Confidence that European and US interest rates could remain low, alongside prospects for low inflation and moderate growth, meant that equities in developed and emerging markets recovered in February after a turbulent January.
In the bond market, US Treasury yields flattened as disappointing data helped US government bonds maintain their gains from January. US GDP growth in the final quarter of 2013 was revised downward from an annualised rate of 3.2 to 2.4 per cent, and job creation for January was weaker than expected. In Europe, data continued to point to recovery for some of the most crisis-ridden economies, although low inflation figures triggered fears of deflation.
Emerging market bonds benefited from the risk appetite recovery. Credit default swaps declined by 34 basis points (bps) in February, as measured by the CDX Emerging Markets Index, while the JPMorgan Emerging Market Bond Index Global Diversified Index rose 3.03 per cent in US dollars. Although volatility persisted in a number of local markets, investors remained attracted to the prices and higher yields offered by a range of emerging market bonds. February was also positive for Mena bonds, which returned 1.69 per cent (as per Citi Mena Broad Index), with spread compression evident in many markets thanks to upbeat news flow and a strong appetite from local accounts. However, Mena and GCC bond indexes underperformed the emerging market bonds rally after having outperformed during January’s volatility.
In the UAE, Dubai continued to experience positive momentum. Forward indicators such as the purchasing managers’ index pointed to further expansion in Saudi Arabia and the UAE, while inflation remained in check in both places. Qatar decided to engage in some cost-cutting to protect the country’s AA sovereign rating, although Qatar’s finances continued to look robust.
Moody’s and Standard & Poor’s upgraded their long-term corporate credit ratings of Dubai’s Emaar Properties (from Ba3 to Ba1 and from BB+ to BBB- respectively) and affirmed a stable outlook on the ratings. S&P highlighted Emaar’s “high-quality, Dubai-based leasing and hospitality assets” and justified its ratings upgrade by noting a rise in recurring income, increasing presales of residential developments in Dubai as well as a substantial reduction in financial leverage.
As for negative ratings, S&P downgraded the Qatar-based telecoms operator Ooredoo from A to A-, citing concerns about negative free cash flows given the “expectation of higher-than-expected volatility in economic conditions in emerging markets”. Moody’s withdrew all ratings of Dubai Holdings Commercial Operations Group, including its medium-term note (MTN) and its B1 rating on the £500 million bond due February 1, 2017 issued under the MTN programme, citing inadequate information to monitor the credit. Finally, Fitch revised its outlook on Batelco’s BBB- rating from stable to negative on regulatory uncertainty and a challenging domestic operating environment for the Bahraini company.
In Dubai’s first sukuk issuance this year, Dubai Investments Park issued a US$300 million five-year sukuk at a rate of 4.3 per cent and issued at 265 bps over mid-swaps, an aggressive 35 bps inside guidance; orders came to about US$4 billion. Abu Dhabi Commercial Bank sold a $750m, five-year conventional bond at 140 bps over mid-swaps, some 10 bps below initial guidance, as international investors showed significant interest. The Saudi Arabia-based Islamic Development Bank priced a $1.5bn five-year sukuk at 23 bps over mid-swaps. Pricing for this issue, the largest-ever Islamic bond from this supranational lender, was also inside guidance.
Favourable performance characteristics of GCC assets in recent months have continued to enhance the region’s attractiveness. Tensions between Russia and Ukraine have boosted the price of hydrocarbons, with a positive effect on GCC countries. The status of some GCC members, particularly Dubai, as a safe haven has benefited financial assets, while the pegging of local currencies to the US dollar gives investors an extra degree of comfort. Dubai’s credit fundamentals have sharply improved since the crisis of 2009, and the emirate has been taking advantage of the strong economic rebound to relieve some debt burden.
GCC members should continue to benefit from their attractive fundamentals and to offer investment grade opportunities without the debt and unemployment challenges of developed market economies. They offer development and growth opportunities comparable to some of the better emerging markets without external or fiscal imbalances and currency fluctuations.
In a world where economic growth is improving, and where financial markets have begun to undertake a material rerating of risk assets, the value of diversification looks set to increase. An allocation to Mena/GCC bonds appears increasingly rational to equity investors in the region as well as to international bond investors.
Mohieddine Kronfol is chief investment officer, fixed income and global sukuk, at Franklin Templeton Investments (ME)
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
UAE currency: the story behind the money in your pockets
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
COMPANY%20PROFILE
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What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
How to come clean about financial infidelity
- Be honest and transparent: It is always better to own up than be found out. Tell your partner everything they want to know. Show remorse. Inform them of the extent of the situation so they know what they are dealing with.
- Work on yourself: Be honest with yourself and your partner and figure out why you did it. Don’t be ashamed to ask for professional help.
- Give it time: Like any breach of trust, it requires time to rebuild. So be consistent, communicate often and be patient with your partner and yourself.
- Discuss your financial situation regularly: Ensure your spouse is involved in financial matters and decisions. Your ability to consistently follow through with what you say you are going to do when it comes to money can make all the difference in your partner’s willingness to trust you again.
- Work on a plan to resolve the problem together: If there is a lot of debt, for example, create a budget and financial plan together and ensure your partner is fully informed, involved and supported.
Carol Glynn, founder of Conscious Finance Coaching
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Engine: 3.5-litre V6
Transmission: eight-speed automatic
Power: 290hp
Torque: 340Nm
Price: Dh155,800
On sale: now
Second ODI
England 322-7 (50 ovs)
India 236 (50 ovs)
England win by 86 runs
Next match: Tuesday, July 17, Headingley
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
Rating: 3/5
The specs
Engine: 6.2-litre V8
Transmission: ten-speed
Power: 420bhp
Torque: 624Nm
Price: Dh325,125
On sale: Now
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
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COMPANY%20PROFILE
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Company%20profile
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
RESULTS
6.30pm: Meydan Sprint Group 2 US$175,000 1,000m
Winner: Ertijaal, Jim Crowley (jockey), Ali Rashid Al Raihe (trainer)
7.05pm: Handicap $60,000 1,400m
Winner: Secret Ambition, Richard Mullen, Satish Seemar
7.40pm: Handicap $160,000 1,400m
Winner: Raven’s Corner, Richard Mullen, Satish Seemar
8.15pm: Dubai Millennium Stakes Group 3 $200,000 2,000m
Winner: Folkswood, William Buick, Charlie Appleby
8.50pm: Zabeel Mile Group 2 $250,000 1,600m
Winner: Janoobi, Jim Crowley, Mike de Kock
9.25pm: Handicap $125,000 1,600m
Winner: Capezzano, Mickael Barzalona, Salem bin Ghadayer
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.