Japanese investment bank Nomura is set to launch funds worth up to $2 billion in booming Gulf states, its Middle East chief said on June 26, as Asian investors eye the changing regulatory framework. "This is the last major emerging market that hasn't been developed," Anais Faraj told Reuters on the sidelines of a conference in London organised by Chatham House.
Faraj said Nomura would initially invest in equities and would seek to become more specialised. "There is appetite in Asia for emerging markets opportunities," he said, noting that Japanese and other Asian savings funds are worth trillions of dollars.
Nomura became the first Asian bank to receive approval to operate in Saudi Arabia - the biggest economy in the Gulf Co-operation Council (GCC) - earlier this year. The GCC is a loose political and economic alliance comprising Saudi Arabia, Bahrain, the United Arab Emirates, Qatar, Kuwait and Oman.
"Within the next two years Nomura intends to open up, bring in capital from Asia into the GCC markets, because that is one channel that has not been tapped yet," Faraj said. "There is no conduit for getting money out of Asia and into the GCC markets."
Some 90 percent of shares listed on the Saudi stock exchange are held by domestic retail investors, while none of the Gulf countries have a law to formalise buyouts, a major obstacle to increased foreign investment in the Gulf economies. "It's very hard to do anything hostile, or for foreign buyers to come into the market," Faraj said.
"Capitalism is still very raw and what is governing it and regulating it is market convention and local customs," he added.
Infrastructure investment and record oil prices have boosted the value of Gulf exchanges, with Oman's index rising by more than 25 percent this year. Kuwait has gained nearly 25 percent this year, hitting a record high this week.
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