International institutional investors mostly do not understand the Mena region and its asset classes and have largely ignored investment opportunities, particularly in the fixed income market, but the region's economic potential warrants a rethink of the strategy, a senior Lombard Odier executive has said.
“It's my view that they [Mena asset classes] are still underrepresented in most international portfolios, and this is certainly something to take a look at, especially on the credit side, as here, the economy is at a point where a lot of investments will be made,” Nannette Hechler-Fayd’herbe, chief investment officer for the Europe, Middle East and Africa region for one of Switzerland's biggest private financial institutions, told The National.
Debt issuance outlook
Fitch Ratings expects GCC debt capital market issuances to continue to rise this year and next, hitting $1 trillion in outstanding debt, with sharia-compliant bonds accounting for about 40 per cent of the total.
The rating agency expects government issuances to be driven by softer oil prices averaging about $80 per barrel this year and at $75 a barrel mark in 2025.
An expected drop in the US Federal Reserve interest rate, will further boost issuances as cost of funding declines.
In the first quarter of this year, the GCC debt market grew by 7 per cent to $940 billion in outstanding amount, with Saudi Arabia accounting for 43 per cent of the total and the UAE’s share climbing to 30 per cent.
In aggregate, GCC issuers raised $48.1 billion in the first three months of this year, almost a third of total emerging-market dollar issuance (excluding China), according to Fitch data.
In the first quarter of this year, global aggregate bond indexes registered negative returns in US-dollar terms and the trend was visible in the GCC where FTSE Mena Bond GCC Index fell 0.55 per cent, according to Franklin Templeton.
However, the global money manager said its outlook still supports an increase in allocations to higher-quality fixed income issues.
“GCC bonds are a good example – as we transition to rate cuts in 2024,” said Mohieddine Kronfol, chief investment officer and head of Mena Fixed Income.
Ms Hechler-Fayd’herbe said Judging by available institutional investors’ data, the representation of the region, or some the regional heavyweights, is underwhelming in institutional portfolios as well as in some of the emerging market indexes.
“Starting with institutions, there's [a need for a] catch-up but this catch-up is even more pronounced among the average private investors,” she said.
The picture might be slightly different for some family offices, particularly those from Asian countries, who know this region and invest here. However, in Europe, the average family office probably does not have a very big exposure nor knowledge of the regional indices and their valuations.
IPO boom
Sovereigns across the broader Mena region and the corporate sector in the six-member economic bloc of the GCC in particular require funding to remain on the growth path and that will translate into more issuances both in the equity and debt markets, said Ms Hechler-Fayd’herbe, who also leads Europe, Middle East and Africa sustainability strategy and research at the 227-year-old bank with $213 billion in client assets.
Equity Markets in the GCC have also performed well in the past two years, driven by continued economic growth and a flurry of public listings by private and state-owned companies.
Listing activity in the Mena has continued this year, with 10 companies tapping equity markets in the GCC alone, raising a combined $1.2 billion in proceeds in the first quarter of this year, PwC said in its quarterly IPO Watch report.
Last week, Saudi Arabia launched secondary sale of share in the world’s biggest oil company Aramco in a deal that could raise as much as 44.8 billion Saudi riyals ($11.9 billion).
The government is selling 1.545 billion shares in Saudi Aramco, or 0.64 per cent of the company’s issued shares, with the offering set to close on June 11.
“I'm seeing the pickup of IPOs [initial public offerings] here and there is also debt issuances and that will continue to [result] in a steady flow [of deals] and this is all going to [blend in] positively in a well-diversified international investment exposure,” Ms Hechler-Fayd’herbe said.
However, judging by the conversations she said she has had with clients, “I would assume that the representation [currently] is either non-existent or tiny”.
Economies in the Mena region, especially those in the Gulf, have bounced back strongly from the pandemic driven slowdown and have maintained strong growth momentum since.
Governments in the GCC region, home to about a third of the world’s proven oil reserves, aim to cut their reliance on sale of hydrocarbons to fuel their economies and are pursuing their separate economic diversification agendas.
The region’s two largest economies, Saudi Arabia and the UAE, have implemented structural reforms, opened up new sectors for investments and are investing heavily in infrastructure and large-scale developments.
The massive spending plans across sectors require a significant amount of financing that has boosted activity in the debt capital markets as sovereign, quasi-sovereign and corporate issuers flock to raise funds.
"Four out of six GCC sovereigns are investment-grade and all on stable outlook," said Bashar Al Natoor, global head of Islamic Finance at Fitch.
"Saudi Arabia is aiming to deepen sukuk and debt markets, with issuance driven by budget deficits (2024 financial year: 3 per cent of gross domestic product and in 2025 3.4 per cent) and while surpluses are expected in the UAE, issuers are seeking funding diversification."
INDIA SQUAD
Virat Kohli (capt), Rohit Sharma, Shikhar Dhawan, KL Rahul, Vijay Shankar, MS Dhoni (wk), Kedar Jadhav, Dinesh Karthik, Yuzvendra Chahal, Kuldeep Yadav, Bhuvneshwar Kumar, Jasprit Bumrah, Hardik Pandya, Ravindra Jadeja, Mohammed Shami
Sanju
Produced: Vidhu Vinod Chopra, Rajkumar Hirani
Director: Rajkumar Hirani
Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani
Rating: 3.5 stars
Your Guide to the Home
- Level 1 has a valet service if you choose not to park in the basement level. This level houses all the kitchenware, including covetable brand French Bull, along with a wide array of outdoor furnishings, lamps and lighting solutions, textiles like curtains, towels, cushions and bedding, and plenty of other home accessories.
- Level 2 features curated inspiration zones and solutions for bedrooms, living rooms and dining spaces. This is also where you’d go to customise your sofas and beds, and pick and choose from more than a dozen mattress options.
- Level 3 features The Home’s “man cave” set-up and a display of industrial and rustic furnishings. This level also has a mother’s room, a play area for children with staff to watch over the kids, furniture for nurseries and children’s rooms, and the store’s design studio.
A Bad Moms Christmas
Dir: John Lucas and Scott Moore
Starring: Mila Kunis, Kathryn Hahn, Kristen Bell, Susan Sarandon, Christine Baranski, Cheryl Hines
Two stars
UAE currency: the story behind the money in your pockets
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
ENGLAND TEAM
England (15-1)
George Furbank; Jonny May, Manu Tuilagi, Owen Farrell (capt), Elliot Daly; George Ford, Ben Youngs; Tom Curry, Sam Underhill, Courtney Lawes; Charlie Ewels, Maro Itoje; Kyle Sinckler, Jamie George, Joe Marler
Replacements: Luke Cowan-Dickie, Ellis Genge, Will Stuart, George Kruis, Lewis Ludlam, Willi Heinz, Ollie Devoto, Jonathan Joseph
Coal Black Mornings
Brett Anderson
Little Brown Book Group
UAE squad
Ali Kashief, Salem Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdelrahman, Mohammed Al Attas (Al Jazira), Mohmmed Al Shamsi, Hamdan Al Kamali, Mohammad Barghash, Khalil Al Hammadi (Al Wahda), Khalid Eisa, Mohammed Shakir, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Adel Al Hosani, Al Hassan Saleh, Majid Suroor (Sharjah), Waleed Abbas, Ismail Al Hammadi, Ahmed Khalil (Shabab Al Ahli Dubai) Habib Fardan, Tariq Ahmed, Mohammed Al Akbari (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Mahrami (Baniyas)
KILLING OF QASSEM SULEIMANI
6.30pm Meydan Classic Trial US$100,000 (Turf) 1,400m
Winner Bella Fever, Dane O’Neill (jockey), Mike de Kock (trainer).
7.05pm Handicap $135,000 (T) 1,400m
Winner Woven, Harry Bentley, David Simcock.
7.40pm UAE 2000 Guineas Group Three $250,000 (Dirt) 1,600m
Winner Fore Left, William Buick, Doug O’Neill.
8.15pm Dubai Sprint Listed Handicap $175,000 (T) 1,200m
Winner Rusumaat, Dane O’Neill, Musabah Al Muhairi.
8.50pm Al Maktoum Challenge Round-2 Group Two $450,000 (D) 1,900m
Winner Benbatl, Christophe Soumillon, Saeed bin Suroor.
9.25pm Handicap $135,000 (T) 1,800m
Winner Art Du Val, William Buick, Charlie Appleby.
10pm Handicap $135,000 (T) 1,400m
Winner Beyond Reason, William Buick, Charlie Appleby.
Company%20Profile
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Killing of Qassem Suleimani
Other key dates
-
Finals draw: December 2
-
Finals (including semi-finals and third-placed game): June 5–9, 2019
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Euro 2020 play-off draw: November 22, 2019
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Euro 2020 play-offs: March 26–31, 2020
Read more from Aya Iskandarani
Mohammed bin Zayed Majlis
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Company%20profile
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Results
Stage seven
1. Tadej Pogacar (SLO) UAE Team Emirates, in 3:20:24
2. Adam Yates (GBR) Ineos Grenadiers, at 1s
3. Pello Bilbao (ESP) Bahrain-Victorious, at 5s
General Classification
1. Tadej Pogacar (SLO) UAE Team Emirates, in 25:38:16
2. Adam Yates (GBR) Ineos Grenadiers, at 22s
3. Pello Bilbao (ESP) Bahrain-Victorious, at 48s
When Umm Kulthum performed in Abu Dhabi
Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.
The specs
Engine: 6.2-litre V8
Transmission: seven-speed auto
Power: 420 bhp
Torque: 624Nm
Price: from Dh293,200
On sale: now
