Gulf banks catch eye of regional investors

Picture showing towers under construction at the King Abdullah Financial District in the Saudi capital Riyadh. (File Photo: AFP)
Updated 23 February 2018
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Gulf banks catch eye of regional investors

LONDON: Gulf banks could benefit from rising global interest rates, a Bloomberg conference in London heard.
Hasnain Malik, global head of equity research at emerging markets bank, Exotix Capital flagged up emerging investment opportunities at the event in London on Thursday.
Speaking at a forum that was looking at opportunities and risks for investors in “frontier markets” in 2018, he said: “From an investment perspective, the (political) risks are not new, they have characterized this region for a very long time, and you could argue that equity and debt markets have already priced in these risks. In some instances, they are pricing them in too much.”
There were now some value opportunities opening up in parts of the Gulf. “The banks across the GCC are perhaps the most leveraged play to rising interest rates across the whole frontier and emerging markets portfolio,” he said.
He added that if one took MENA as a broadly defined region, it had enough population to match the EU, and enough sovereign capital to match China.
“It has some of the world’s cheapest supplies of oil, gas, petrochemicals and plastics, so the potential is massive, but the problem is that it’s a marketplace with a lack of inter-regional trade, and this has hamstrung this region from realizing its full potential.”
He flagged up the example of the UAE’s Aramex as a top flight logistics company that has out-competed the likes of FedEx of the US.
“Aramex should be growing two to three times faster than it is, but it struggles amid regional dislocation and disruption in places such as Syria, Iraq and Libya. This constrains its growth rate,” he said.
But as long as there is trouble in the region, Dubai would continue to enjoy an inflow of “refugee” capital from high net worth individuals and other investors from throughout the Middle East and beyond.


US unveils new veto threat against WTO rulings

Updated 23 June 2018
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US unveils new veto threat against WTO rulings

  • US tells WTO appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days
  • Trump, who has railed against the WTO judges in the past, threatens to levy a 20 percent import tax on European Union cars

GENEVA: The United States ramped up its challenge to the global trading system on Friday, telling the World Trade Organization that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by US Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a major bulwark against protectionism.
It came as US President Donald Trump, who has railed against the WTO judges in the past, threatened to levy a 20 percent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish US trading partners.
Shea told the WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus,” whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
An official who attended the meeting said other WTO members agreed that the Appellate Body should stick to the rules, but none supported Shea’s view that late rulings could be vetoed, and many expressed concern about his remarks.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
At Friday’s meeting the United States maintained its opposition to the appointment of judges, effectively signalling a veto of one judge hoping for reappointment to the seven-seat bench in September.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyze, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, US ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.