#Kuwait, Iran, Oman, Lebanon, #UAE: Mideast Markets Face Rough Quarter - Bloomberg

Kuwait, Iran, Oman, Lebanon, UAE: Mideast Markets Face Rough Quarter - Bloomberg:

From parliamentary gridlock in Kuwait to paralyzed debt talks in Lebanon and giddy valuations for Saudi Arabian stocks, investors in the Middle East face a raft of risks in the fourth quarter.

Ever-present is the fact that current crude prices can’t balance the budgets of most of the region’s energy exporters.

Here are six risks to watch in the last three months of the year:

Oil Blow

While derivative traders have pared bets that Gulf states will be forced to devalue their currency pegs in the next 12 months, bouts of volatility may return.

Countries that have been financing deficits through debt sales “may be in trouble if oil prices persist at current levels,” said Peter Kisler, a London-based portfolio manager at hedge fund North Asset Management. “2020 is an exceptional year, and they can get away with it now, but I am not sure they have a viable long-term plan if oil prices don’t return to pre-2020 levels.”

Debt sales from the region hit a record in the past quarter as governments rushed to place bonds after the coronavirus shock.

#Dubai economy could take 11% hit from travel, tourism curbs in 2020 - Arabianbusiness

Dubai economy could take 11% hit from travel, tourism curbs in 2020 - Arabianbusiness:

Dubai's economy could contract sharply by around 11 percent in 2020 due to restrictions on travel and tourism during the ongoing coronavirus pandemic, S&P Global Ratings said in a research note on Saturday.

While it does not rate Dubai, the rating agency said based on publicly available information, Dubai's gross general government debt will reach about 77 percent of GDP this year (AED290 billion) compared to 61 percent in 2019. 

It added that although Dubai's economy is more diversified than that of most its regional peers, it may take until 2023 for it to recover to 2019 levels due to the impact of the global Covid-19 crisis which forced the postponement of Expo Dubai 2020 to next year.

"Dubai's large exposures to tourism and aviation place it in a relatively more vulnerable position to the effects of Covid-19... The indirect effect of weaker demand from Dubai's neighbours will dampen Dubai's trade, tourism, and real estate markets," the rating agency said.

How #Dubai property prices compare globally for investor risk - Arabianbusiness

How Dubai property prices compare globally for investor risk - Arabianbusiness:

Dubai's real estate market remains fairly priced compared to other major cities in the world after seeing six years of falling values after reaching a peak in 2014, according to new research.

The UBS Global Real Estate Bubble Index 2020, a yearly study by UBS Global Wealth Management's Chief Investment Office, indicates bubble risk or a significant overvaluation of housing markets in half of all evaluated cities around the world.

The Eurozone stands out as the region with the most overheated housing markets. Munich and Frankfurt top the ranking, with Paris and Amsterdam closely following.

By comparison, prices in Dubai are fairly valued, UBS said, adding that the market is likely to see a rebound in the mid- to longer-term.

Blank-check firm ION begins search for Israeli tech unicorn | Reuters

Blank-check firm ION begins search for Israeli tech unicorn | Reuters:

ION Acquisition Corp 1 made its debut on the New York Stock Exchange on Friday after raising $225 million in an initial public offering (IPO), the only current blank-check acquisition company focusing on the Middle East region.

The IPO, which was larger than ION had originally planned, is the latest in a string of listings by special purpose acquisition companies (SPACs), with almost $50 billion raised so far in the United States.

ION shares closed up 4.7% at $10.47.

A SPAC uses capital raised through an initial public offering to buy a private company, usually within two years.

With a specific geography and industry focus, ION Chief Executive Gilad Shany said he wants to target Israeli tech companies at over $1 billion valuation and bridge the gap between local entrepreneurs and the U.S. capital market.

Oil market has not priced in prospect of a Biden victory | Financial Times

Oil market has not priced in prospect of a Biden victory | Financial Times:

Wall Street oil investors spend a fortune trying to figure out how to trade risks, from Opec meetings to Libyan militia movements or even pandemics.

But a doozy is staring them in the face — and oil markets, even after a brisk sell-off this week, have been largely a snoozefest, trading in a narrow range around $40 a barrel for months.

That risk for the oil industry is Joe Biden. President Donald Trump’s positive test for coronavirus has thrown up new uncertainty over the US election but if recent polling is right, Democrat Mr Biden will win the presidency on November 3. His party may even take the Senate, giving it full control of Congress.

Some crisis fatigue may be partly to blame for the oil market’s muted reaction to this prospect. After a Saudi-Russian supply war, the virus-induced collapse of global crude demand, sub-zero prices, dozens of corporate bankruptcies and mass job losses, traders want a breather. As coronavirus cases surge again in some western countries, they have other new threats to consider too.

Turkish Exporters See Political Strife With Saudis Hitting Trade - Bloomberg

Turkish Exporters See Political Strife With Saudis Hitting Trade - Bloomberg:

Saudi Arabia is hindering the entry of goods from Turkey, Turkish companies say, suggesting that political tensions between the regional powers are increasingly spilling over into trade.

The claims prompted a Turkish official familiar with the issue to warn on Thursday that Ankara doesn’t rule out an appeal to the World Trade Organization; while the world’s largest container line has warned clients about likely disruption.

Cargo from Turkey to Saudi ports “will be subjected to possible import bans and/or slowed various customs clearance,” the Turkish agent of A.P. Moller-Maersk A/S said in a Sept. 29 email.

Transiting cargo over land has been blocked, according to Kemal Gul, the owner of Gulsan Transport, a logistics firm based near Turkey’s southern border with Syria, who says the pandemic has given Saudi authorities an excuse to restrict access. “We’re not having such issues with Iran or Iraq. It seems to me they’ll now hamper sea transport.”

ION Acquisition SPAC Raises $260 Million to Buy Israeli Unicorn - Bloomberg

ION Acquisition SPAC Raises $260 Million to Buy Israeli Unicorn - Bloomberg:

An Israeli blank-check company will begin trading Friday on the New York Stock Exchange after raising about $260 million, making it the largest such deal in the Middle East and the region’s first this year. 

Investors behind ION Acquisition Corp 1 plan to buy an Israeli technology startup worth at least $1 billion, and see an opportunity to capitalize on a banner run for local offerings. The deal was multiple times oversubscribed and ended up bigger than an initially planned $200 million, said Gilad Shany, chief executive officer of ION Acquisition.

Israel’s startups have traditionally sought to go public via initial public offerings -- prominent examples over the past year have included Lemonade Inc. and JFrog Ltd. But with low interest rates and market volatility helping fuel a frenzy, special purpose acquisition companies have raised more than $40 billion this year as an alternative.

“It’s become very costly, it’s become very complicated and cumbersome for companies to go public,” Shany said. “We give them certainty, visibility, price visibility, which you don’t get in a very volatile market.”