In line with the strength seen in the previous two months, certain risk assets – particularly equities – continued to perform strongly last month.
Developed-market equities were spurred by a stream of positive economic data from the United States as well as by the dovish tone struck by Janet Yellen, the expected successor to Ben Bernanke as chair of the US Federal Reserve. Renewed speculation about the Fed’s tapering of its monthly asset purchases started to affect benchmark rates, but the central bank continued to placate fears through its commitment to low rates.
European markets were helped by a cut in base rates early in the month and the European Central Bank’s determination to combat the risks associated with disinflation.
Concerns about possible Fed tapering led to a renewed rise in long-term US treasury yields last month, although volatility was contained by expectations of an enhancement of the Fed’s forward guidance for low rates.
However, outside developed markets, concerns about Fed tapering meant most emerging-market equities (barring pockets of strength in China and GCC countries), commodities and fixed income broadly produced negative returns.
The sukuk market, as measured by the HSBC/Dubai Sukuk Index, nonetheless managed to eke out a small positive performance, outperforming the Citi World Government Bond Index and higher-beta indexes.
The outperformance of GCC countries last month – in sukuk as well as in equities – was aided by a number of positive events, including the decision to select Dubai as the site for the World Expo 2020. That decision crowns a strong year for Dubai and the UAE at large. Dubai’s GDP growth accelerated to a year-on-year rate of 4.9 per cent in the first half of this year, while the purchasing-manager index (PMI) for the UAE (56.3 in October) points to continued momentum.
Sukuk issuance in GCC countries picked up considerably last month as the market stabilised. Gems Education, a Dubai-based school operator with facilities across several emerging and developed markets, launched a US$200 million debut hybrid subordinated sukuk with a 12 per cent profit rate. The issue resulted in an oversubscribed book and this unrated sukuk traded well in the secondary market.
Aldar Properties, the largest property developer in Abu Dhabi, returned to the sukuk market for the first time since its merger with Sorouh in June. The company raised $750 million via a five-year sukuk that was priced at 290 basis points (bps) over mid-swaps.
There were also a number of conventional bond issues during the month. In the UAE, Abu Dhabi Commercial Bank sold a conventional $500 million floating-rate note due in January 2017, while First Gulf Bank tapped the market with a senior $500m conventional note set to mature in 2019 that offered a fixed rate of 3.25 per cent.
While market sentiment has improved considerably since the summer, emerging-market assets in general, including bonds, have struggled to hold on to the initial gains they made after the Fed decided in September to delay tapering. Long-term government bond yields have retraced much of their initial declines, which unsurprisingly has had a detrimental effect on the total returns registered in a number of fixed-income markets and had a knock-on effect on emerging-market currencies and credit spreads. Nevertheless, as their performance in November shows, sukuk have generally been less impacted by volatility in benchmark interest rates and have provided some downside protection from emerging market stress.
Overall, despite the financial market volatility that we expect to continue, we think investors in GCC bonds can expect to benefit from a sustained strong macroeconomic backdrop, the low correlation of GCC bonds to major fixed-income sectors, and continued bond market development and growth in the region.
Collectively, we believe these factors should underpin the GCC market’s prospects for strong risk-adjusted returns in the coming months.
Mohieddine Kronfol is the chief investment officer of fixed-income and global sukuk at Franklin Templeton Investments Middle East
SPEC SHEET: APPLE IPHONE 15 PRO MAX
Display: 6.7" Super Retina XDR OLED, 2796 x 1290, 460ppi, 120Hz, 2000 nits max, HDR, True Tone, P3, always-on
Processor: A17 Pro, 6-core CPU, 6-core GPU, 16-core Neural Engine
Memory: 8GB
Capacity: 256/512GB / 1TB
Platform: iOS 17
Main camera: Triple: 48MP main (f/1.78) + 12MP ultra-wide (f/2.2) + 12MP 5x telephoto (f/2.8); 5x optical zoom in, 2x optical zoom out; 10x optical zoom range, digital zoom up to 25x; Photonic Engine, Deep Fusion, Smart HDR 4, Portrait Lighting
Main camera video: 4K @ 24/25/30/60fps, full-HD @ 25/30/60fps, HD @ 30fps, slo-mo @ 120/240fps, ProRes (4K) @ 60fps; night, time lapse, cinematic, action modes; Dolby Vision, 4K HDR
Front camera: 12MP TrueDepth (f/1.9), Photonic Engine, Deep Fusion, Smart HDR 4, Portrait Lighting; Animoji, Memoji
Front camera video: 4K @ 24/25/30/60fps, full-HD @ 25/30/60fps, slo-mo @ 120/240fps, ProRes (4K) @ 30fps; night, time lapse, cinematic, action modes; Dolby Vision, 4K HDR
Battery: 4441mAh, up to 29h video, 25h streaming video, 95h audio; fast charge to 50% in 30min (with at least 20W adaptor); MagSafe, Qi wireless charging
Connectivity: Wi-Fi, Bluetooth 5.3, NFC (Apple Pay), second-generation Ultra Wideband chip
Biometrics: Face ID
I/O: USB-C
Durability: IP68, water-resistant up to 6m up to 30min; dust/splash-resistant
Cards: Dual eSIM / eSIM + eSIM (US models use eSIMs only)
Colours: Black titanium, blue titanium, natural titanium, white titanium
In the box: iPhone 15 Pro Max, USB-C-to-USB-C woven cable, one Apple sticker
Price: Dh5,099 / Dh5,949 / Dh6,799
FA CUP FINAL
Chelsea 1
Hazard (22' pen)
Manchester United 0
Man of the match: Eden Hazard (Chelsea)
Paris Can Wait
Dir: Eleanor Coppola
Starring: Alec Baldwin, Diane Lane, Arnaud Viard
Two stars
THE BIO
Bio Box
Role Model: Sheikh Zayed, God bless his soul
Favorite book: Zayed Biography of the leader
Favorite quote: To be or not to be, that is the question, from William Shakespeare's Hamlet
Favorite food: seafood
Favorite place to travel: Lebanon
Favorite movie: Braveheart
Hot Seat
Director: James Cullen Bressack
Stars: Mel Gibson, Kevin Dillon, Shannen Doherty, Sam Asghari
Rating: 1/5
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Heavily-sugared soft drinks slip through the tax net
Some popular drinks with high levels of sugar and caffeine have slipped through the fizz drink tax loophole, as they are not carbonated or classed as an energy drink.
Arizona Iced Tea with lemon is one of those beverages, with one 240 millilitre serving offering up 23 grams of sugar - about six teaspoons.
A 680ml can of Arizona Iced Tea costs just Dh6.
Most sports drinks sold in supermarkets were found to contain, on average, five teaspoons of sugar in a 500ml bottle.
When is VAR used?
• Goals
• Penalty decisions
• Direct red-card incidents
• Mistaken identity
Abu Dhabi GP Saturday schedule
12.30pm GP3 race (18 laps)
2pm Formula One final practice
5pm Formula One qualifying
6.40pm Formula 2 race (31 laps)
TO CATCH A KILLER
Director: Damian Szifron
Stars: Shailene Woodley, Ben Mendelsohn, Ralph Ineson
Rating: 2/5
Ahmed Raza
UAE cricket captain
Age: 31
Born: Sharjah
Role: Left-arm spinner
One-day internationals: 31 matches, 35 wickets, average 31.4, economy rate 3.95
T20 internationals: 41 matches, 29 wickets, average 30.3, economy rate 6.28
RESULT
Copa del Rey, semi-final second leg
Real Madrid 0
Barcelona 3 (Suarez (50', 73' pen), Varane (69' OG)
ACC 2019: The winners in full
Best Actress Maha Alemi, Sofia
Best Actor Mohamed Dhrif, Weldi
Best Screenplay Meryem Benm’Barek, Sofia
Best Documentary Of Fathers and Sons by Talal Derki
Best Film Yomeddine by Abu Bakr Shawky
Best Director Nadine Labaki, Capernaum