x Abu Dhabi, UAEThursday 27 July 2017

Funds placing bets on Gulf

Roy Maurer, managing-director of Qatar's QNB Capital, said panic flight from the region had led to an indiscriminate sell-off.

Roy Maurer, managing-director of Qatar's QNB Capital, said panic flight from the region had led to an indiscriminate sell-off of quasi-sovereign bonds from oil and gas states with vast wealth and very low levels of debt. "Those who were spooked by Dubai are giving a nice profit to anybody who knows the region and understands that Qatar, Abu Dhabi, Saudi Arabia, and Kuwait are much stronger credits. Funds are building up positions significantly," he said.

The US bond giant Pimco said it is buying Qatar sovereign debt and bonds of state-owned companies in Abu Dhabi. "We're coming and buying. We think they're cheap," the group told Bloomberg TV. Qatar has the world's second largest gas reserves. Oil-rich Abu Dhabi has the biggest sovereign wealth fund, worth about $700bn (£431bn). Kuwait has 8pc of global oil reserves, with a population of just 3m. By contrast, "post-oil" Dubai is trying to reinvent itself as a tourist and financial hub - a strategy now in trouble.

The contagion effect has caused credit default swaps (CDSs) gauging risk on five-year bonds to jump to 177 basis points for Abu Dhabi, 119 for Qatar, and 98 for Saudi Arabia. The Dubai debacle is seen by many in the region as an "aftershock" of the West's financial crisis, a result of Dubai mimicking US debt-leverage. If anything, it is a vindication of Islamic principles of finance. Ambrose Evans-Pritchard, The Telegraph www.thetelegraph.co.uk

The US House has voted for legislation that is described as "financial services reform." But most of the "reforms" are so mild that the savviest of the nation's big bankers will be breathing sighs of relief, rather than worrying about being regulated into good behaviour. That's not to say that the House bill is meaningless. It proposes some valuable shifts, including the creation of a Consumer Financial Protection Agency that could - if infused with proper authority and backed by a White House and Congress that want to tip the regulatory balance in favour of the great mass of Americans - give bankers and speculators some headaches. Unfortunately, that's a vague promise rather than a firm one. John Nichols, The Nation thenation.com