Investors want to see more pieces of the Middle East’s geopolitical jigsaw drop into place before they give bonds in the region a fresh lift.
The Gulf Cooperation Council’s annual meeting in Saudi Arabia on Tuesday is raising hopes for a thaw between Qatar on one side, and Saudi Arabia, the United Arab Emirates, Bahrain and Egypt on the other. But the market impact may be muted as investors focus on bigger concerns, including U.S. President-Elect Joe Biden’s stance on key allies in the region, and escalating tensions between Washington and Tehran.
Any step toward mending the standoff would be only “marginally positive” for the region’s debt markets, said Mohieddine Kronfol, Dubai-based chief investment officer for Middle Eastern and North African fixed income at Franklin Templeton.
“While this is clearly welcome news to see a rapprochement of some sorts between the GCC members, this is arguably one of the less impactful geopolitical pressure points facing the region,” he said in an interview with Bloomberg Television. “This will take time to convince the market that trust has been rebuilt.”
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