The roar of Formula One car engines will be heard at the twentieth Bahrain Grand Prix in less than a fortnight.
When F1 arrived in 2004, the Gulf country was catapulted into the public consciousness and the event sparked a series of attempts to imitate its sporting success.
Neighbors such as Saudi Arabia, Qatar and the United Arab Emirates have organized their own races in a bid to boost the sport and the way it acts as a showcase, attracting international investors.
But as the 20th anniversary of its Grand Prix approaches, Bahrain is fighting for pole position in the booming financial and technology sectors.
Particularly in the financial sphere, officials and business leaders are interested in talking about the country’s history as a bridge between East and West.
Leading the race: Max Verstappen wins last year’s Bahrain Grand Prix. Formula One came to Bahrain in 2004 and put the Gulf country on the world stage.
The strategy bodes well for the UK – which is seen as a key destination for Bahrain’s investment cash – and British banking giants are a dominant force in the country’s financial industry.
As The Mail on Sunday recently revealed, the country’s £14.4bn sovereign wealth fund, Mumtalakat, is planning to build a cash wall in the UK through a series of investments, including in the north of England.
Mumtalakat already controls Woking-based racing car maker McLaren, where investors last month approved a restructuring that will make it easier to sign partnership deals.
Mumtalakat CEO Sheikh Abdullah bin Khalifa has stated that he wants the fund to become “a deal engine” and expand internationally.
Bahrain and the United Kingdom have deep and long-standing ties. The country was a British protectorate for more than 100 years before gaining independence in 1971.
The connections extend to business. London-based Standard Chartered was the first bank to set up shop in Bahrain in 1920 and helped establish it as a key financial center in the region.
The kingdom has strived to maintain its strong ties with the West. The island is home to the US Navy’s Fifth Fleet, as well as a Royal Navy support facility.
It is also the only Gulf country to be formally part of the US-UK coalition to protect shipping in the Red Sea following attacks by Yemen’s Iran-backed Houthi rebels in response to the Israel-Hamas conflict. in Gaza.
Sandwiched between oil-rich Saudi Arabia to the west and gas-rich Qatar to the south, Bahrain likes to assert its credentials as a commercial and diplomatic link both among its Gulf brethren and with the world at large.
Shifting focus: Bahrain central bank governor Khalid Humaidan
A key trading port since ancient times, the island was known for millennia for its pearl fisheries and was one of the first Middle Eastern states to discover oil in 1932.
But the kingdom knows the dangers of relying too much on fossil fuels and began diversifying its economy in the late 1970s, another example of its cleverness in getting ahead of its Gulf neighbors.
Liberalization of the economy has intensified over the past two decades and accelerated after the pandemic as Bahrain’s oil and gas reserves, which still account for a large share of government revenue, decline rapidly.
Since that first Grand Prix, the economy has skyrocketed. National income has risen to more than £35 billion in 2022 from less than £8 billion two decades earlier.
The main areas of interest today are banking and tourism. The first received a boost in the 1970s and 1980s, when the Lebanese civil war forced that country’s large financial sector to flee Beirut for Manama, the capital of Bahrain.
Singapore, another small nation that developed rapidly thanks to its position on key trade routes, appears to be a model.
Bahrain’s fortunate geography could also help it become a hub for international data cables.
A strategy is being drawn up to exploit advances in artificial intelligence, along with plans to use desert plains as a location for the vast data centers that power cloud computing.
The country has already seen success with companies such as Amazon establishing a data center in the country, while in 2021 Citigroup chose Bahrain as the location for its first global technology center in the region.
Khalid Humaidan, former head of Bahrain’s Economic Development Board and now governor of the country’s central bank, notes that its financial sector has surpassed oil and gas and is the largest contributor to the country’s gross domestic product (GDP) with 17.5 percent. .
Currys, whose history dates back 140 years to a bicycle repair company founded by Henry Curry, has 28,000 employees and more than 800 stores in eight countries selling electrical goods and mobile phones.
Its current incarnation arises from the merger ten years ago of Currys PC World with Carphone Warehouse.
But it is worth just a fraction of the combined £3.8bn valuations of those companies at the time. The stock has fallen more than 50 percent in the last two years alone.
In its last financial year to April 2023, it slumped to a loss of £450m, while revenue fell 6 per cent to £9.5bn.
Mall: The skyline of Manama, the capital of Bahrain. Bahrain likes to assert its credentials as a commercial and diplomatic link both among its Gulf brethren and with the world at large.
The company’s most recent trading update showed a 3 per cent drop in sales over the crucial Christmas period, although it raised full-year profit guidance.
And he highlighted the growth in the use of credit, which allows customers to buy now and pay later, as well as repair services and its iD Mobile telephone network.
Meanwhile, Currys last year reached a deal to sell its Greek and Cypriot subsidiary for £170m.
And a recent report from analysts at Investec suggests that the growing services-related parts of the business, with millions of registered customers, could generate “powerful tailwinds for profits”.
They said Currys’ ‘care and repair’ operation could be worth up to £667m alone, and that iD Mobile would be valued at £500m (together, far more than the combined market capitalization of the entire the group).
Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: “It’s no secret that things have been tough for Currys lately.”
‘It has been hit hard by cost of living headwinds as shoppers find it difficult to justify purchasing higher-priced items, especially as many purchases were brought forward during the pandemic.
However, it is clear that the board believes its market valuation is driven by its near-term challenges and that better times are ahead for the company.
Analysts at Peel Hunt raised the prospect of more UK retailers becoming takeover targets.
“Cheap valuations across the sector, especially for market leaders, mean we are likely to see much more M&A activity this year,” they said.
Overall, non-oil sectors account for almost 80 percent of the country’s GDP. This is in stark contrast to Saudi Arabia, which relies on oil sales for 40 percent of its GDP, while natural gas exports account for about 60 percent of Qatar’s GDP.
“While oil and gas remains an important sector for Bahrain’s national economy, we have changed our focus,” Humaidan said.
Beyond business, Bahrain is also keen to emphasize its status as a more liberal place to operate compared to its neighbours, in a bid to encourage more global companies to set up shop and attract its international workforce.
Alcohol is legal and same-sex relationships have been allowed since 1976. This is in contrast to Saudi Arabia, where both are strictly prohibited.
The country is also seeking to allay lingering concerns about its human rights record following a crackdown on protests in 2011 sparked by the wave of Arab Spring demonstrations that swept the Middle East.
As the region once again faces a period of instability, Bahrain has a difficult balancing act to maintain if it wants to stay ahead of the race.
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