Friday's Notes of Interest
January 19, 2024
Saudi Stock Market Capitalization tops $3 trillion by end of 2023
https://www.arabnews.com/node/2439896/business-economy
Stock market and exchange consolidation in the Middle East is back on the table with the Saudi exchange acquiring a strategic interest in the Dubai Mercantile Exchange, alongside American behemoth CME. A regional commodities exchange powerhouse is created. Will other mergers and acquisitions between MENA exchanges follow ?
https://www.prnewswire.com/news-releases/saudi-tadawul-group-acquires-a-strategic-stake-in-dubai-mercantile-exchange-creating-gulf-mercantile-exchange-302038438.html
The regulator versus the court - a new development taking shape in capital markets
JLN: The SEC Is at the Mercy of the Courts at a Perilous Moment
Alexander Talel - Time
For nearly a century, the U.S. Securities and Exchange Commission (SEC) has wielded largely un-checked power over investment mechanics and capital formation. But federal courts are quietly poised to change that. While SEC Chairman Gary Gensler continues to try to broaden his agency's purview, pending federal cases-including two now before the Supreme Court-threaten to existentially diminish the SEC's power, just as the complexities of modern markets reach new heights. /jlne.ws/3U8mQYX
International investors pulling away from China
JLN: That Thunder Out of China Is Loss of Confidence; The building blocks of gobal investor belief in the world's second-largest economy are being pulled away, one by one.
John Authers - Bloomberg
Shanghai Surprise
Everyone was braced for trouble in Chinese markets this week. The election in Taiwan threatened to be a major geopolitical flashpoint and scare off investors. Then Saturday's presidential result came in largely as expected, the status quo on the island largely seemed intact, China said little or nothing about it. Chinese stocks traded calmly on Monday. Since then, they've tanked. /jlne.ws/48XI1RF
But Middle East investments in China to bloom in amount, scope in 2024 as sovereign wealth funds aim to diversify …
https://finance.yahoo.com/news/middle-east-investments-china-bloom-093000351.html
And India is becoming a favorite.
JLN: India's Markets Are Turning Into an Inexorable Force; The inclusion of the nation's bonds in the global benchmark index for emerging-market debt is the strongest sign yet that it is leading the world's growth club.
Matthew A. Winkler - Bloomberg
Anyone wondering whether the India juggernaut is sustainable will find the answer in bonds, which have a penchant for discerning the way of the world and telling every other market what to do. At least $1 trillion of government securities traded daily in the most populous nation and biggest democracy is poised to become the darling of international investors when India this year joins the benchmark for emerging-market debt compiled by JPMorgan Chase & Co. India's entry following Russia's exclusion after Vladimir Putin's 2022 invasion of Ukraine (and 2014 seizure of Crimea) and when China's sovereign debt is losing its luster, will make Asia's third-largest economy a beneficiary of as much as $40 billion of inflows during the next 18 months, according to Goldman Sachs Group Inc. How big a deal is that? Consider that foreigners, who are currently prohibited from owning more than 6% of India's sovereign debt, held as little as 0.4% last March, paltry by any measure of major developing countries. /jlne.ws/47zoK81
The Iowa Republican primary last week put Trump on a path of becoming the Republican candidate for president, running against Biden come November. Some pundits are already predicting a second Trump presidency. How would a Trump presidential win this year impact the Middle East ?
JLN: Trump Will Move Markets More Than the Fed; The difference is that unlike rate cuts, the former president's campaign fortunes aren't yet priced in. That could change soon.
John Authers - Bloomberg
Pricing in Politics
Very little that happens this year will matter as much for markets as the US election. Indeed, it's just possible that the campaign and its result could move markets even more than what the Federal Reserve might do. /jlne.ws/3tYWnSZ
JLN: Turkey on the rise.
Bond giant Pimco says Turkey on track for investment grade rating; Fund manager bets on economic reforms by buying lira-denominated bonds
Mary McDougall and Adam Samson - Financial Times
Pimco has been wading into Turkey's bond market, betting that President Recep Tayyip ErdoÄŸan's commitment to a sweeping economic overhaul has set the country on a path to regaining its investment grade credit rating. /jlne.ws/47IAHbs
FT: UK house prices fall at fastest pace in more than a decade
https://www.ft.com/content/d4e9537f-a486-4b8a-bead-e51a4bc68921?desktop=true&segmentId=7c8f09b9-9b61-4fbb-9430-9208a9e233c8#myft:notification:daily-email:content
The increasing importance for cyber security for banks in the MENA region…
JLN: JPMorgan suffers 45bn cyber attacks a day; Bank spends $15bn a year on tech and employs 62,000 technologists, senior executive says at Davos
Owen Walker - Financial Times
JPMorgan Chase is targeted by hackers trying to infiltrate its systems 45bn times a day - twice the rate at which it was attacked a year earlier - the bank's head of asset and wealth management has said. Speaking at Davos on Wednesday, Mary Erdoes said the bank spent $15bn on technology every year and employed 62,000 technologists, with many focused solely on combating the rise in cyber crime. "We have more engineers than Google or Amazon. Why? Because we have to," she said. "The fraudsters get smarter, savvier, quicker, more devious, more mischievous."
/jlne.ws/47yqkqM
Nasdaq expects 85 IPOs this year …
JLN: Nasdaq's Friedman Says 85 Firms Waiting to IPO in Busier Year
Katherine Doherty - Bloomberg
Nasdaq Inc. has more than 80 companies ready to go public in what is expected to be a busier year for initial public offerings, according to Chief Executive Officer Adena Friedman. "We have about 85 companies that have filed to go public on Nasdaq, so it means they are ready for the markets to be open," Friedman said in an interview with Bloomberg TV from Davos on Tuesday. /jlne.ws/47DJUli
More shipping problems that will add to inflationary pressures …
JLN: DHL Chief Warns Over Shipping Shortages From Red Sea Attacks
Sam Dagher - Bloomberg
DHL Group sees potential for a container ship shortage in the near future if vessels continue to undertake lengthy journeys around Africa to avoid attacks in the Red Sea, Chief Executive Officer Tobias Meyer said. Shortages might begin occurring in about two weeks, hitting Asia in particular, if Houthi militants' attacks continue to force merchant ships to steer clear of the waterway, Meyer said at a panel discussion at the World Economic Forum in Davos. /jlne.ws/3U6exwK
FT: Investment firms are raising billions of dollars to buy stakes in venture capital-backed technology start-ups, as a long drought in acquisitions and initial public offerings forces early investors to offload their stock at discounts.
https://www.ft.com/content/72ef0c38-c2c1-44cd-89a4-18d2ee585a3f?campaign_id=4&emc=edit_dk_20240117&instance_id=112731&nl=dealbook®i_id=51603676&segment_id=155542&te=1&user_id=df5365f1f1b9e4acac4b2b05d62e461a
Emerging-market stocks have dropped in the first half of January, something that hasn’t happened since 2016.
https://www.investmentnews.com/industry-news/news/em-stocks-drop-for-worst-start-to-a-year-since-2016-248077
FT: Exchange-traded funds worldwide saw net inflows of $965 billion last year, the second-highest total ever and up from $867 billion in 2022, according to BlackRock data. Investors moved record amounts of money into fixed-income exchange-traded funds and "quality" stocks as appetite for risk rose toward the end of 2023, while inflation-linked bond funds and broad commodity funds saw record outflows.
JLN: Solar and Wind to Top Coal Power in US for First Time in 2024
Will Wade - Bloomberg
Electricity generated from US solar and wind systems will surpass power produced by burning coal for the first time next year, driven by surging panel installations.Coal will produce about 599 billion kilowatt-hours in 2024, according to government data released Tuesday. That will be down from 669 billion kilowatt-hours this year as utilities continue to shutter coal-burning power plants. /jlne.ws/3O4GyRu
JLN: Panmure Gordon and Liberum agree merger to create new investment banking giant in the UK; Upon completion the new entity will have trading relationships with more than 900 counterparties across the UK, US, Europe and Asia, with former Barclays Rich Ricci at the helm.
Claudia Preece - The Trade
Panmure Gordon and Liberum are set to merge to create the UK's largest independent investment bank, with ex-Barclays executive Rich Ricci stepping into the chief executive role of the combined entity. The new firm - Panmure Liberum - will be a market maker in over 750 stocks with all-cap execution capabilities and have over 250 quoted corporate clients with market cap of £250 million. /jlne.ws/47HBols
JLN: Egyptian Overseas Cash Withdrawals Banned by Some Banks Amid FX Crunch
Tarek El-Tablawy - Bloomberg
At least five Egyptian banks imposed new limits on overseas cash withdrawals and spending as the North African nation wrestles with its worst foreign currency crunch in decades. Cairo-based Al Baraka Bank and EG Bank scrapped international cash withdrawals altogether, according to statements posted on their websites. Others such as Commercial International Bank - Egypt's largest listed lender - Abu Dhabi Islamic Bank and First Abu Dhabi Bank Misr reduced daily and monthly limits to as little as $50, according to statements on their websites. /jlne.ws/3HrQgJT
Bloomberg: Egyptian inflation slowed to 33.7% in December and looks set to decelerate further unless authorities move to weaken the pound again in the coming weeks. However, JPMorgan Chase said it would exclude Egypt from local-currency bond indexes tracked by billions of dollars worth of emerging market funds, underscoring the pressure on the country to resolve dire shortages of foreign exchange.
Infrastructure investing continues to grow …
gfma: BlackRock has agreed a deal to buy Global Infrastructure Partners in a $12.5 billion deal. GIP, which has around $106 billion in assets under management, will help expand BlackRock's market share of the alternative assets space. BlackRock will pay $3 billion in cash and 12 million in shares to GIP's founders, and the group will become BlackRock's second-largest shareholder. Full Story: Financial Times (12 Jan.)
JLN: Women's appointment to board level at EU financial firms' slows - EY
Reuters. /jlne.ws/48SXvXb
JLN: The 'smile files' cheering up gloomy workers; Records of achievements and praise can boost staff morale
Emma Jacobs - Financial Times
About 20 years ago Emma Ewing, a trainer and public relations consultant, created an email folder called "nice things" to which she would add messages of thanks from clients or colleagues. Later, she included praise for her team too. On grey mornings, she sometimes opens it and scrolls through years' worth of compliments. "They show how my work and impact has changed over time and they remind me of all the great people I've worked with," she says. "That kind of reminder can really lift your day and get you back on track." /jlne.ws/3O4U1su
Saudi Arabia’s startup ecosystem ranked first in regional venture funding in 2023, raising $1.38 billion
https://www.arabnews.com/node/2441066/business-economy
From the Hertie School: This year, more than half the world's population will be going to the polls and AI is poised to alter the relationship between parties and voters
https://www.hertie-school.org/en/news/allcontent/detail/content/trolls-versus-democracy-how-artificial-intelligence-impacts-political-campaigns
Arab News: This year, sukuk issuance globally is expected to total between $160 billion and $170 billion thanks to higher financing needs in some core Islamic finance countries, according to S&P Global
https://www.arabnews.com/node/2441926/business-economy
IMF: The global average cost of sending $200 from one country to another was about $12.50 in the first quarter of 2023, or 6.25%. Cheaper cross-border payment services would benefit people and economies worldwide.
https://www.imf.org/en/Blogs/Articles/2024/01/03/how-training-and-advice-can-speed-cross-border-payments-and-cut-costs
FT: Fund manager GQG has amassed a $2.8bn holding in companies in the Middle East and expects to raise this further
https://www.ft.com/content/4f0c9d6e-23a2-42f3-9ec4-aa414d30ea40
All the best
Majd