A succession of firms have stepped forward in recent days to say they remain committed to investing in the Gulf. That’s despite a war that seems to lack a clear strategy or endgame, and that is wreaking havoc across the Gulf.
Which begs the question: Is Wall Street overly optimistic about how this conflict plays out? The answer is nuanced.
Gulf leaders and regulators have long memories. They remember who stands with them in times of trouble, and who ups sticks and leaves.
Take Saudi Arabia. After the murder of the Saudi journalist Jamal Khashoggi in 2018, those CEOs that stayed with the kingdom were rewarded, even if it meant taking a lot of heat from elsewhere. Larry Fink, Jamie Dimon, and Ken Moelis all continued to appear alongside Saudi officials at events in the aftermath of the killing. It’s no coincidence that BlackRock, JPMorgan, and Moelis are some of the government’s go-to firms today.
Western CEOs know that if they walk away from the region now, they may not be able to get back in for years: Citigroup sold its stake in a Saudi bank in 2004; it was not able to return until 2017, an example cited often in my conversations with bankers and officials in Riyadh.
The length of the war is uncertain, as is what it will be left once it is over. That leaves Wall Street bosses facing a tough choice: Walk away and risk being shut out when the war ends, or stick around and hope the conflict ends quickly. So far, most are choosing the latter.
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“It’s a single-variable market,” investment banker Piper Sandler told the Wall Street Journal, as results suggest it will be the worst quarter for US stocks in four years. “If oil doesn’t go down, the market won’t go up—period.”