MSCI and Saudi Arabia: friends again

Robin Wigglesworth

Robin Wigglesworth joined the FT as a Gulf correspondent in June 2008. He writes extensively on debt and equity markets across the Middle East and North Africa.

MSCI and Saudi Arabia: friends again

April 30, 2012 7:15 pm by Robin Wigglesworth

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After a discreet but damaging spat over licensing that saw Saudi Arabia fall out of MSCI’s indices in 2009, the Middle East’s largest economy and the world’s most influential emerging markets index provider appear to have kissed and made up.

MSCI said on Monday that it will reintroduce its Saudi Arabia Domestic Indices and related regional indices – such as the MSCI Arabian Markets – in June, a move that some hope could signal another move by Saudi Arabia to ease foreign investor access to its bourse, the largest and most liquid in the Arab world. Continue reading »

State-owned EM cos: more value than you think

April 25, 2012 11:59 pm by Robin Wigglesworth

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Emerging market equity investors may not always like the smell of state control, fearing that the interests of minority shareholders may be hijacked by activist governments, but as Morgan Stanley showed in a recent research note, state-owned companies have overall outperformed their private counterparts in recent years.

Indeed, they have done much better. The 122 members of the MSCI Emerging Markets index that have state ownerships of 30 per cent or more have beaten the index by a cumulative 260 per cent since January 2001, and by 33 per cent since late October. Continue reading »

Tags: EM equities, equities, Petrobras, Vale Posted in Global | Permalink

Lesson for Greece from the Caribbean

March 17, 2012 9:23 pm by Robin Wigglesworth

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What country enjoys a bountiful tourism industry and pleasant weather, but has seen a government overspending and ill fortune send its indebtedness soaring, forcing a sorely needed sovereign restructuring?

The answer, of course, is Saint Kitts and Nevis, the lush West Indies island federation.

The similarities don’t end there. Like Greece, St Kitts has been locked in an inflexible monetary bloc – the East Caribbean Currency Union – limiting its options in the face a debt-to-gross domestic product of almost 200 per cent when it first embarked on a restructuring last summer. Continue reading »

Tags: debt, Greek debt crisis Posted in Global, LatAm | Permalink

Frontier equities: still out of favour

February 2, 2012 4:23 pm by Robin Wigglesworth

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While interest in frontier market debt may be waxing, international investment in frontier equity markets has waned considerably of late.

After robust inflows over most of 2010, funds dedicated to frontier markets and tracked by EPFR Global, a data provider, have suffered a five month streak of net outflows. Investors have now withdrawn money for nine of the past 12 months, cutting the total assets under management to $7.5bn. Continue reading »

Tags: equities, frontier markets, fund flows Posted in Africa, Global | Permalink

Saudi equities: a lifting of the veil?

January 15, 2012 9:01 pm by Robin Wigglesworth

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Riyadh may be a parched, inhospitable place for dapper fund managers, but many may start to make more regular pilgrimages to the capital of Saudi Arabia in the coming years – and not just to raise fresh funds, the traditional cause for a visit in the oil-rich state.

Saudi Arabia’s Tadawul stock market, the largest and most liquid in the Arab world, may this year finally allow foreign institutional investors to invest directly into its blue-chip listed companies, rather than the swaps the Capital Markets Authority introduced in 2008. Continue reading »

Tags: equities, fund management Posted in Middle East, Saudi Arabia | Permalink

A new high for EM bond issues

January 11, 2012 6:34 pm by Robin Wigglesworth

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Debt may have been the drug of choice for western economies – at least before the financial crisis turned leverage into a dirty word – but emerging markets are increasingly starting to dabble in the dangerous stuff.

While global debt issuance, including sovereign, sovereign-linked entities, financial institutions and companies, dipped 6 per cent last year, emerging market debt issuance climbed 11 per cent to a record $849bn last year, according to Dealogic. Developing markets accounted for 15 per cent of the global total – another record. Continue reading »

Tags: bonds Posted in Global | Permalink

Saudi Arabia: spend it while you can

December 27, 2011 5:00 pm by Robin Wigglesworth

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While most western governments are by now checking ministry sofas for any loose change that might have been lost in the creases, Saudi Arabia increased spending by 25 per cent this year – and has still been able notch up budget surplus north of $81bn, or 14 per cent of the kingdom’s annual economic output.

Emboldened, the kingdom now plans to raise government spending further next year, to an all-time budget high of SR690bn next year, according to the 2012 fiscal plan approved on Tuesday. A planned SR250bn splurge on housing projects comes on top, as the money needed has already been deposited at the central bank. Continue reading »

Tags: economy Posted in Saudi Arabia | Permalink

EM bonds: roaring back to life

October 19, 2011 8:15 pm by Robin Wigglesworth

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Emerging market debt was one of the last shoes to drop when Europe’s simmering sovereign debt crisis once again turned into a full-blown panic this summer, but when it finally did, it landed with a thud.

The yield of JPMorgan’s benchmark emerging markets debt indices shot up from 5.46 per cent in early August to a one-year high of 6.39 per cent at the start of this month, and corporate issuance in September shrivelled to the lowest since at least January 2010.

However, emerging market bonds have rallied markedly this month, and issuance is once again picking up, with a flurry of deals on Wednesday. Continue reading »

Tags: bonds, fixed income Posted in Global | Permalink

Banks reap profits from M&A deals in emerging markets

July 14, 2011 7:00 am by Robin Wigglesworth

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Leading international banks have piled into emerging markets in recent years, dispatching thousands of their best and brightest to recondite but promising parts of the global financial system to counter the glum outlook for domestic western markets.

While hardly a goldmine – yet, at least – emerging markets are certainly starting to contribute to the bottom line of many banks. Although the overall volume of M&A deals involving an emerging market company only rose 4 per cent in the first half of the year, Thomson Reuters estimates that fees rose almost a quarter to $3.9bn. So who is coining it? Continue reading »

Tags: equities, fixed income, investment, M&A Posted in Global | Permalink

Egypt: friends rally round; will stocks rally, too?

May 24, 2011 4:01 pm by Robin Wigglesworth

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A friend in need is a friend indeed, or so the saying goes. Egypt is certainly in need of friends that can help it financially in the wake of its revolution, and the US and Saudi Arabia have kindly obliged.

President Barack Obama on May 19 promised to cancel $1bn of debt, and offered $1bn of loan guarantees. Saudi Arabia, whose relationship with Egypt has often been complicated, on May 22 pledged $4bn in “soft loans, deposits and grants” according to the state-run Saudi Press Agency. Continue reading »

Tags: Arab spring, capital flows, debt, FDI Posted in Africa, Egypt | Permalink

Dubai Bank taken over – an isolated case?

May 16, 2011 7:30 pm by Robin Wigglesworth

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“Extend and pretend”, a common if maligned banking tactic when important clients are unable to repay their loans, can only get you so far, as Dubai Bank, an Islamic bank majority-owned by the debt-laden emirate, has discovered.

The Dubai government has been forced to take over Dubai Bank – wiping out the shareholding of Emaar and Dubai Holding, two other state-owned entities – to protect depositors, and is now considering whether the bank can continue as a standalone entity.

Dubai Bank’s woes raise questions as to the quality of loan books at other local banks. Continue reading »

Tags: banking, debt Posted in Middle East, United Arab Emirates | Permalink

Kuwait’s Stock Exchange: gambling den no more?

April 6, 2011 1:20 pm by Robin Wigglesworth

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Kuwait’s stock market may be one of the oldest and largest in the Arab world, but has long been synonymous with rampant market abuses such as insider trading and pump-and-dump trading by powerful merchant investors. That may be about to change.

Spurred on by the financial crisis, which caused the exchange to shed almost two thirds of its market capitalisation, Kuwait last year introduced a new regulatory framework, and this year established a dedicated Capital Markets Authority to enforce the new rulebook. Continue reading »

Posted in Kuwait | Permalink

Egypt’s rally: can it last?

March 28, 2011 4:47 pm by Robin Wigglesworth

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The massacre that was widely expected when Egypt’s bourse finally reopened its doors after a revolution and several weeks of clumsily-handled closure has turned out to be nothing more than some slight bloodletting – followed by a dramatic rally.

After collapsing the maximum allowed by automatic circuit-breakers within seconds of opening on Wednesday – and closing down 8.3 per cent – the benchmark EGX30 index fell only 4.2 per cent on Thursday, and has jumped this week. Continue reading »

Tags: Arab spring, equities, stock exchanges Posted in Africa, Egypt | Permalink

An Arab awakening for Saudi Arabia?

March 10, 2011 2:50 pm by Robin Wigglesworth

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The recent Gulf stock market rout ended this week, with all regional bourses chalking up significant gains. Saudi Arabia, the largest and most liquid Arab equity market, soared 15 per cent thanks to the intervention of government pension funds. But fund managers now say the “relief rally” has been too strong, given the still-uncertain political outlook for the region.

Saudi Arabia is a particular concern, as officials prepare to face protests scheduled to take place on Friday. Continue reading »

Tags: oil & gas Posted in Saudi Arabia | Permalink

Bahrain’s youth: not party animals

February 21, 2011 10:35 am by Robin Wigglesworth

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Fluttering flags, ramshackle tents, reeking portaloos and constant talk of peace and communal harmony. But for the occasional fiery chant of “Death to al-Khalifa!” the Pearl roundabout in Bahrain could be an oddball festival anywhere in Europe.

The symbolic intersection was triumphantly reclaimed by thousands of flower-wielding, flag-waving protestors on Saturday, after Bahrain’s armed forces and riot police were ordered to withdraw by Sheikh Salman al-Khalifa, the reformist crown prince. Continue reading »

Posted in Bahrain | Permalink

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