have the same structure of problems as in the West." Still, the region's credit and equity markets have been hit by some of the same problems. Credit markets have contracted sharply in recent weeks, as banks have been cut off from international credit and pull back lending. Meanwhile, equity markets continue into the worst rout in their histories, with the Dubai Financial Market falling for a seventh straight trading session. The 5.9 per cent drop sent the index below the 2,000 mark for the first time since 2004.
The market was led lower by Emaar Properties, the Dubai developer, which fell 9.7 per cent amid concerns about slowing property sales and falling prices. Husam S Alameri, the chief executive of Al Brooge Securities, continued efforts that he began on Saturday to convince the Emirates Securities and Commodities Authority (ESCA) to host talks with market participants. He said that without such a meeting, the country faced a "big crisis", because the market's fall was not representative of the economy's underlying strength.
He said he had not received a response from Esca. In a statement released after an inquiry from The National, the regulator said it had "an open-door policy for all shareholders in the financial markets". Other GCC markets fell as well, with only Saudi Arabia's Tadawul exchange posting a gain, a day after it fell sharply. In Kuwait, a court ordered the Kuwait Stock Exchange to resume trading. The exchange was ordered closed by a panel of judges last week. Yesterday, that ruling was overturned after a government appeal. Trading will resume today.
At a conference of business leaders in Dubai, some warned that the region was unlikely to sidestep the global economic problems. "The GCC is very well managed but shifts around the world are dramatic; it would be surprising to me if anywhere in the world is a place to hide, including here," said James Wolfensohn, a former head of the World Bank who now runs his own investment and consulting firm. He said business leaders would face many challenges, but the first order of business would be "survival".
While Mr Ansari said the DIC would focus it sights on the region, other executives said they would look for opportunities in developing economies to the east. Fadi Ghandour, the chief executive of Aramex International, a logistics and transport company, said he would be looking to expand operations in China and India. Etisalat, the UAE's flagship telecommunications company, had invested more than US$11 billion (Dh40.4bn) in 16 countries that it viewed as having high growth potential, said Ahmad Abdulkarim Julfar, the company's chief operating officer.
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