Around the globe, there are strong signs that the recession may be easing and only when this is evident people will start to look for innovative products, and attractive investments.
The shareholders and management team of Khalijia Invest, a Riyadh based Shari’ah compliant investment bank, were counting on this fact at the time when they decided to establish the company. Dhafer Salih Alqahtani, Deputy CEO of Khalijia Invest has great expectations for his company especially its Corporate Finance and Asset Management business and he believes that the timing is right for launching the firm’s operations as well as introducing new funds.
Commenting on the forthcoming launch of a number of funds, he said "our plan is to capitalize on the fact that the market valuations are reasonably low and offer attractive buying opportunities. For this reason among others, we have decided to launch these two funds and we are planning a further launch of four additional new and innovative funds during the year 2010. We remain committed to this strategy as we believe it will provide our investors with an excellent opportunity to capture attractive returns. In short, we are confident of the fact that the market is on its way to recovery during the coming years of 2010, 2011 and 2012," says Alqahtani. Khalijia Invest is a new entrant to the Saudi market, with big ambitions and plans. "We have ambitious plans to build the firm into one of the leading investment banks in Saudi Arabia. Our company and the prominent shareholders behind it are determined to see the firm develop into one of the major players in Saudi Arabia, as well as the GCC" he notes.
Commenting on the potential impact of the events surrounding Dubai World on the development of Islamic financing, Alqahtani stated "first of all, the problem did not stem from the fact that Shari’ah compliant debt (Sukuk) was part of the obligations of Dubai World and its affiliates, thus there will not be any major impact on the development of the Shari’ah financing industry, besides we should reject that notion. Dubai is strong and Dubai World is only one of the assets which are owned by Dubai. What happened with Dubai is a case of debt services default and it is not yet a Technical default. Dubai has only asked to reschedule the debt, due to its cash flow and valuation. Thus, Dubai is not defaulting on its obligations. What happens in Dubai is not a sovereign default. What went wrong is that Dubai managed the communications on this issue in a less effective manner. They didn’t consult their Sukuk Unitholders before they announced the news. Why? This is the biggest question." It was the suddenness of the news that shocked the market and it was caught off guard. And after the storm became clearer, everything went back to normal. "So as far as I’m concerned, there are no major impacts on the area’s economy, moreover Abu Dhabi will not let the issue escalate to a default level as this issue is a sovereign matter. Dubai is moving on; hopefully it passed the bump in the road, in fact the uncertainty provided a good opportunity to accumulate Nakheel Sukuk" he adds. Alqahtani elaborates further " the lesson to be learned from Dubai’s incident, is that the region has to develop bankruptcy regulations which do not exist yet, in order to protect businesses from creditors when things start going wrong."
On the northern end of the Gulf, the Kuwaiti market never rose to our expectations; Alqahtani believes that there is still the issue of regulations and politics to be addressed. Therefore, as long as that’s in the way, nothing major will evolve from Kuwait as Kuwait‘s economy unfortunately is still behind in many areas despite the fact that it is the 2nd largest oil producing country of the GCC. Dubai has matured as result of the burst real estate bubble, that resulted in the recent drop in the real estate prices but he believe that Dubai is already beyond that though the real estate is still a major asset class of Dubai’s economy.
