The Gulf Petrodollars Fuel The Western Stock Markets

Gulf emirates of Dubai and Qatar on Thursday splurged an estimated £1.6bn or more on shares in the London Stock Exchange and Nordic bourse operator OMX. At the same time, Dubai struck a partnership deal with Nasdaq which it hopes will eventually deliver a stake worth an estimated £1bn in the US operator.

From Carlyle Group to P&O, from Ferrari to Four Seasons, Gulf sovereign funds have been rapidly scooping up major interests in some of the western world's biggest businesses. They have not been this active since the oil price peaks of the 1970s - and, with the era of cheap borrowing apparently at a close, there is every sign such cash-rich funds could again pick up the pace of their overseas investment programmes.

Control
Among the busiest - and most active in Britain - have been funds from Qatar, Dubai and Abu Dhabi.

Dubai, operating through three main funds - Dubai Holdings, Dubai International Capital and Istithmar - last year took control of ports operator P&O and budget hotels Travelodge. It remains an investor in the Tussauds theme park empire, including Alton Towers and Legoland, but recently sold 80% of the business. DIC also came close to owning Liverpool football club.
Meanwhile, Abu Dhabi's Mubadala fund this week emerged with a 7.5% stake in US private equity firm Carlyle. It also has a 5% holding in Ferrari.
The latest petrodollar investments are causing consternation in the US, where many politicians are arguying about sovereign funds - particularly when they are investing in assets that are strategically important to a nation - should not be treated like regular investors.
The prospect of a sheikhdom becoming the largest shareholder in the Nasdaq was enough last week to draw comment from President George Bush, who gave assurances that the "national security implications" would be thoroughly scrutinised before the deal was closed.

Critical
On Dubai's planned Nasdaq holding, senator Schumer said: "At this early stage, this deal gives me pause. While I am and have been a big proponent of foreign investment in the United States, we must still be careful of the kinds of investments made in our critical infrastructure, financial exchanges, utilities and other areas that are vital to the operation and security of our country."
It seems clear that both Dubai and Qatar also regard ownership of the world's leading stock exchange operations to be of central strategic importance. Both are vying to be the region's leading financial centre and a bridgehead to emerging markets further east.

War chest
Abu Dhabi is the energy hub of the United Arab Emirates, holding the bulk of the UAE's gas and oil reserves, which puts it well up the global league table for reserves of both fuels.
It joined the ranks of the oil rich towards the end of the 1950s, when its huge reserves were first tapped, making Qatar something of a newcomer.
The emirate has an estimated $1,000bn invested abroad and its 420,000 citizens are reckoned to be worth about $17m each - excluding the emirate's huge population of foreign workers.
Despite its oil wealth Abu Dhabi is seeking to diversify to reduce its dependence on its energy resources.
Dubai, like Abu Dhabi a member of the UAE, has no such luxury. It does not have Abu Dhabi's abundance of oil and gas. Instead it has built its success on its location, re-inventing itself as a top tourist attraction and, behind the glitz, a serious international business and financial centre - turning, in the words of one observer, the cash from its oil rich neighbours into capital.

Cash pile
The total invested on shares in the London Stock Exchange and Nordic OMX: £1.6bn.