Factbox-Brexit and the City of London: what changes and when | Reuters

Factbox-Brexit and the City of London: what changes and when | Reuters

Britain, which left the European Union in January, loses full access to the bloc under transition arrangements that end at 2300 GMT on Dec. 31.

The 27-nation EU is Britain’s biggest financial services customer, worth about 30 billion pounds ($40 billion) a year. The relationship helped cement London’s position as one of the world’s biggest financial centres and as a major contributor to British tax revenues.

The following details how the City of London’s ability to access the EU market and serve clients in the bloc will change.

WHAT WILL THE EU TRADE DEAL MEAN FOR THE CITY?

Financial services were not part of talks on a EU-UK trade deal and are being dealt with separately by Brussels. But the deal agreed on Dec 24 could make the EU amenable to granting more financial market access to Britain in areas like derivatives trading, even if only on a temporary basis.

WHAT CHANGES IN JANUARY?

From the start of 2021, blanket access for British financial firms to the EU ends and will be replaced by an EU system known as equivalence.

WHAT IS EQUIVALENCE?

This refers to an EU system that grants market access to foreign banks, insurers and other financial firms if their home rules are deemed by Brussels to be “equivalent”, or as robust as regulations in the bloc.

It is a patchy form of access that excludes financial activities like retail banking. British banks have already warned customers in the bloc their accounts will be closed.

It is a far cry from continued “passporting”, or full access, that banks lobbied for in the aftermath of the 2016 British referendum vote to leave the EU.

Access under the system of equivalence can be withdrawn at one month’s notice, making it unpredictable.

HAS EQUIVALENCE BEEN GRANTED?

With less than four weeks to go, Brussels has only granted equivalence so far for two activities: derivatives clearing houses in Britain from January for 18 months, and settling Irish securities transactions for six months.

Faced with limited or no direct access, financial firms in London have already moved 7,500 jobs and over a trillion pounds in assets to new EU hubs to avoid disruption to EU clients.

Trading stocks, bonds and derivatives will be split into less efficient British and EU “pools” if there is no equivalence by January. Britain and the EU have agreed that asset managers in London can continue to pick stocks for funds in the EU.

Most firms anticipate euro-denominated share trading will have to leave London on Jan. 4. But there is a major lobbying effort to allow euro-denominated derivatives trading to stay in Britain a while longer and a chance that equivalence could still be granted in this area before the end of 2020.

WILL EU FINANCIAL FIRMS HAVE TO LEAVE LONDON?

To help maintain London as a global financial centre Britain is allowing EU firms to stay for up to three years, in the hope they will apply for permanent UK authorisation. Britain is also unilaterally allowing financial firms in the EU to offer selected services like credit ratings directly to British customers.

Britain will allow UK investors to use share trading platforms in the bloc.

WHAT’S ALL THIS TALK ABOUT DIVERGENCE?

Brussels says it has not decided to offer equivalence more broadly yet because it wants reassurances that British rules will stay similar to those in the bloc, to avoid Britain potentially having a competitive edge over the EU, and cut EU reliance on the City for core services.

Britain has said it won’t apply some EU rules it inherits, will tweak others like insurance capital norms, and will introduce its own version of pending European regulation for investment firms.

It has also begun a root-and-branch review of regulation and wants to make listing rules more friendly to attract tech firms from across the world.

Britain insists it won’t lower standards and will stick to rules agreed at the global level.

WILL BREXIT END LONDON’S REIGN AS EUROPE’S TOP FINANCIAL
CENTRE?

For now, no. London still has a towering lead over rivals Frankfurt, Milan and Paris when it comes to trading stocks, currencies and derivatives and playing host to asset managers.

Financial firms say shifting more capital out of London than is necessary under Brexit would cause unnecessary and costly market fragmentation.

But in the longer term, if the EU takes a tough line on equivalence and its financial centres reach a critical mass in trading key asset classes, the attractions of London as a financial hub would diminish.

Oil edges higher after Brexit deal, gains capped by pandemic | Reuters

Oil edges higher after Brexit deal, gains capped by pandemic | Reuters

Oil prices inched higher on Thursday, helped by late-day buying in a low-volume session to close out the week.

The market built gains overnight as Britain and the European Union reached a post-Brexit trade deal, reversed those gains, and then rebounded during the U.S. session to end modestly higher.

U.S West Texas Intermediate (WTI) crude CLc1 settled up 11 cents to $48.23 a barrel, while Brent crude futures settled 9 cents higher at $51.29. Volumes were light on the last trading day before the Christmas holiday.

For the week, U.S. crude fell 1.6% while Brent lost 2%.

Markets have rallied sharply since late October as vaccines progressed to approval in numerous countries. Worldwide, infections are still growing, and investors’ outlook will be clouded by the pandemic for several months.

“While the Brexit deal is supportive, the impact of COVID is the dominant driver in the oil market,” said Andrew Lipow, president of Lipow Oil Associates, in Houston, Texas. “The oil market is waiting for the wider distribution of vaccines to get the public back on the road and in the air.”

Founder of #UAE healthcare major Aster mulls London, #Dubai listing - Arabianbusiness

Founder of UAE healthcare major Aster mulls London, Dubai listing - Arabianbusiness

UAE-based healthcare major Aster is looking again at listing the company on either London Stock Exchange or Dubai Financial Market, its founder has told Arabian Business.

The discussions come as management are keen to discover the true value of the company for its shareholders, said Dr Azad Moopen, founder chairman and managing director of Aster DM Healthcare.

“About 80 percent of our business comes from the GCC market and 20 percent from India. Paradoxically we are not getting the true value of our (overall) business reflected in the market valuation of our company listed on the Indian stock exchanges,” he told Arabian Business.

“We are trying to convince the investors (of the listed company in India) to realise the true value of the company, but if it is not happening, we will definitely look at (options) to discover the true value of the stock as we go forward,” Moopen said, adding that the options could be a listing in London or Dubai.

He added that of late there has been a surge in the share price of the Aster DH Healthcare on the Indian bourses, though he agreed that it could also because of healthcare companies being favoured by investors because of the Covid pandemic.

Major Gulf markets end mixed, #Qatar snaps losing streak | Reuters

Major Gulf markets end mixed, Qatar snaps losing streak | Reuters

Major stock markets in the Gulf were mixed when they closed on Thursday, with trading volumes modest because of the absence of many foreign investors for Christmas.

Saudi Arabia’s benchmark index fell 0.2%, hit by a 0.7% fall in Al Rajhi Bank and a 0.8% decline in the country’s largest lender National Commercial Bank.

The kingdom’s oil exports fell by 18.9 billion riyals ($5.04 billion) in October, down by nearly a third, while non-oil exports fell 0.3%.

The Saudi economy is forecast to shrink by 5% this year, according to the International Monetary Fund.

Dubai’s main share index gained 0.6%, with blue-chip developer Emaar Properties rising 2% and sharia-compliant lender Dubai Islamic Bank gaining 0.7%.

DAMAC Properties closed 0.7% higher after its board approved increasing ownership in London real estate project Nine Elms to 40% from 20%.

The emirate started rolling out the COVID-19 vaccine produced by Pfizer and BioNTech for free on Wednesday, the government said, joining Saudi Arabia which last week became the first Arab country to begin using the vaccine.

In Abu Dhabi, the index eased 0.3%, weighed down by a 0.5% fall in the United Arab Emirates’ largest lender First Abu Dhabi Bank and a 1% decline in Abu Dhabi Commercial Bank.

The Qatari index added 0.3%, ending three sessions of losses, helped by a 2.2% gain in Qatar Islamic Bank and a 1.7% increase in lender Masraf Al Rayan.

Oil climbs as U.S. inventory draw, Brexit deal hopes boost risk appetite | Reuters

Oil climbs as U.S. inventory draw, Brexit deal hopes boost risk appetite | Reuters

Oil extended gains on Thursday in light holiday trade as a drop in U.S. stockpiles spurred demand hopes, while hints of an imminent Brexit deal underpinned investors’ risk appetite.

Brent crude futures rose 17 cents, or 0.3%, to $51.37 a barrel by 0745 GMT, while U.S. West Texas Intermediate (WTI) crude increased 10 cents, or 0.2%, to $48.22.

Both contracts gained more than 2% on Wednesday.

“Lower U.S. inventories of crude and fuels as well as signs of a potential Brexit deal which led to weaker U.S. dollar were good news,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

“But lingering worries over a new variant of the novel coronavirus capped gains,” he said, adding that oil markets were quiet with investors in holiday mode.

Private equity will be a key driver of post-crisis Middle East economic recovery | ZAWYA MENA Edition

Private equity will be a key driver of post-crisis Middle East economic recovery | ZAWYA MENA Edition

Alternative debt funds will be crucial to supporting funding gaps in Middle East markets – particularly for the small and medium-sized enterprises and mid-market enterprises, which represent a significant part of the region’s non-oil economy, experts said.

Although the level of deal flow in 2020 has been similar to pre-crisis levels, the types of transactions and the reason for them have differed, according to panellists at a recent ICAEW (the Institute of Chartered Accountants in England and Wales) webinar on fast tracking mergers and acquisitions (M&A) in the Middle East.

Discussions centred on how corporate finance is shaping capital raising, driving transactions and supporting business transformation to help economies adapt during and beyond the coronavirus pandemic.

The speakers indicated that the COVID-19 pandemic has impacted deals significantly, and the business environment and willingness of international investors to do business in the region has changed due to uncertainty in the market and recent high-profile scandals.

Most major Gulf markets little changed; Dubai outshines | Reuters

Most major Gulf markets little changed; Dubai outshines | Reuters

Dubai’s stock market extended the previous session’s gains on Thursday as the emirate began COVID-19 inoculations with the Pfizer-BioNTech vaccine, while other major Gulf markets were little changed.

Dubai’s main share index rose 1%, with blue-chip developer Emaar Properties advancing 2.6%, while Emirates NBD Bank was up 1.4%.

The emirate started rolling out the COVID-19 vaccine produced by Pfizer and BioNTech for free from Wednesday, the government said, joining Saudi Arabia which last week became the first Arab country to begin using the vaccine.

S&P Global warned earlier this year that Dubai’s economy was set to shrink 11% in 2020, almost four times the drop in GDP experienced during the global financial crisis in 2009.

In Abu Dhabi, the index edged up 0.1%, with the country’s largest lender First Abu Dhabi Bank 0.2% higher.

Aldar Properties gained 0.6%. It signed an agreement on Wednesday to divest two of its district cooling assets on Abu Dhabi’s Saadiyat Island to National Central Cooling Company (Tabreed) for 963 million dirhams ($262.20 million).

The Qatari index added 0.1%, with Qatar Islamic Bank up 2.4%.

Saudi Arabia’s benchmark index eased 0.1%, hit by a 0.7% fall in Al Rajhi Bank.

#Dubai Sees Economy Shrinking 6.2% This Year Before 2021 Growth - Bloomberg

Dubai Sees Economy Shrinking 6.2% This Year Before 2021 Growth - Bloomberg

The economy of Dubai, the Middle East’s business hub, will likely contract 6.2% this year, according to the emirate’s media office. It’s expected to see 4% growth in 2021.

Gross domestic product fell 10.8% in the first half of the year, estimates published on Wednesday showed. The economy is heavily dependent on tourism and retail, sectors especially hard hit by the pandemic.

The fallout this year is “within the expected range of economic contraction, given the massive global economic impact of the Covid-19 pandemic,” said Arif Al Muhairi, executive director of the Dubai Statistics Centre. “The critical priority placed on combating the pandemic and protecting public health and safety induced a widespread slowdown.”

In the United Arab Emirates, of which Dubai is a part, economic output is seen shrinking around 6% as well, with lower oil prices contributing heavily to the slump. Late on Tuesday, the emirate’s government press office published the same growth forecasts but retracted them shortly after without explanation.

#Qatar Sees No Political Obstacles for Resolving Gulf Standoff - Bloomberg

Qatar Sees No Political Obstacles for Resolving Gulf Standoff - Bloomberg

Qatar’s foreign minister said talks were ongoing to resolve the rift that has divided the energy-rich Gulf nations, and that there weren’t any obstacles to resolve the crisis at a political level.

Talks on a reconciliation had taken place with Saudi Arabia, which represented the other parties to the dispute, Sheikh Mohammed bin Abdulrahman Al Thani said in Moscow, according a statement posted on Qatar’s foreign ministry website. He also called for dialogue between countries in the Gulf Cooperation Council and Iran.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic, trade and transport links with Qatar in 2017, accusing the gas-rich country of maintaining close ties with Iran and supporting terrorism. Qatar denies the charges.

But talks of a potential breakthrough began to circulate earlier this month. Kuwait’s foreign minister said last week that a meeting Gulf leaders was planned for Jan. 5 in Riyadh.

People with knowledge of the matter said that Saudi Arabia and Qatar are close to a preliminary rapprochement that may not initially include the UAE, Bahrain and Egypt.