Is the Middle East the New Hedge Fund Mecca?

Amid falling prices in most emerging and developed markets, Middle East markets with their low correlation to most other markets are poised to be the next stop for dollars on the move. Middle East oriented Hedge funds are poised to grow their assets as investors search for new sources of stability. Even large private equity managers were present in Dubai to discuss the potential for the region. Participants at the conference included Henry Kravis of KKR, Blackstone Group co-founder Stephen Schwarzman and Carlyle Group co-founder David Rubenstein. Rubenstein's firm just opened an office in Dubai.

Hedge funds and private equity firms are not the only ones bullish on the Middle East. Merrill Lynch (to be B of A) CEO John Thain is intent on building up the firms trading, investment banking, and wealth management capabilities and has applied for licenses in Kuwait and Qatar.

Of course, growth in the region is underpinned by rising commodity prices. As we have recently seen, lofty commodity prices are unsustainable during a period of Global slowing. Nonetheless, hedge funds, private equity, and a variety of financials will continue to look for the next growth region now that the emerging market bubble has so impressively crashed.

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