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‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

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‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

A person wearing a thawb walks previous Dassault Falcon govt jets, Dubai, United Arab Emirates

Leonid Faerberg | Sopa Photos | Lightrocket | Getty Photos

The organizers of the Investopia x Salt convention in Abu Dhabi — the brainchild of American financier and one-time White Home press secretary Anthony Scaramucci and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum — anticipated to see 1,000 visitors over its two-day occasion in early March. As a substitute, it acquired 2,500. 

“We’re just a little overwhelmed, however it’s an excellent signal,” one of many organizers instructed CNBC. Some others have been aggravated. “It is too many individuals. Everyone seems to be coming to the Gulf now begging for cash. It is embarrassing,” one Dubai-based fund supervisor stated. Each sources declined to be named attributable to skilled restrictions. 

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That oil-rich Gulf states have some huge cash to spend is not new. The area’s 10 largest sovereign wealth funds mixed handle practically $4 trillion, in response to the Sovereign Wealth Fund Institute. That is greater than the gross home product of France or the U.Ok. — and it would not embody personal cash.

However the inflow of overseas institutional traders — and visual curiosity from enterprise capitalists and startup founders in superior sectors like fintech, digital transformation and renewable power know-how — reveals a degree of sophistication that is being observed now greater than ever, business gamers say.

“Funding used to solely circulation from the Gulf outward. Now it is going each methods; institutional traders are coming and investing right here,” Marc Nassim, managing director at Dubai-based funding financial institution Awad Capital, instructed CNBC.    

The regional traders, particularly the sovereign funds but additionally the households, at the moment are rather more refined than earlier than.

Marc Nassim

Managing director, Awad Capital

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“The Center East feels extra steady than Europe does proper now,” Stephen Heller, founding accomplice at Germany-based AlphaQ Enterprise Capital, instructed CNBC. “Europe’s safety points, financial inequality are getting worse … in the meantime, the Gulf has its s— collectively.” Heller’s fund of funds, which invests in megatrends like local weather know-how, infrastructure, well being and fintech, lately opened its first Center Jap workplace in Abu Dhabi.

“There’s an entrepreneurial power within the UAE and Saudi Arabia immediately,” Heller stated. “I see the potential as a result of you could have technically infinite capital, and in case you have entrepreneurs coming right here, you possibly can have big outcomes.”

Observe the capital

As oil costs made a roaring comeback within the final two years, the Gulf’s public wealth funds went on a spending spree. The highest 5 regional funds when it comes to spending within the final 12 months — Abu Dhabi’s ADIA, ADQ and Mubadala, Saudi Arabia’s PIF and Qatar’s QIA — deployed a mixed complete of greater than $73 billion in 2022 alone, in response to sovereign wealth fund tracker International SWF. 

Abu Dhabi metropolis skyline, United Arab Emirates.

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In the meantime, the worth of sovereign wealth funds’ belongings globally dropped from $11.5 trillion to $10.6 trillion between 2021 and 2022, International SWF reported, and people held by public pension funds additionally dropped amid a dramatic downturn in inventory and bond markets.

“5 out of the ten most energetic traders hail from the Center East,” and ADIA is at present the “world’s largest allocator to hedge funds,” International SWF’s 2023 report wrote. It added that GCC sovereign wealth funds “performed an vital function in 2020 through the Covid-19 pandemic and now once more in 2022 throughout occasions of monetary misery.” 

So it is an understatement to say that overseas demand is excessive. “Numerous locations on the earth are low on capital – Western institutional funds are sort of hamstrung. And this area has a whole lot of capital. Our telephones are ringing off the hook,” one supervisor from a UAE funding fund stated, declining to be named attributable to skilled restrictions. 

Not ‘dumb cash’

However whereas many abroad firms have lengthy seen the Gulf as a supply of “dumb cash,” some native funding managers stated – referring to the stereotype of oil-rich sheikhdoms throwing money at whoever needs it – funding from the area has turn out to be rather more refined, using deeper due diligence and being extra selective than in previous years.

“The regional traders, particularly the sovereign funds but additionally the households, at the moment are rather more refined than earlier than,” Awad Capital’s Nassim stated. “They’re much extra diligent than earlier than when it comes to who they write the examine to.” 

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“Earlier than it was a lot simpler to return and say, ‘I am a fund supervisor from San Francisco, please give me a pair million’. Now, not solely are they extra refined however there are much more funds from all around the world – the U.S., Latin America, from Europe, Southeast Asia – coming right here to lift capital. I feel {that a} very small minority of them will have the ability to take cash from the area – they’re much extra selective than earlier than.”

A display broadcasts Khaldoon Al Mubarak, chief govt officer of Mubadala Funding Co., throughout a session on the Future Funding Initiative (FII) convention in Riyadh, Saudi Arabia, on Tuesday, Oct. 25, 2022.

Tasneem Alsultan | Bloomberg | Getty Photos

Within the UAE particularly, liberalizing reforms, a much-praised dealing with of the Covid-19 pandemic and a willingness to do enterprise with anybody — together with nations like Israel and Russia – have enhanced its picture to overseas traders. In Saudi Arabia, financiers are drawn to historic reforms and an enormous development market of practically 40 million folks, some 70% of whom are under the age of 34. 

The cash from the GCC funds nonetheless overwhelmingly goes to developed markets, particularly the U.S. and Europe. Precedence sectors embody power, renewables, local weather know-how, biotech, agri-tech and digital transformation, fund managers say. 

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Like all commodity-related financial increase, nevertheless, fortunes are topic to vary – it was not so way back that the pandemic pushed oil costs to multi-decade lows, forcing Gulf governments to reign in spending and introduce new taxes. Saudi Arabia and the UAE particularly are investing closely in diversification, with a view to the long run. 

“The music would cease if [the price of] oil goes down in a approach that some SWFs are pressured to make use of their reserves to assist governments shore up their fiscal positions – most unlikely – or geopolitical threat” reminiscent of battle or uprisings, Nassim stated.

“If oil goes down, the excess generated and which is often allotted to the SWFs would clearly cut back, and that may power them to scale back their investments and restrict them to belongings that generate increased returns,” he added, although famous that not all SWFs have the identical mandate with regards to funding technique.

For these firms looking for funding from the deep pockets of the Center East, they’re sensible to take action whereas the music is taking part in.

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Assess your financial risk before new policies affect the economy

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Assess your financial risk before new policies affect the economy

I’ve been thinking about financial risk lately.

Should I change my asset allocation in my retirement portfolio, considering Donald Trump’s successful bid for the White House? Stock market valuations have risen smartly in recent years, which real income growth, productivity improvements, technological innovation, low unemployment rates and healthy corporate profits have largely powered. Yet with the election of Trump, voters have approved a massive economic experiment.

The Trump administration comes into power with many policy goals, but four economic initiatives stand out: Enacting significant tax cuts; imposing broad-based and significant tariffs; sweeping raids, mass deportations and tighter immigration controls; and slashing federal government regulations. The extent that these plans turn into reality and how each policy will interact with the others is uncertain. The risks are obvious. The outcome isn’t.

Enter risk management, a critical concept in finance. Professionals often associate risk with volatility. The tight link makes sense, since owning assets with high volatility hikes the odds of losses if there is a pressing need to sell the asset to raise money.

However, for the typical individual and household, risk means the odds money decisions made today don’t pan out. Managing risk means lowering the negative financial impact on your desired standard of living from decisions gone wrong and when circumstances take an untoward turn.

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“Anything that makes reaching or maintaining that more likely reduces your risk, and anything that makes this less likely increases your risk,” writes Bob French, the investment expert at Retirement Researcher. “Everything else is just details.”

The key risk management concept is a margin of safety, a bedrock personal finance idea broader than investment portfolios. It can include having an emergency savings fund, owning life insurance to protect your family and investing in your network of friends and colleagues to hedge against the risk of losing your job. The right mix depends on the particulars of your situation.

In my case, after studying my portfolio, running household money numbers and reviewing lifestyle goals, I’m comfortable with the asset allocation in my retirement portfolio. There is too much noise in the markets for comfort, and market timing is always tricky. The prudent approach with my individual situation is to stay the course.

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Shannon Bernacchia Appointed Interim Finance Director for Regional Schools – Amherst Indy

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Shannon Bernacchia Appointed Interim Finance Director for Regional Schools – Amherst Indy

At a Zoom meeting on Friday, November 22, School Superintendent Dr. E. Xiomara Herman recommended to the Regional School Committee and Union 26 School Committee that Shannon Bernacchia be appointed interim Finance Director for the schools, replacing Doug Slaughter who had served in that position since 2019. Bernacchia has served as Assistant Finance Director under Slaughter. Her appointment was approved unanimously by both school committees.

In recommending Bernacchia for the interim director position, Herman cited her “impressive career, dedication, and accomplishments during this transitional period [to a new administration],” adding, “Since joining our district, she has demonstrated exceptional proficiency in managing complex financial operations, including preparing budgets, overseeing audits, and providing detailed financial reporting to the school committee.”

Bernacchia holds a Bachelors Degree in Business Management from Bay Path University and professional training in school fund accounting. She currently holds an emergency School Business Administrator license valid through 2025 and has completed all requirements for her initial license, except for the 300 hours of mentorship. She anticipates completing that requirement in January, 2025. Former Amherst Regional Public Schools and Town of Amherst Finance Director Sean Mangano is serving as her mentor.

Herman expressed confidence in Bernacchia’s ability to head the district’s financial operations.

In acknowledging her appointment, Bernacchia thanked the school committee members and said that she was excited to work with superintendent who is woman.

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US SEC obtained record financial remedies in fiscal 2024, agency says

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US SEC obtained record financial remedies in fiscal 2024, agency says

NEW YORK (Reuters) -The U.S. Securities and Exchange Commission obtained $8.2 billion in financial remedies, the highest amount in its history, in fiscal 2024, the agency said in a statement on Friday.

The SEC filed 583 enforcement actions in the year that ended in September, down 26% from a year earlier, it said in a statement.

The $8.2 billion in financial remedies included $6.1 billion in disgorgement and prejudgment interest, a record, and $2.1 billion in civil penalties, the second-highest amount on record, according to the SEC’s statement.

Much of the total financial remedies came from a single action: a $4.5 billion settlement with the now-bankrupt crypto firm Terraform Labs, following a unanimous jury verdict against the firm and its founder Do Kwon. The SEC is expected to collect little of that settlement amount because it agreed to be paid only after Terraform satisfies crypto loss claims as part of its bankruptcy wind-down.

The SEC also obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such prohibitions in a decade. Holding individuals accountable for misconduct has been a priority of the agency under Chair Gary Gensler, who is stepping down in January.

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“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” Gensler said in a statement about the agency’s 2024 enforcement results.

(Reporting by Chris Prentice; Editing by Leslie Adler and Jonathan Oatis)

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