Mena region countries affected by unrest are expected to struggle to find international buyers of their debt this year.
Global appetite for bonds and other debt issued by regional governments has waned in recent weeks.
"The sovereigns with the highest debt levels will face the most challenges," Kai Stukenbrock , the director of Europe, Middle East and Africa sovereigns ratingsfor Standard & Poor's, said yesterday.
Countries such as Egypt and Jordan have the ability to absorb some debt through domestic markets, removing the risk for international investors, Mr Stukenbrock said.
Bond sales in the Middle East had been tipped to rise this year as investor appetite improved after the global financial crisis. A series of issues following a US$1.25 billion (Dh4.59bn) bond sale by Dubai in September had set the scene for a renewed surge in sales this year.
But instead, there has been a slowdown in interest globally. Unrest in parts of the Mena region, along with rising inflation in some markets, led to investors withdrawing $1.15bn from emerging market bond funds last month.
Sovereign debt insurance costs have also risen for several countries after ratings agency downgrades followed civil unrest. As a result, recent local issuers have had to rely on local demand.
Last month, Egypt raised most of the 15 billion pounds (Dh9.33bn) it sought at a debt auction from local banks.
Despite the uncertain outlook in parts of the region, other issuers are forecast to test the market this year.
"The fourth quarter of 2010 saw a surge in debt issuances largely for the purpose of refinancing maturing debt and partly for business expansion," Dr Jehad el Nakla, the general manager of Moody's Middle East, said in Dubai yesterday.
"According to public announcements, this trend is likely to continue during the first half of 2011, despite the political instability in some Middle Eastern countries."
Capital markets in the region are not as developed as those in the western world. A more established debt market is seen as a way of offering borrowers greater flexibility and a wider range of funding sources. It could also help reduce companies' reliance on short-term bank finance.
tarnold@thenational.ae
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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How to invest in gold
Investors can tap into the gold price by purchasing physical jewellery, coins and even gold bars, but these need to be stored safely and possibly insured.
A cheaper and more straightforward way to benefit from gold price growth is to buy an exchange-traded fund (ETF).
Most advisers suggest sticking to “physical” ETFs. These hold actual gold bullion, bars and coins in a vault on investors’ behalf. Others do not hold gold but use derivatives to track the price instead, adding an extra layer of risk. The two biggest physical gold ETFs are SPDR Gold Trust and iShares Gold Trust.
Another way to invest in gold’s success is to buy gold mining stocks, but Mr Gravier says this brings added risks and can be more volatile. “They have a serious downside potential should the price consolidate.”
Mr Kyprianou says gold and gold miners are two different asset classes. “One is a commodity and the other is a company stock, which means they behave differently.”
Mining companies are a business, susceptible to other market forces, such as worker availability, health and safety, strikes, debt levels, and so on. “These have nothing to do with gold at all. It means that some companies will survive, others won’t.”
By contrast, when gold is mined, it just sits in a vault. “It doesn’t even rust, which means it retains its value,” Mr Kyprianou says.
You may already have exposure to gold miners in your portfolio, say, through an international ETF or actively managed mutual fund.
You could spread this risk with an actively managed fund that invests in a spread of gold miners, with the best known being BlackRock Gold & General. It is up an incredible 55 per cent over the past year, and 240 per cent over five years. As always, past performance is no guide to the future.
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
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Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
