Gulf states seen shifting away from U.S. assets

By Natsuko Waki
Reuters
Thursday, January 25, 2007

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=...

LONDON -- Oil-rich Gulf Arab estates are seen shifting their assets away from the United States, and Qatar is keen on customer states including Asia and Europe as destinations, the country's financial regulator says.

Middle Eastern countries have been scaling back its once near full reliance on U.S. assets in recent years to minimize risks and enhance returns as they diversify the massive windfall from oil and gas revenues.

"Regionally there is less evidence of enthusiasm to be the major owner of U.S. assets. It doesn't mean U.S. investments will go away but you will find governments and agencies looking at a wider range of opportunities," Phillip Thorpe, chairman and chief executive officer of Qatar Financial Center Regulatory Authority, told Reuters in an interview this week.

"For Qatar it's clearly the case they are enthusiastic to assets in its customer states -- follow the gas. Where is it going? That's good place to buy, as you are offsetting some risks by buying their assets," he said in the ski resort of Davos, where more than 2,400 business leaders and politicians are gathering.

Thorpe said that by 2012 the broad breakdown in Qatar's energy customer base would be around one third the UK and Europe, one third Asia, and the rest the United States.
"So it's very broadly diversified."

The economy of Qatar, which has a population of less than 1 million and is home to the world's third largest gas deposits, has tripled since 1998, making it among the world's fastest-growing economies.

The economy was expected to grow around 8 percent last year and inflation slightly easing to 6 percent.

Property prices and rents have surged in several Gulf Arab nations in recent years as the region's economies flourished on high income from oil exports.

"In terms of overall economic growth, it's been running in double-digits. The evidence of stress is in inflation but there is no sign of other chronic problems that are rising," Thorpe said.

"A lot of it is because the government is using the windfall of oil ... very cleverly, which is helping to mop up some of the liquidity."

Oil and gas are believed to accounted for about 65 percent of the country's GDP and 87 percent of its exports.

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