A loss in Virginia and a close race in New Jersey sent divided Democrats in Washington searching for answers on Wednesday, and calling for new strategies to unlock a stalled legislative agenda before they sustain deeper political damage.
Republican Glenn Youngkin beat Democrat Terry McAuliffe in the Virginia governor’s race, erasing President Joe Biden’s 10 percentage point margin of victory just a year ago.
In New Jersey, the heavily favoured Democratic governor, Phil Murphy, won re-election against Republican political newcomer Jack Ciattarelli after about 24 hours of being neck and neck despite running in a state Mr Biden had carried by 16 percentage points.
The results were ominous for Democrats far beyond those states. The party's eroding support does not bode well as it clings to thin House and Senate majorities before midterm elections next year.
Elections without presidential races historically mean many lost seats, especially in the House, for the party holding the White House.
Congressional leaders on Wednesday tried to bolster the appeal of Mr Biden's stalled domestic legislation and used the election results to call for action.
The two measures – a $1 trillion infrastructure bill and a 10-year, $1.75tn package of social and environment initiatives financed largely with taxes on the wealthy and corporations – have been slowed for months by infighting between progressive and moderate Democrats.
Mr Biden on Wednesday said Virginian voters were frustrated that the Democrats had been unable to deliver on the key legislation.
"People want us to get things done," he said. "And that's why I am continuing to push very hard for the Democratic Party to move along and pass my infrastructure bill and my Build Back Better bill."
Three quarters of voters said drawn-out negotiations in Washington over Mr Biden’s agenda were an important factor in their vote.
They were more likely to back Mr Youngkin, according to preliminary results from AP VoteCast, a survey of Virginia voters.
“I would hope this clarifies everybody’s thinking about how important it is to get these bills behind us,” said Democratic Congressman Gerald Connolly, who represents some of Washington’s prosperous suburbs.
Senator Tim Kaine of Virginia lamented that some fellow Democrats “wanted to be purist about whatever their own particular goals were, left, right and centre".
“A lot of politics is about timing. And there was a time to do this that would have helped in both of these states,” Mr Kaine said.
But rather than swift passage of the compromises on the table, progressives used the moment to urge the party to restore the liberal priorities dropped during talks.
They blamed the election losses on Democrats’ failure to make the bills bold enough.
Mr Biden and congressional leaders have cut in half what was a $3.5tn package of social and environment initiatives, curtailing or eliminating provisions embraced by progressives but opposed by moderates.
Republicans, meanwhile, were jubilant.
Mr Youngkin's victory in Virginia, in which he secured Donald Trump's endorsement but kept him at arm's length, has given other Republicans a blueprint to follow as they seek to regain control of Congress next year, analysts said.
"Youngkin created the playbook," said Leonard Steinhorn, a professor of communication at the American University in Washington. "He threaded the Donald Trump needle."
Mr McAuliffe, a Clinton Democrat who served as Virginia's governor from 2014 to 2018, tried during the campaign to portray Mr Youngkin as a Trump acolyte.
"The McAuliffe campaign was just non-stop trying to tie Mr Youngkin to Trump," said J Miles Coleman of the University of Virginia's Centre for Politics.
"I don't think it was that effective. Youngkin just doesn't talk or act like Trump.
"He's more of a Mitt Romney or a Paul Ryan-type Republican," he said, referring respectively to the senator from Utah and the former Republican speaker of the House.
Mr Youngkin, while giving a "wink and a nod" to Mr Trump, managed to keep his distance from the former president, whose brash style alienated many suburban voters, particularly white women.
Agencies contributed to this report
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.”
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