Saudi Arabia's stock index fell yesterday on rumours that index compiler FTSE might not upgrade Riyadh to emerging-market status as quickly as hoped, while Qatar notched up its fifth straight session of gains.
At the end of the business day on Sept. 29, FTSE will announce its decision on whether to include Saudi Arabia in its secondary emerging market index.
For several weeks the market had been pricing in a strong chance of an upgrade. Analysts have predicted Saudi Arabia could see around US$3.2 billion to US$3.7bn of passive fund inflows as a result, although that would not occur until the decision actually took effect, probably in late 2018.
Two fund managers told Reuters that the Saudi stock index fell 1.4 per cent yesterday because investors were worried that FTSE might delay the upgrade on the grounds that foreign investors lacked enough access.
"These are rumours, which cannot be validated or verified until FTSE makes the announcement - nevertheless they were strong enough to create nervousness in the market today," said one fund manager, who declined to be named.
_______________________
Read more:
Saudi market regulator approves Awazel IPO
Saudi Arabia's Savola to sell down Almarai stake
_______________________
Shares in major companies that would probably be included in FTSE's emerging market index were some of the worst performers yesterday. Samba Financial Group shed 2.9 per cent and dairy maker Almarai lost 3.0 per cent.
In Abu Dhabi, Dana Gas sank 4.1 per cent, taking its losses since Wednesday to a little more than 10 per cent, as investors awaited the outcome of a London High Court trial on the validity of its $700 million of outstanding Islamic bonds.
The trial focuses on Dana's June announcement that it would not redeem its sukuk on the grounds that changes in Islamic financial practice had made them unlawful in the United Arab Emirates. It is not clear when the London court will rule or whether a ruling will end the dispute, which is also being fought in a UAE court.
Most other Abu Dhabi shares were weak, dragging the index 0.7 per cent lower. In Dubai, the index fell 0.9 per cent as 20 shares declined and only nine rose.
Qatar's index rose 0.6 per cent, however, as regional investors stepped up their purchases of Qatari shares. They accounted for roughly 10 per cent of total market turnover, bourse data showed.
Fund managers from the six-nation Gulf Cooperation Council, excluding Qatar, dumped Qatari equities after four Arab states cut ties with Doha in June. It was not clear whether some GCC investors were now buying because they hoped for a resolution of the dispute.
A little under two-thirds of the 20 most valuable Qatari companies rose yesterday, including Qatar Islamic Bank , which added 2.6 per cent.
In Egypt, the index rose 0.5 per cent with tourism-related companies some of the top gainers. They included Egypt Resorts, which surged 9.8 per cent in unusually heavy trade.
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
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
