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December 5, 2006

Petrodollars and Saudi Prince Alwaleed

There has been lots discussion lately about petrodollars and the effect on markets, some of which showed up in a recent Barron's roundtable with Peter Thiel, the chief proponent of the bearish take on petrodollars' distorting market impact. For folks interested in the other side of the argument, you might have a look at the current McKinsey Quarterly for an interesting interview with Saudi Prince Alwaleed:

I can’t put numbers on any of this, but I have seen the trend for some time in the communications I have with other investors. When the Bank of China asked Kingdom Holding to be the Saudi investor in their bank, we received subscriptions for the first $2 billion within three days. Actually, we were oversubscribed.

At the same time, a lot of capital is being invested in the local economies of the Gulf. In the past several months, I have met five or six chairmen of US banks and investment banks that are lining up to come to Saudi Arabia, to open branches and serve the corporate sector and high-net-worth individuals. Studies say that in excess of $1 trillion could flow into the budgets of the Gulf economies in the next two years, even with oil at around $60 a barrel, and if there were to be a slowdown in the world economy the transfers would be huge.

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