FT : Gulf states’ neutrality on Ukraine reflects deeper Russian ties

Gulf states’ neutrality on Ukraine reflects deeper Russian ties
Long-term US allies UAE and Saudi Arabia want to preserve co-operation with Moscow on energy and geopolitical issues

A day before the UN Security Council voted on a US resolution condemning Russia’s invasion of Ukraine, Washington reached out to one of its most important Arab partners as it sought to rally support against President Vladimir Putin.

The United Arab Emirates had taken a temporary seat on the council this year and US secretary of state Antony Blinken called his Emirati counterpart, Sheikh Abdullah bin Zayed al-Nahyan, to reiterate the “importance of building a strong international response to support Ukrainian” sovereignty.

But when it came to the vote on Friday, the UAE ignored Washington’s pleas and instead joined China and India in abstaining in a public display of Abu Dhabi’s frustrations with US policies.

For decades, the Gulf’s two powerhouses, the UAE and Saudi Arabia have marched to America’s beat, but Friday’s decision underlines how they are pursuing more independent foreign policies as they deepen relations with Washington’s adversaries in Moscow and Beijing.

“We no longer need a green light from America or any other western capital to decide on our national interest,” said Abdulkhaleq Abdulla, an Emirati political science professor. “We are not with or against — that is the position. If America is upset, they will just have to level with that.”

The response of most Gulf states, which for decades have viewed the US as the guarantor of their security, has been muted as they attempt to pursue a neutral stance to preserve co-operation with Moscow on geopolitical and energy issues, while deflecting western accusations that refusing to condemn Russia amounts to support for the invasion.

Anwar Gargash, a UAE presidential adviser, said on Sunday the Gulf state “believes that taking sides would only lead to more violence”. He insisted Abu Dhabi’s priority was to “encourage all parties to resort to diplomatic action and to negotiate to find a political solution”.

Emile Hokayem, a Middle East expert at the International Institute for Strategic Studies, said the UAE’s abstention “at a time of western consensus has surprised some western officials”. But he added that the UAE’s “hedging behaviour has been ongoing for some time”.

Both the UAE and Saudi Arabia believe successive US administrations have been disengaging from the Middle East. They have been privately expressing their disgruntlement with US policies since former president Barack Obama was perceived to have ignored the interests of long-term Arab partners during the 2011 popular uprisings and when he signed up to the 2015 nuclear deal with Iran.

Abu Dhabi’s concerns came to the fore in December when it suspended talks with the Biden administration over the UAE’s bid to buy US-made F-35 jets, angered by Washington’s restrictions on their use. This year, it has chafed at what it considers the Biden administration’s tepid response to attacks on Abu Dhabi by Iranian-backed rebels in Yemen. The US has deployed additional military assets to the UAE, part of a Saudi-led coalition that has been fighting the Iran-allied Houthis since it intervened in Yemen’s civil war in 2015. But Abu Dhabi wants Washington to designate the Houthis a terrorist organisation and impose tougher sanctions on the Yemeni group.

The Biden administration appears reluctant to do so as it holds indirect talks with Iran on the revival of the nuclear accord, and heeds warnings that such a move would exacerbate Yemen’s humanitarian crisis.

President Joe Biden has also annoyed Riyadh by criticising human rights abuses and refusing to talk to Crown Prince Mohammed bin Salman, the kingdom’s day-to-day ruler.

In contrast, Putin was one of the few world leaders to embrace Prince Mohammed after the royal was widely blamed for the 2018 murder of Jamal Khashoggi by Saudi agents. The Russian president publicly high-fived the crown prince at a G20 meeting weeks later.

Saudi Arabia, which has not issued statements on Russia’s invasion of Ukraine, also has shared energy interests with Moscow as they are the main players in Opec+, which Russia joined in 2016.

Despite oil prices soaring above $100 a barrel, Riyadh has resisted US pressure to pump more oil, with analysts saying it believes raising supply would make little difference. In a phone call with French President Emmanuel Macron, Prince Mohammed said the kingdom was committed to Opec+, according to a Saudi statement on Monday.

Ali Shihabi, a Saudi commentator, said the US had “sent multiple signals and actions” that its alliance with the kingdom was no longer a relationship Riyadh could rely on.

“Hence Saudi leaders have decided that they have to build multiple alliances and relationships with other major powers, mainly China and Russia,” he said.

He added that Riyadh had invested heavily in building ties with Moscow and regarded Opec+ as a strategic relationship critical to the “lifeblood” of the kingdom’s economy — oil.

“This is not something the kingdom will flush down the toilet now,” he said. “Russia has proven that it remembers its friends and also its enemies and the Opec+ agreement signed by the kingdom is one the Saudi leadership will strictly adhere to. Western politicians have a short memory. Saudi leaders do not.”

Saudi and Emirati officials still insist that the US is their primary foreign partner. Yet as the US has talked up its pivot to Asia, Moscow has been deepening its presence in the Middle East.

Russia turned the tide of the Syrian civil war by intervening militarily in 2015 to back the Assad regime; it deployed mercenaries from the Kremlin-linked Wagner Group to Libya to fight alongside a UAE-backed Libyan warlord; and it has nourished political links with regional powers including Iran.

“Russia, like China and others, are trying to fill the vacuum left by America. and Russia is well positioned to play a bigger role,” said Abdulla. “They are winning. Putin has calculated it very well.”

But, advising caution, Hokayem said “western resolve and possibly success in Ukraine may change Emirati calculations, showing the limitations of Russian soft and hard power”.

>>> Europe : Brokers Upgrades & Downgrades - 28th of February 2022 V2(+)

>>> Up
* CompuGroup Raised to Buy at Baader Helvea; PT 72 euros
* Deliveroo Raised to Buy at Citi; PT 230 pence
* Dios Raised to Hold at Handelsbanken; PT 100 kronor
* FDJ Raised to Buy at Citi
* Ferguson Raised to Buy at HSBC; PT 13,625 pence
* Fortum Raised to Neutral at Goldman; PT 24.10 euros
* Hensoldt Raised to Overweight at JPMorgan; PT 22.50 euros
* Merck KGaA Raised to Neutral at UBS; PT 175 euros (+)
* QinetiQ Raised to Neutral at JPMorgan; PT 320 pence
* Telefonica Raised to Equal-Weight at Barclays; PT 4.20 euros
* Tenaris ADRs Raised to Overweight at Barclays; PT $32

>>> Down
* ABN AMRO GDRs Cut to Sell at Berenberg; PT 10 euros
* Aveva Cut to Underperform at Jefferies; PT 2,000 pence
* Befimmo Cut to Neutral at Oddo BHF; PT 47.50 euros (+)
* Ericsson Cut to Neutral at Citi; PT 100 kronor (+)
* Europris Cut to Sell at Carnegie; PT 47 kroner (+)
* Ferguson Cut to Hold at Jefferies; PT 12,374 pence
* Kahoot Cut to Hold at Kepler Cheuvreux; PT 30 kroner (+)
* Swiss Re Cut to Hold at Berenberg; PT 103 Swiss francs
* Wizz Air Cut to Add at AlphaValue/Baader

>>> Initiation
* AstraZeneca Rated New Buy at Stifel; PT 12,300 pence
* Ferrexpo Reinstated Hold at Peel Hunt; PT 155 pence
* Gooch & Housego Rated New Add at Numis; PT 1,150 pence (+)
* GSK Rated New Hold at Stifel; PT 1,700 pence
* Kingswood Rated New Corporate at Finncap; PT 39 pence (+)
* Novartis Rated New Hold at Stifel; PT 87 Swiss francs (+)
* Novo Nordisk Rated New Buy at Stifel; PT 715 kroner (+)
* Roche Rated New Buy at Stifel; PT 410 Swiss francs
* Sanofi Rated New Buy at Stifel; PT 120 euros

>>> Call
* Defense Stocks Upgraded on Fundamental Outlook Shift: JPMorgan (+)
* Telefonica Rating, Estimates Raised at Barclays After Results

>>> TradeGate Pre-Market Indications

DAX:
  • Airbus (AIR TH) +7.7%
    • Europe Defense Stocks May Move as Germany to Lift Military Spend
  • MTU Aero (MTX TH) +4.9%
    • Europe Defense Stocks May Move as Germany to Lift Military Spend
  • Siemens Healthineers (SHL TH) +0.5%
  • Fresenius SE (FRE TH) -1.1%
  • Siemens Energy (ENR TH) -1.2%
  • Zalando (ZAL TH) -3.7%
    • Options Traders See More Earnings-Day Moves for CRH, Beiersdorf
  • Porsche SE (PAH3 TH) -3.9%
  • Infineon (IFX TH) -4.3%
  • Puma (PUM TH) -4.7%
  • Deutsche Bank (DBK TH) -5.2%
    • Global Banks Lose Juicy Fees as China Junk Bond Drought Drags On
MDAX:
  • Rheinmetall (RHM TH) +59%
    • Europe Is Rearming, and Its Defense Firms Stand to Profit
  • Thyssenkrupp (TKA TH) +17%
    • Europe Is Rearming, and Its Defense Firms Stand to Profit
  • Vantage Towers (VTWR TH) -0.9%
  • Telefonica Deutschland (O2D TH) -0.9%
  • Bechtle (BC8 TH) -1.2%
  • Hugo Boss (BOSS TH) -3.9%
  • Lufthansa (LHA TH) -4%
    • European Union Bans Russian Flights in Bid to Rein In Putin
  • Evotec SE (EVT TH) -4.3%
  • Aixtron (AIXA TH) -4.4%
  • Commerzbank (CBK TH) -7.1%
SDAX:
  • Jenoptik (JEN TH) +15%
  • SGL (SGL TH) +3.7%
  • MorphoSys (MOR TH) +1.6%
  • Hochtief (HOT TH) +1.5%
  • Secunet Security Networks (YSN TH) +1.4%
  • Shop Apotheke (SAE TH) -4.1%
  • LPKF (LPK TH) -4.6%
  • 1&1 (DRI TH) -4.7%
  • Krones (KRN TH) -5.9%
  • Adler Group (ADJ TH) -12%

>>> Stoxx 600 Pre-Market Indications

  • Rheinmetall (RHM TH) +61%
    • Europe Is Rearming, and Its Defense Firms Stand to Profit
  • BAE (BSP TH) +24%
    • Europe Is Rearming, and Its Defense Firms Stand to Profit
  • Thyssenkrupp (TKA TH) +14%
    • Europe Is Rearming, and Its Defense Firms Stand to Profit
  • Nibe (NJB TH) +7.4%
  • Airbus (AIR TH) +7%
  • Rolls-Royce (RRU TH) +6.4%
  • Equinor (DNQ TH) +6%
    • Equinor to Start Exiting From Joint Ventures in Russia
  • Fortum (FOT TH) +3.8%
  • Dassault Systemes (DSYA TH) +3.1%
  • MTU Aero (MTX TH) +3.1%
  • HSBC (HBC1 TH) -6.1%
  • Commerzbank (CBK TH) -6.3%
    • European Bank Bond Investors Face Five Risks in Ukraine Crisis
  • Credit Agricole (XCA TH) -6.3%
    • European Bank Bond Investors Face Five Risks in Ukraine Crisis
  • TUI (TUI1 TH) -6.5%
    • European Airline Stocks May Move on Airspace Bans Amid War
  • Erste (EBO TH) -6.6%
    • European Bank Bond Investors Face Five Risks in Ukraine Crisis
  • Voestalpine (VAS TH) -6.9%
  • Glencore (8GC TH) -7.8%
  • IAG (INR TH) -8.1%
    • European Airline Stocks May Move on Airspace Bans Amid War
  • BP (BPE5 TH) -12%
    • BP to Exit Rosneft Stake and May Take a $25 Billion Hit
  • Raiffeisen (RAW TH) -12%
    • Watch European Russia-Exposed, Energy Stocks Over New Sanctions

>>> What to look at today - 28th of February 2022

Equity futures slid Monday while sovereign bonds and crude oil surged amid heightened uncertainty after Western nations unveiled harsher sanctions on Russia for the invasion of Ukraine. European contracts fell some 3.5%, Nasdaq 100 futures shed about 2.5% and those for the S&P 500 lost more than 2%. Oil and palladium jumped, with Brent again soaring above $100 a barrel on fears of commodity supply disruptions. Rallies in a dollar gauge,  gold and Treasuries underlined the demand for havens. The euro fell on worries about risks for Europe’s economy, which relies on Russian energy. An Asia-Pacific equity index dipped as Hong Kong struggled. Doubts are now growing about the Bank of Russia’s ability to backstop Russia’s financial system and the ruble, which sank nearly 30% in offshore trading. Russia temporarily banned non-residents from selling securities.  There’s speculation that monetary authorities may have to supply markets with dollars to fill holes in global banking created by the SWIFT step. 
The escalating Ukraine conflict and more severe Western sanctions are roiling markets. The hostilities threaten to stoke inflation by imperiling flows of key resources such as wheat, natural gas, oil and metals, exacerbating the pandemic-era price pressures that were already weighing on world growth. In Russia, citizens were lining up at cash machines around the country to withdraw foreign currency, fearful of a ruble collapse. Russian bonds were cut to below investment grade by S&P Global Ratings on Friday.

Nikkei +0.09% Hang Seng -0.85% CSI -0.15% Shanghai +0.01% Shenzen +0.01%

Eur$ 1.1160 CNH 6.3129 CNY 6.3112 JPY 115.51 GBP 1.3366 CHF 0.9258 RUB 107.50 TRY 14.0950 WTI$ 96.59 +5.46% Gold 1,909.40 BTC 37,915 +1.25% ETH 2615 +0.42%

S&P -2.20% Nasdaq -2.26% EuroStoxx -3.30% FTSE -1.52% Dax -3.02% SMI -2.035%

Macro :
- European Union to Ban Russian Flights in Effort to Slow Putin
- EU Will Shut Airspace to Russian Planes: Ukraine Update
- Germany to Boost Military Spending in Latest Historic Shift
- West Cuts Some Russian Banks from Swift, Sanctions Central Bank
- CBR Raises Key Rate to 20.00%

Keep an eye on :
- ABI BB : AB InBev Wins in Post-Dip Bargain Hunting: EMEA Consumer Wrap
- ACX SM : Acerinox 4Q Net Income Beats Estimates
- BSGR NA : B&S Group FY Revenue Beats Estimates
- BAVA DC : Bavarian Reports Positive Result From Covid-19 Vaccine Candidate
- BAYN GY : Cinven Is Said to Near Deal for Bayer’s Pest Control Business
- BRK/A US : Berkshire Hathaway 4Q Operating Income $7.29B Vs. $5.02B Y/y
- BPSO IM : Italy’s BPER Bank Open to Other Deals After Carige Buy, CEO Says
- BP/ LN : BP to Exit Its 20% Shareholding in Russian Oil Producer Rosneft
- IAG LN : British Air Investigating Technical Issues Disrupting Travel
- BWO NO : BW Offshore 4Q Ebitda Beats Estimates
- CFEB BB : CFE FY EPS Beats Estimates
- CIE SM : CIE Automotive FY Net Income Meets Estimates
- MBG GY : Li-Metal Inks Deal With Daimler Supplier to Make Better Battery
- DTG GY : Daimler Truck Plans Hydrogen Buses: Welt am Sonntag
- DTG GY : Daimler Truck Ends Cooperation With Russia’s Kamaz: Handelsblatt
- AM FP : Europe Is Rearming, and Its Defense Firms Stand to Profit
- DE NORA IPO : De Nora Confirms It Will Proceed With IPO in 1H: CEO in Corriere
- EBRO SM : Ebro Foods Unit to Buy InHarvest Assets for $48.75 Million
- EQNR NO : Equinor to Start Exiting From Joint Ventures in Russia
- ELISA FH : Elisa to Procure Cloud Services From Alphabet’s Google Cloud
- EBS AV : Erste Sees 2022 Cost of Risk Below 0.2%
- EOAN GY : EON Opposes Stopping Nord Stream 1 Pipeline: Rheinische Post
- ETL FP : SES, Eutelsat Good Fits for Europe Sovereign-Communication Plan
- HAG GY : U.S. Military Is Interested in Hensoldt’s Radar: Welt am Sonntag
- HPHA GY : Huadong Plans $118 Million Investment in Heidelberg Pharma
- KAR SS : Karnov Signs SPA to Buy Wolters Kluwer Units for EU160m
- PST IM : Poste Italiane to Buy of IGT’s LIS Holding for EU700m
- QFUEL NO : Quantafuel 4Q Ebitda Loss NOK61.2M
- RHM GY : Europe Is Rearming, and Its Defense Firms Stand to Profit
- RWE G: RWE Successful in Offshore Wind Lease Auction in U.S.
- SRT GY : Maravai Rejects $42 Per Share Cash Offer From Sartorius: Reuters
- SHLF NO : Shelf Drilling 4Q Adjusted Ebitda $43.5M Vs. $33.9M Q/Q
- TEF SM : *TELEFONICA HIRES BBVA TO SEEK PARTNER FOR RURAL AREAS: CONFI
- UCB BB : UCB Extends Tender Offer for Zogenix Until March 4
- UN01 GY : Uniper Resumes LNG Terminal Plan on German Request: Handelsblatt
- VOW GY : VW Fears Many of 4,000 Cars on Burning Ship Are Beyond Salvage
- XIOR BB : Xior to Investigate Alternative for Planned Development in Vaals

>>> Europe : Brokers Upgrades & Downgrades - 28th of February 2022

>>> Up
* CompuGroup Raised to Buy at Baader Helvea; PT 72 euros
* Deliveroo Raised to Buy at Citi; PT 230 pence
* Dios Raised to Hold at Handelsbanken; PT 100 kronor
* FDJ Raised to Buy at Citi
* Ferguson Raised to Buy at HSBC; PT 13,625 pence
* Fortum Raised to Neutral at Goldman; PT 24.10 euros
* Hensoldt Raised to Overweight at JPMorgan; PT 22.50 euros
* QinetiQ Raised to Neutral at JPMorgan; PT 320 pence
* Telefonica Raised to Equal-Weight at Barclays; PT 4.20 euros
* Tenaris ADRs Raised to Overweight at Barclays; PT $32

>>> Down
* ABN AMRO GDRs Cut to Sell at Berenberg; PT 10 euros
* Aveva Cut to Underperform at Jefferies; PT 2,000 pence
* Ferguson Cut to Hold at Jefferies; PT 12,374 pence
* Swiss Re Cut to Hold at Berenberg; PT 103 Swiss francs
* Wizz Air Cut to Add at AlphaValue/Baader

>>> Initiation
* AstraZeneca Rated New Buy at Stifel; PT 12,300 pence
* Ferrexpo Reinstated Hold at Peel Hunt; PT 155 pence
* GSK Rated New Hold at Stifel; PT 1,700 pence
* Roche Rated New Buy at Stifel; PT 410 Swiss francs
* Sanofi Rated New Buy at Stifel; PT 120 euros

>>> Call
* Telefonica Rating, Estimates Raised at Barclays After Results