Bloomberg, UAE, Saudi Arabia discussed on Bloomberg Business of Sports
For that. Let's get back to this part of the world and turned to the regents markets, bringing our equities reported for Philippe pay looking at the sovereign credit default swaps. They haven't priced in additional risk off the back of the latest esscalation of the Gulf of Amman when it comes to stock story, similar, isn't it? Well, you said, yes, I think that the stock market is always the first one to reflect the increasing tensions every time that we have such episodes happening here in the in the Gulf CPS did not reflect that much bonds did not. Let's say you did not jump as much as people would expect. But when you look at stock markets, most of those into golf fell more than one percent Thursday. That's what's significant considering that all of them were coming from a very good winning streak. For example. Saudi Arabia was the first session in six sessions. It was a very good moment for Saudi stocks, and they are the ones that felt the most own Thursday done. One point. Six percent and but still trimming gains in the week for five percent. That means that what we hear from investors is, of course, there's tension in the air, people do not like to deal and to work with the fact that nobody knows exactly how this collegiate and the first thing that you imagined to. So just the names that we're providing some gains indepence few days and Philippa. I mean, this is coming at a time of are seeing quite a bit of foreign buy into the Saudi market as well. Could lost much steeper, if it wasn't for the arrival of foreign investors. Yes, exactly. If it's quite interesting to see this happening at a moment that the Saudi market starts to become. Quite popular within emerging marketing investors that had never had to actually look at this market before, and they're coming at a moment that the market is actually welcoming inflows. Quite increase the political Titian, as we just spoke. So if we look at weekly inflows to the Saudi market, so far, this year, they've been steadied. There's been just one week when the foreigners were net buyers. If we look at q FIS, which is the professional, the big funds from abroad. They've been buying on a spree. That's like the highest since the market opened to foreigners four years ago. This is a new market to a lot of investors, and there's inflows are, of course because of the inclusion of the Saudi stocks into deficiency, and miss. May emerging market benchmarks, which is C dissing flows coming, no matter what happens within the region in terms of political tension mostly because it's specif- money that has detract, the benchmarks a real political tensions reflected very differently in asset classes across the board. You think of two thousand seventeen and the dislocations in pretty much every metric we're nothing short of astounding to me by going into Trey today, though. What are some of the names investors should be looking up, considering all of this, that what we said, it's very important to track those names that received a lot of those inflows from the foreigners, such as other as he Bank, NCB SABIC, the big names within the Saudi market. They're the ones that have been targeted by a lot of this best money and also considering the political risk. We have do DP road. I'm sorry, deport operator here in Dubai. The stock fell five percent on Thursday. Mostly on top of this in Chris. It was the biggest drop in exactly the Wendy other attacks happened in the Gulf. So that's a very sensitive name to such news. Thank you very much for some of those thoughts markets in equities reported. Philippa pacheco. Let's stay with this part of the world and talk about the United Arab Emirates banking sector because that's just experience recent Russian activity. I wave of mergers started with banks that have common orders of Bloomberg and tell us it's teams suggests say second wave where ownership structures are less supportive is imminent with third wave across the insurance sector likely to fall. It's bringing Ed but Krystal use the financials analysts for Bloomberg intelligence so us around the sendo, you suggest that then any research that the could be that second and potentially third wave time line. What kind of features are we looking at here? We believe the second wave is Bill. Even though there is less supportive, as shareholders structure, and most of this would happen across imminent and less efficiency high kept on requirement and, and. And condition spending push for the second way constellation. We have undefined set of performing banks among this local banks in the UAE's and this bang on the perform and one more than one metric of return on equity, deployment of capitan and liquid and. In terms of the financials that you look at which banks could be a target now. When we look at this on the performing banks a few of them. Bank International in the United Auto banks, Sean guys, not make Bank as Bank. And this is out among the banged up on the performance metrics, other banks, which is quite interesting to their business. Rock bank. It's very profitable in terms of the margin, the have the highest margin and the industry and are growing higher than the industry down deploying liquid. Ity optimally. However, the problem was wracked Bank is with being quiet. They would have a scale they can reduce their cost base, and that would improve their auto e which is not around the industry. Median over twenty percent. We spoke with some of the CEO's of the insurance companies over the last three years and repeatedly they've made a call that there would be more midday in the sector, but it hasn't really come through is that likely to change the banks have taken the lead. The insurance companies are going to fall. We believe that insurance usually insurance fix changing, then should take a long time and most of them. Happened. The financial sector, ended up banking sector with the easy to execute and shoot. Is facing already high pressure dirty phone going from the regulator increasing capital requirement? I S seventeen would be implemented twenty twenty one and that would put more pressure on the coasts for the companies. So we believe insurance is also spending ensure take and spent would be a third way for the nation across the sector. And thank you for your analysis. There Christo financial analyst for Bloomberg intelligence now coming out day ahead.