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.


Ex-Nissan chief Ghosn charged, may face new allegations

Updated 1 min 10 sec ago
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Ex-Nissan chief Ghosn charged, may face new allegations

  • Authorities are also widely expected to re-arrest him later Monday over separate allegations that he also under-reported his income by a further four billion over the past three years
  • Under Japanese law, suspects can be re-arrested several times for different allegations, allowing prosecutors to question them for prolonged periods

TOKYO: Japanese prosecutors have formally charged Carlos Ghosn with financial misconduct for under-reporting his salary, local media reported on Monday, three weeks after the auto tycoon’s arrest stunned the business world.
Former Nissan chairman Ghosn, 64, has been in detention since his November 19 arrest on suspicion of under-declaring his income by some five billion yen ($44 million) between 2010 and 2015.
Authorities are also widely expected to re-arrest him later Monday over separate allegations that he also under-reported his income by a further four billion over the past three years.
Under Japanese law, suspects can be re-arrested several times for different allegations, allowing prosecutors to question them for prolonged periods — a system that has drawn criticism internationally.
Monday was the final day prosecutors can hold Ghosn and close aide Greg Kelly before either charging or re-arresting them, and a further arrest would allow them another 22 days of questioning.
In addition to charges against Ghosn, prosecutors also indicted Kelly and Nissan itself, according to local media, as the company submitted the official documents that under-reported the income.
Ghosn denies the charges and is in a “combative” frame of mind, according to sources at Renault, the company he still formally leads — even if the French car giant has appointed an interim chairman.
The Japanese firms in the three-way alliance with Renault — Nissan and Mitsubishi Motors — have both sacked the Franco-Lebanese-Brazilian as chairman.
The millionaire auto sector star, who attracted some criticism for a perceived lavish lifestyle, is now alone in a spartan cell in a Tokyo detention center, in a tiny room measuring just three tatami mats — around five square meters.
He has reportedly told embassy visitors he is being well treated but has complained of the cold, with Monday’s temperature in the Japanese capital hovering around five degrees Celsius.
He spends his time reading books and news reports and is said to be unhappy about the rice-based food.
According to local news agency Kyodo, he has admitted signing documents to defer part of his salary until after retirement but said this amount did not need to be declared as it has not yet been definitively fixed.
A source close to the investigation has said Ghosn and Kelly allegedly put the system in place after a new law came in obliging the highest-paid members of the firm to declare their salary.
Ghosn is suspected of deferring part of his pay to avoid criticism from staff and shareholders that his salary was too generous.
Nissan is appealing to a court in Rio de Janeiro to block access by Ghosn’s representatives to a luxury apartment on Copacabana Beach
“We are closely watching if he is actually indicted and then found guilty,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.
“If he is exempted from prosecution or found innocent, it is going to create huge confusion in Nissan’s management,” Takada told AFP.
It is unclear if Ghosn can be bailed before a potential trial.
In Japan, prosecutors and defendants begin a trial at a district court and can appeal to a high court and the Supreme Court. It may take several years before reaching a final judgment.
If found guilty, Ghosn could face a 10-year prison sentence.
The affair represents a staggering turnaround for a figure celebrated for saving Nissan from the brink of bankruptcy and rebuilding it as a money-making subsidiary of Renault.
Nissan has begun a process of choosing Ghosn’s successor, with the final decision expected on December 17.
His arrest has sparked incredulity at Renault, which owns 43 percent of Nissan and says it has not seen a detailed account of the charges against Ghosn.
It has also fueled anger in Lebanon, with digital billboards around Beirut proclaiming “We are all Carlos Ghosn” under a picture of the magnate.
“A Lebanese phoenix will not be scorched by a Japanese sun,” Interior Minister Nohad Machnouk has declared.