Iran's President Pezeshkian meets Saudi Foreign Minister Prince Faisal amid fears of regional escalation

Iranian President Masoud Pezeshkian met Saudi Arabia’s Foreign Minister Prince Faisal bin Farhan in Doha amid mounting fears of regional escalation following Iran's massive missile attack on Israel.

The two leaders discussed the latest regional and international developments in their meeting late on Wednesday in Qatar's capital, the official Saudi Press Agency said, without giving details.

Saudi Arabia and Iran, among the region's powerhouses, restored diplomatic ties in March last year, ending a seven-year rift. Their rapprochement has opened the door to top-level contact but caution remains a defining characteristic of their relations.

The meeting in Doha came a day after Iran launched 180 ballistic missiles on Israel to avenge the killing on Friday of Hassan Nasrallah, leader of Hezbollah – Iran's main regional proxy – and Hamas leader Ismail Haniyeh earlier this year.

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Israel and its main backer the US have vowed to hit back hard to avenge Tuesday's attack, but Iran said on Wednesday its missile volley – its biggest assault on Israel – was over, barring further provocation.

Sources briefed on diplomatic efforts to defuse tension in the region said Saudi Arabia was searching for ways to prevent a major escalation in the Middle East that could spiral out of control.

Tension in the Middle East and fears of a wider conflict have escalated since the war between Hamas and Israel began nearly a year ago. Iran's proxies in the region, including Yemen's Houthis and armed Shiite groups in Iraq – have attacked Israel in efforts to stop its bombardment of Gaza that has killed about 41,700 people.

Hezbollah's daily exchange of cross-border fire with Israel has inched closer to a full-fledged war over the past fortnight, with Israel carrying out a ground invasion in Lebanon this week, and significantly stepping up air strikes, mostly in southern Lebanon, the group's stronghold, and the eastern Bekaa Valley.

Iran's President Masoud Pezeshkian, left, meets Sheikh Tamim, Emir of Qatar, at Lusail Palace in Doha. AFP

Qatar's Emir Sheikh Tamim said on Wednesday that Doha will continue mediation efforts to end the war in Gaza. In a joint press conference with the Iranian President, he said: “The recent surge of conflict in Lebanon is what we have been warning against since the beginning of Israeli aggression.” Israel, he added, must “cease its unjust war in Gaza, and the West Bank and its aggression on Lebanon”.

Mr Pezeshkian warned at the news conference that if Israel acts against Iran, then Tehran will respond in a more severe way. “We are not in pursuit of war with Israel,” he said. “They promised us peace. But Israel has terrorised our guests in Tehran during our presidential inauguration. We want to establish peace. If you disagree, peace will not be established.”

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Iran's President Pezeshkian meets Saudi Foreign Minister Prince Faisal amid fears of regional escalation

The two leaders discussed the latest developments following the Iranian president's meeting with the Emir of Qatar

Israel-Gaza war one year on – in pictures

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