Financial markets across the Arabian Peninsula have gone from being small, quasi-medieval structures in the 1960s to large world-class groupings of financial institutions. This evolution has been fueled by vast increases in income from oil and natural gas. The Financial Markets of the Arab Gulf presents and analyzes the banks, stock markets, investment companies, money changers and sovereign wealth funds that have grown from this oil wealth and how this income has acted as a buffer between Gulf society at large and the newfound cash reserves of Gulf Cooperation Council states (Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain) over the last fifty years.
By assessing the development of institutions like the Abu Dhabi Investment Authority, the Saudi Arabian Monetary Authority, the Public Investment Fund and the National Bank of Kuwait, The Financial Markets of the Arab Gulf evaluates the growth of the markets and provides a detailed, critical, snapshot of the current form and function of the Gulf’s financial markets. It argues that the markets have been controlled by various state institutions for socio-political reasons. In particular, the Saudi state has used its sophisticated regulatory regime to push for industrialization and diversification, which culminated in the Vision 2030 plan. The UAE, Qatar, Kuwait, Bahrain and Oman have also been strongly involved in establishing modern markets for similar purposes but have done so through different means, with varying results, and each in line with what has been considered their respective comparative advantages.
Along with critically surveying these institutions and their role in global finance, the book also presents case studies depicting transactions typical to the region, including the highly profitable documentary credits of commercial banks, the financial scandal of certain financiers and their regulatory arbitrage between Bahrain and Saudi Arabia, a review of the Dubai’s trade miracle, and an assessment of the value and importance of the privatization of Saudi Aramco.
A Short History of the Financial Markets in the GCC States The Commercial Banks The Islamic Banks The Money Changers The Bahraini Offshore Market The Capital Markets Conclusion The Financial Markets of the United Arab Emirates Dubai versus Abu Dhabi The UAE’s Regulatory Environment Free Trade Zones The Banking Sector Sovereign Wealth Funds SWFs, Power Patronage and Asset Ownership Conclusion The Financial Markets of Saudi Arabia SAMA and the Regulatory Environment The Capital Markets The State Controlled Financing Companies The Money Changers The Commercial Banks Conclusion The Financial Markets of Bahrain, Qatar, Kuwait and Oman 4.1 The Financial Markets of Bahrain The Banking Sector The Capital Markets Islamic Financial Regulation: A New Niche? Bahrain’s Unique Natural Resource Conclusion 4.2 The Financial Markets of Qatar Qatar’s Energy Markets Trade and the Embargo The Banking Sector The Capital Markets The Qatar Investment Authority Conclusion 4.3 The Financial Markets of Kuwait The National Assembly The Capital Markets The Banking Sector Sovereign Wealth Funds SWFs in Crises: The KIO and the Gulf War Conclusion 4.4 The Financial Markets of Oman Qaboos’s Elite Bargain A New Challenge Natural Resources and Diversification The Banking Sector The Capital Markets Conclusion The Gulf States in Global Financial Markets Phase 1: 1960-1985 Phase 2 1985-Present 2008: Shifting Tones Lasting Change Looking East: Energy Investments in Asia and Southeast Asia Conclusion Case Studies Introduction 6.1 The Saudi Aramco Privatization Valuation Transparency through Privatization To IPO, But Where? Conclusion 6.2 Name Lending and the TIBC Bankruptcy Background Regulatory, Personality or Practice: Who is At Fault? Conclusion Name Lending: A Primer 6.3 Dubai as a Financial Safe Haven Indian Gold Smuggling Iranian Trade Links Conclusion 6.4 Documentary Credits The Mechanics Profitability Conclusion Conclusion
Dr. Jean-François Seznec is Senior Fellow, Center for Global Energy at the Atlantic Council, Adjunct Professor at Johns Hopkins School of Advanced International Studies and Managing Director at The Lafayette Group. Samer Joseph Mosis is a Senior Analyst with S&P Global Platts focusing on commodity markets. He previously was a Consultant for The Lafayette Group and holds a Masters Degree in International Economics from Johns Hopkins School of Advanced International Studies
