The Gulf Cooperation Countries are growing extremely rapidly thanks to the revenues from oil; the windfall is not soon finished as they own 37% of the proven oil’s reserve worldwide. Not only have those countries an impressive amount of liquidity, but they also tend to keep it in their regional market, thus fostering the diversification of their economy. Those countries are naturally getting in the depth of interest of investors globally. Investing in the GCC Markets: Regional Opportunities and Challenges, edited by Kamar Jaffer and Sohail Jaffer, will undoubtedly be of major interest to current market practitioners and a broader audience. As a precise and incisive picture of the market, this book, published by CPI Financial (ISBN: 978-0-9757493-7-1), is providing the reader with both a documented outlook of the financial markets in the GCC and a mine of specialised pieces of information.
The main objective of the book and its positioning on the market
“Investing in the GCC Markets” enables the reader to take advantage of the opportunities presented by one of the most rapidly growing area of international finance by analysing in a comprehensive way the latest trends and developments in the countries of the Gulf Cooperation Council (GCC).
In particular, Kamar Jaffer and Sohail Jaffer aim to highlight the emergence of the IFCs, to emphasise the huge potential of Islamic banking and finance and more generally to raise the visibility of what the Middle East is trying to do in order to attract foreign investors.
The book brings together an impressive amount of information and knowledge that otherwise would not be readily available in one place. In fact, even though on the market there are numerous trade publications, brokers’ and advisors’ research reports (Morgan Stanley, McKinsey&Company) on the Middle East, there is no other Compendium or publication that has collected the views of the most respected market practitioners and shared them with the industry.
Moreover, the book takes one of its major strength from its ability to provide the readers with a perfectly up to date reflection of the markets. Most figures cited but also the graphs and tables, abundant in the book, are dated from mid 2007 or end of 2006. This is of utmost interest especially regarding Islamic Banking and Finance, which is experiencing an impressive expansion at the present times. For example, some eloquent graphs which scan the GCC Equity Markets Performance or the GCC Stock Market Capitalisation from 2003 until 2007 can be found in that section.
According to the editors, it will be fully updated by the end of 2009 to cover the latest developments in the field due to the fact that the dynamics of the Middle East markets are changing at an incredible pace. Regular updates will follow.
The main audience will be composed by financial intermediaries and various professionals, such as service providers (accountants, lawyers, etc.). The book is also intended for institutional investors who are likely to invest in the Middle East. It will be an invaluable guide in assisting those interested in the GCC markets in understanding the challenges and opportunities within this region. However the reader is assumed to have certain knowledge of the financial sector, since many terms and concepts are not fully detailed.
The structure of the book allows it to be very comprehensive. The book is composed of 6 sections, ranging from the most fundamental and general to the most essential and specific to that market at the present time. Those are the following: Financial Centers in the GCC, Capital Markets in the GCC, Investment Banking in the GCC, Wealth Management, Islamic Banking and Finance and Insurance.
The first two sections are linked and give the reader an historical and legislative framework that represents basics for the following sections. The Islamic Banking and Finance section is particularly detailed and provides the readers with chapters dealing with Shari’ a compliant products (with chapters such as Islamic Asset Management, Islamic Securitisation or Sukuk), the various Islamic institutions as well as the general outlook of the Islamic Finance Industry.
Chapters are entities of their own. There is no introductive paragraph at the beginning of the sections however; each subject is put into the general context by each writer.
Thirty leading experts and market practitioners with extensive experience in GCC markets have contributed with their impressive wealth of knowledge to this book. Each contribution in the publication provides discerning and valuable information in order to fully understand the dynamic of the GCC markets. Unlike some other publications, the writers give a critical perspective with the wide use of case studies, real-word applications of finance principles and even historical backgrounds.
Two examples of subjects that are particularly highlighted
An area of particular interest is the section regarding the private equity and venture capital industry due to the increasing importance of this sector. In fact, the GCC economy is largely dominated by private family businesses and many family groups have shown interest in going public or disinvesting control. The chapters on private equity clearly demonstrate through extensive examples that the international and regional investors are increasingly acknowledging the GCC region as a potential source of private equity opportunities. Moreover clear explanations are given to the reader on how different macroeconomic factors have contributed to the takeoff in the last few years.
Another section of paramount importance is that dedicated to Islamic finance. That industry has been experiencing a Renaissance for a few years and it is growing as fast as 15% to 20% per year. The GCC, that have got a lot of liquidity and tend to diversify more and more their sources of revenue, have been a privileged site of development for Islamic products. The section of the book entitled Islamic Banking and Finance provides the reader with comprehensive information about it through the following chapters: Islamic Asset Management, Islamic Securitisation, Sukuk, Overview of the Islamic Mutual Fund Industry in the GCC, Islamic Investment Funds: The GCC goes Global, Islamic Structured Products, Islamic Private Equity, Islamic Mega Banks, and finally, Trends, Developments and Outlook for the Islamic Finance Industry.
Islamic securitisation is of particular interest and is developing extremely fast. Some complementary chapters will give the reader an insight about the emergence and trends of the Sukuk Markets as well as very precise definitions of what Sukuk is. Especially, some information is to be found about the players of the Islamic securitisation process, the various type of Sukuk and their trading characteristics, or the models of securitisation deals in the different countries of the GCC.
This pioneering work needs to be lauded and should be considered without any doubts as a substantive achievement as it makes an original and noteworthy contribution to the study of the booming GCC markets. It is also clear that, at the present time, this publication forms one of the key building blocks for a better understanding of the GCC markets and will probably be referred as the standard reference work in its field for many years to come. “Investing in the GCC Markets” is also the only of its kind, therefore, we hope it will open the door for its own competitors and we are looking forward to commenting on them.