Foreign banking still languishes in some state-led economies. But elsewhere it is maturing rapidly, moving from a state-controlled system of nationalised banks to a private sector system that is increasingly in line with international best practice.

But the region’s investment mechanisms are still in their infancy. The combined market capitalisation of all the Gulf bourses only amounts to about $700 million-800 million.

“There is a lot of liquidity in the region, but too few places to spend it,” says Monica Malik, senior economist at Standard Chartered Bank.

“There is a definite need for more companies to be listed on the region’s stock markets, for more breadth and depth in the market. Too few companies are actively traded.”

Bond markets are even less developed, although analysts believe they would provide an important catalyst for inward investment. “Corporate bond issues in the Middle East are very limited,” says Malik. “But there is huge potential.”

The first signs of a developing bond market are emerging. Islamic bonds – known as sukuks – are growing in popularity, and Qatar Petroleum is increasingly using a combination of banks and bonds to raise debt for its key projects.

“Islamic sukuks, and now convertible sukuks, are becoming more and more prevalent,” says Khan. “They’ve been very well received. Established companies are able to use them as an alternative to borrowing from banks, and they can raise serious amounts of money.”