MISSING THE ARAB DENTIST
The Arab investment companies which were created in the late 1970s and early 1980s are in a state of malaise. It is not just that their performance has often been unsatisfactory, and is now more readily questioned by anxious shareholders. The dramatic change in investors' mood and in the investment environment is threatening their existence.
With very few exceptions, the returns of Arab investment companies have failed to match those available from most conservative investments. Still less have they lived up to the extravagant pledges made in the early days. "Arab investment companies have a real credibility problem," said George Kardouche, general manager of United Gulf Investment Company in London (the investment subsidiary of the Bahrain-based and Kuwaiti-dominated United Gulf Bank). "Most of those institutions do not have a track record long enough to enable a safe judgement by the investor. Where there is one kind of a track record the results were not often encouraging."
There are many causes of the reversal in investors attitudes to direct investment -- the crash of the unofficial Souk al-Manakh stock market in Kuwait in August 1982, the disappointment with investment returns, the economic recession and the political insecurity in the Gulf.