Middle east money is nothing new to wall street. The petro dollars always came back to feed M&A frenzy, and hedge fund adventures. But of late.. it's more in the open and it almost feels like the rich sheikhs of middle east are coming in to protect their investment.
There are glaring headlines around. The abu dhabi investment authority coming in to citi group's rescue at it's bleakest times by buying up 7.5 billion dollars of equity. The Kuwaiti's buying up 50% of dow chemical's plastic division. And unknown investors from the middle east ponying up 11.5 billion dollars for UBS AG's equity, especially when UBS's balance sheet is the most murkiest from the subprime mess.
Its true that all the assets come cheap now with a cheaper dollar. Save for them gorging up on what's available, there must be a protection play involved.
After all, the middle eastern oil churners don't want to let their biggest market, the united states to go through a recession. Especially with the dollar going the way it has been, they wouldn't want it to go further down. Well, they cannot afford to for their oil revenues are stored in dollar denominations.
Of course, they would do anything that they can to protect their favorite investment, even if it means propping up companies with bad balance sheets so the markets continue as though nothing happened.
They may also be leveraging themselves for the far future when oil would dry up. Borse dubai taking up 20% of Nasdaq and Qatar buying out 20% of london stock exchange. This can only be a measure to integrate better into global markets.
Maybe, when the oil dries up and the world starts using bio fuels, the sheiks would live off the spreads from investment deals with the middle east transforming itself from a oil maker into a financial trading powerhouse. What next? a macau or las vegas styled desert gambling oasis. maybe!!!
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