Businesses in the Gulf raised a record $16 billion (£8.64 billion) from share issues in the past year, taking advantage of the surge in liquidity from a huge influx of petro-dollars and foreign investment. The flood of rights issues by Gulf companies comes after record bond issuance locally as companies raised $17 billion in Islamic bonds and $11 billion in corporate debt.

The scale and speed of the fund-raising is an indication of the growing maturity and confidence of the Gulf stock markets, Andrew Rae, a partner in the Abu Dhabi office of Trowers & Hamlins, the British law firm, argued. “The oil-led boom has provided a tremendous boost to the profitability of Gulf companies and their strategies for expansion,” he said.

Unlike the huge cash calls by troubled banks in London and New York to repair balance sheets, Gulf companies are raising funds for expansion.

Mr Rae said that investors had been hoarding dirhams, expecting that the local currency, which is pegged to the US dollar, would be revalued as the UAE Government took action on inflation. However, the rise in the dollar has taken off the pressure and investors are seeking new homes for their cash.

The appetite over the past year for equity funds has tripled since last year's total of $4.6 billion, which was depressed by a fall in local stock markets. Almost half the cash raised in the past year has been through share issues by banks. According to Trowers & Hamlins, little money is needed to repair damage caused by the sub-prime mortgage markets in the United States and Europe. Instead, the banks are hoping to exploit acquisition opportunities in the expanding Gulf financial market, such as the merger of Emirates Bank with National Bank of Dubai.

The surging price of crude oil is injecting hundreds of billions of dollars into the Gulf economies, but, unlike in the oil-price boom of the late 1970s and early 1980s, the money is not being recycled into dollar accounts and Treasury bills. Instead, much is being reinvested in Gulf economies in huge infrastructure projects. Property has absorbed much of it, but the Gulf is also investing in petrochemicals, refining and manufacturing in an effort to diversify away from oil.

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