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Thursday, 1 January 2009

Happy New Year from the Middle East

Happy Islamic and Gregorian New Year, both of which fall this week.

This year saw the return of Command Economies!

As 2007 closed my headline was: “"Sovereign Wealth Funds" not "Sub-Prime" were the words of the year!” and never in my wildest imaginings could I have foreseen 2008 would see a return of Command Economies, or as my daily guide, The Financial Times, wrote this week:

“we witnessed the rise of an alternative model: illiberal capitalism.”

Illiberal capitalism, to me this smacks of what former President, now Prime Minister Putin, has been roundly condemned for implementing since the days of Yukos and who can remember those days?

What peculiar times we live in!

Sovereign Wealth Funds remain the envy of many!

I have been overwhelmed by so many investment offerings, seeking investors from the Middle East, but unlike the Three Wise Men of the Christmas Story, who brought gifts, most of the promoters thought they were following in the footsteps of CitiBank etc, who, I suggested, offered Junk Bond returns to secure what only proved to be “lifeboat” capital.

Of course now with some Emerging Market Debt offering a US Dollar yield in excess of 60%, Barclays giving 14% this past Autumn appears to be, for them, a good deal.

Gordon Brown, he who led the second charge to Command Economies, was found around the Gulf seeking capital for IMF coffers and Saudi Arabia seemed not too overwhelmed by their seat at G20.

Meanwhile the article linked in this sections heading remains confused about SWF’s and who they are.

Possibly the FT Editor is correct with his phrase “illiberal capitalism”, where Arab brothers will be keen to support an Arab brother in difficulty, yet without the grandstanding that may be seen elsewhere in the world!

Improbable heroes of 2008! (This is the Pantomime Season)

As you may know I have been involved with Pakistan over the past two years and as the KSE suspended themselves, in August, the wheels came off that train.

With MSCI BARRA removing Pakistan from every Index, the country is included in, and with the resumption of normal trading on the Karachi Stock Exchange only three Asset Managers have re-opened their Equity Funds to their clients, providing them with liquidity after a four month spell.

MCB; KASB and HBL, Asset Managers in Pakistan, are my improbable heroes as 2008 comes to a close, with Naz Khan, of KASB, leading the way, following the Summer launch of her Pakistan Equity Fund, through Melchior, Luxembourg.

As to who plays the roles of the Three Ugly Sisters, well I just do not know!

2009 reading suggestions

The Way We Live Now”, Anthony Trollope, published 1875;
and something lighter, but in a similar vein:
Vanity Fair”, William Makepeace Thackeray, published 1847.

Both are relevant for our times, but how peculiar to know that “Madoff” was written of in 1875! Just goes to prove “Alternative Investing” is not a creation of Mr Jones in 1949 and subsequently developed to the trough it has reached now.
All in all a very odd year, but for me very stimulating and I look forward to my nineteenth year in the Middle East, which will rise like a Phoenix in 2009, but note I did not say “from the ashes”, as the regional society works together in a familial way, that the new markets of “illiberal capitalism” seem to have forgotten.

Hopefully 2009 will see me involved in Offshoring more Asset Managers and establishing country specific ETF’s beyond the Middle East.

For those newly dubbed “Command Economies” recovery seems to be a prospect for 2010.

Wherever you are, and whether a LinkedIn connection, an Outlook contact, or a Blog reader, I wish you and your family a very successful 2009.