Hedge fund titan Ray Dalio highlights the GCC region as an attractive investment in a turbulent global environment

Amid a turbulent global environment, hedge fund titan Ray Dalio sees certain parts of the world as holding promise for investors, particularly the Middle East’s Gulf states. Specifically, Dalio highlighted the United Arab Emirates while speaking at the CNBC panel at Abu Dhabi Finance Week.

The Bridgewater Associates founder spoke to CNBC’s Dan Murphy, saying, “We’re talking today about how the world order is changing, and how the region, the GCC (Gulf Cooperation Council) region is becoming an important region. It’s very classic. It’s a renaissance state. We’re now talking about a renaissance state here that happens within this greater geopolitical and economic environment.”

Bridgewater Associates is the world’s largest hedge fund, managing $97.2 billion in assets as of September 2023. Dalio expanded his push into the Middle East in April by opening a new branch of his family office, the Dalio Family Office, in Abu Dhabi, in addition to the existing locations in the U.S. and Singapore.

Dalio described the UAE as a “renaissance state,” emphasizing the importance of fundamental financial indicators such as a good income statement, a good balance sheet, and a supportive culture for the development of people.

Dalio also lauded the region for being outside of great power conflicts, making it very attractive for investment.

Gulf states leverage oil wealth for strong economic potential

The Gulf states have been making significant economic strides, particularly in the UAE and Saudi Arabia. Dubai, the UAE’s commercial capital, has become a hotspot for foreign investment, with 40 registered hedge funds as of July 2023, over a third of which arrived in the previous 12 months.

The vast majority of these funds are regional subsidiaries of London or New York-based firms, positioning the Gulf states as attractive spots for foreign investment and fundraising.
Moreover, the region’s combined 10 largest sovereign wealth funds managed $4 trillion in early 2023, exceeding the GDP of France or the U.K. These figures, along with the willingness of the funds to make large investments in advanced industries, have drawn visible interest from venture capitalists and startup founders around the world.

Rise of the ‘middle powers’

Geopolitically, the UAE and Saudi Arabia have emerged as “middle power” countries, maintaining good relations with the Western world and heavyweights like Russia and China. This has allowed them to leverage these relationships to maximize trade and political influence. Moreover, the countries have played crucial roles in mediating conflicts, signaling a new world order where smaller states aren’t forced to tie themselves to dominating powers.

Dalio emphasized the critical importance of diversification and the stability, both financial and political, of the Gulf states for institutional investors. He pointed out the emergence of a renaissance in the region and its potential for prosperity.