Rising hostilities between Israel and Hamas will have little of an effect on dealmaking in the Middle East region, according to Bloomberg Television’s citation of Miguel Azevedo, regional head of investment banking for Citigroup Inc.
According to Azevedo, “so far, it’s had a very muted impact,” and “if it stays contained, we don’t really believe there will be much of an impact.”
He claimed that the influence of recent US inflation figures has fueled even more rumours about rate hikes in the future.
The Middle East region’s IPO landscape is “resilient” despite “nervousness and volatility” in the markets, the report stated, adding that Azevedo anticipates the pipeline to stay “very solid” for the coming year.
According to Turkish-American consultant and economist Nouriel Roubini, markets are underestimating the possibility of a big conflict involving Iran and Lebanon, which would interrupt the Gulf’s oil supply and have a significant economic impact, according to Bloomberg.
According to the international accounting company EY, in the first half of 2023, the MENA IPO market had 23 IPOs, down 4% annually, valued at USD 5.2 billion.
According to a survey by EY, the MENA region has a promising pipeline for the remainder of the year, particularly from Saudi Arabia, where 23 Saudi companies have declared their intention to list on the Tadawul in the second half of 2023.
There Are Casualties Though
However, Egypt’s Orascom Development expects the tourism sector and foreign direct investments in the Middle East region to be affected by the fallouts of the Gaza conflict.
The Switzerland-listed company, with assets worth over USD 2 billion, is currently involved in the development of integrated townships with residences, hotels, retail and other amenities in seven countries including Egypt, Switzerland, Oman, Morocco, England, Montenegro and the UAE.
“I think foreign direct investment in the region is going to probably take a hit (in the short term) because most people, most foreign investors, particularly Western investors, don’t necessarily fully understand that the interlinkages between different parts of the region, where the real direct effect is, where the indirect effect is?,” Omar El Hamamsy, group chief executive of Orascom, told The National.
“Tourism revenue will decrease because people will feel that there is a security concern,” Omar El Hamamsy stated further, while adding, “That will be another unfortunate hit on our business and more generally, on tourism in the region, which will hit the current accounts of many North African countries as well as some of the GCC countries.”
The official also noted that due to the conflict, capital accounts operating in the MENA (Middle East and North Africa) region would be negatively impacted in the short term as investors might be hesitant to invest in the region due to geopolitical volatility.
As the armed conflict broke out in the first half of October 2023, US Treasury Secretary Janet Yellen said that Washington was monitoring the economic impact of the crisis. However, she didn’t expect it to be a major driver of the overall global economic outlook.
JP Morgan chief executive Jamie Dimon, while weighing on the situation, remarked that the Israel-Gaza war could have serious geopolitical consequences for the global economy.
“The war in Ukraine, compounded by last week’s attacks on Israel, may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships,” Mr Dimon said.