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Sunday, 18 December 2016

ETFs must stay simple, safe and cheap

ETFs must stay simple, safe and cheap:
"In only one part of the economy — finance — is innovation to be distrusted on principle. Paul Volcker said that the only worthwhile financial innovation during his career was the ATM. He has a point: the finance industry will take any good idea and push it until it cracks. Credit derivatives are only the most recent example.

Exchange traded funds deserve even more than default scepticism. In barely a quarter of a century, they have hoovered up more than $3tn in assets, and now account for a huge chunk of stock trading. The sceptic’s charge sheet: they were largely the invention of stock exchanges that had their own reasons to pump up revenues. They have provided work for exchanges, and for the brokers and investment bankers who keep them from trading at a discount.

All the classic sins are there. ETFs are growing needlessly overcomplicated. They are also looking for ways to reintroduce higher charges. As low costs were always a critical advantage, this is hard to forgive. The extraordinary turnover in ETFs — many times that of the largest common stocks — makes clear that salesmen are pushing clients into pointless trading. Their structure allows for trading minute by minute, unlike the mutual funds they are supplanting, encouraging short-termism just when the world is crying out for long-termism. The swift moves between sectors and top down approach that they permit have changed the pattern of equity markets, with stocks staying unnaturally correlated for long periods and then violently correcting. This helps no one."

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MIDEAST STOCKS-Gulf, Egypt inch up as trading volume shrinks | Reuters

MIDEAST STOCKS-Gulf, Egypt inch up as trading volume shrinks | Reuters:
"Stock markets in the Gulf posted small gains on Sunday after crude oil prices climbed back towards 17-month highs at the end of last week, but trading volumes shrank across the region. Foreign buyers continued to bid up shares in Egypt.

Brent futures rose 2.2 percent to settle at $55.21 a barrel on Friday after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output.

Saudi Arabian petrochemical shares were bid up on Sunday with all 14 listed producers advancing, pulling the main Saudi stock index 0.7 percent higher. Mid-sized producer Sahara Petrochemical was the top performer, jumping 7.1 percent."

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GCC’s structural reforms present multitude of opportunities: SocGen | GulfNews.com

GCC’s structural reforms present multitude of opportunities: SocGen | GulfNews.com:
"A long period of oil price decline and the GCC governments’ efforts to structurally transform economies are throwing up huge opportunities to deploy both intellectual and financial capital in the region, said Frederic Oudea, CEO of Societe Generale in an exclusive interview with Gulf News.
“We have had a pretty steady strategy for the region for the last 4 years while taking advantage of our core expertise. Last year we said we will put some of our people and expertise in structured finance and infrastructure finance and asset finance. Within a short span of time we have had good results. Of course, the reform efforts in the region come with a lot of opportunities,” he said.
Although there has been a slowdown in economic activities due the pressure from lower oil prices, the economic situation has increased the region’s demand for international funding from varying sources ranging from governments, private sector, public private partnerships and financial services sector.
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Saudi Telecom to Invest $100 Million in Uber’s Middle East Rival - Bloomberg

Saudi Telecom to Invest $100 Million in Uber’s Middle East Rival - Bloomberg:
"Government controlled Saudi Telecom Co. will acquire a 10 percent stake in Middle East-based ride-hailing app Careem Networks FZ for $100 million, months after the country’s sovereign wealth fund invested in Uber Technologies Inc.

The board of STC, as the Saudi company is known, approved the investment in Dubai-based Careem on Dec. 15, according to a statement on the Saudi Stock Exchange Sunday. STC will fund the deal from internal resources. The company is already an investor in Careem through its venture capital arm, STC Ventures, according to Careem’s website.

Careem has been working with Credit Suisse Group AG to raise as much as $500 million, people familiar with the matter said in September, adding that the company could be valued at more than $1 billion after the funding. Careem raised $60 million last year from investors including buyout firm Abraaj Group to expand in the Middle East, Africa and Asia.

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MIDEAST STOCKS-Firmer oil prices push up Gulf slightly | Reuters

MIDEAST STOCKS-Firmer oil prices push up Gulf slightly | Reuters:
"Stock markets in the Gulf made small gains on Sunday morning after crude oil prices climbed back towards 17-month highs at the end of last week.

Brent futures rose 2.2 percent to settle at $55.21 a barrel on Friday after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output.

Saudi Arabian petrochemical shares were bid up in the first hour of trade with all but one of the 14 listed producers advancing, pulling the main Saudi stock index 0.3 percent higher. Top producer Saudi Basic Industries added 0.5 percent.

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