FT : UAE’s Sheikh Mohammed takes power as dynasty speculation swirls

UAE’s Sheikh Mohammed takes power as dynasty speculation swirls
Gulf state buzzes with talk that new president could choose son as heir apparent

As world leaders descended on the United Arab Emirates this week to offer condolences on the death of ruler Sheikh Khalifa, diplomatic circles buzzed with speculation over whether his successor Sheikh Mohammed, known as MBZ, will break with tradition and pick his son as crown prince.

The nomination of a crown prince or heir apparent is used to signal stability in Abu Dhabi, the oil-rich emirate that leads the Gulf monarchy, whose ruler wields power in consultation with his siblings and other powerful clans. The UAE plays an increasingly important role across the Middle East.

The UAE’s founder, Sheikh Zayed — the father of Sheikh Khalifa and Mohammed and other influential officials — had two decades ago indicated that succession should pass through his sons but many anticipate that the powerful Sheikh Mohammed, 61, will instead choose his eldest son, Sheikh Khaled.

“There are obviously concerns that MBZ wants to establish his own dynasty by selecting Khaled. It would be a massive departure from the traditional power dynamics in the UAE,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations. “MBZ is already doing centralisation — this would be hyper-centralisation.”

Sheikh Mohammed’s 18 years as heir apparent transformed Abu Dhabi, from restructuring local government operations to launching diversification programmes to prepare for a post-oil era. He cracked down on domestic dissent and intervened in regional conflicts from Libya to Yemen to prevent political Islam consolidating gains after the Arab spring.

His control deepened after Sheikh Khalifa suffered a stroke in 2014 and retired from public life. Since then, the ruling family has overseen dramatic domestic reforms seeking to secularise society and torn up the regional rule book by normalising diplomatic relations with Israel.

MBZ’s relative young age would make his sons a more likely choice than his brothers. “MBZ could reasonably expect to be an active leader for at least another two decades, barring ill health or anything unexpected, so my instinct is that he would want to name one of his sons as his crown prince,” said Kristian Coates Ulrichsen, a fellow at Rice University’s Baker Institute for Public Policy.

Educated in the US, Sheikh Khaled, 40, started his formal government career within the security services, graduating to domestic policy in recent years, including oversight of a powerful Abu Dhabi executive agency. His profile has risen in recent years as he took on more senior government roles.

If Sheikh Mohammed elects to follow familial tradition and put forward one of his brothers, the most obvious candidate is Sheikh Tahnoon, the experienced national security adviser, analysts say.

He has played a pivotal role in the country’s regional interventions over the past decade, including military operations in Yemen and Libya, while also building close relations with the security services of western allies and handling delicate diplomacy with rivals, including Iran and Turkey.

Sheikh Tahnoon oversees pillars of Abu Dhabi’s economy, including a state holding company, ADQ, and the country’s largest bank, FAB. He also has sprawling private business interests, including the IHC conglomerate, which has grown from a fish farming firm into one of Abu Dhabi’s largest companies with a flurry of takeovers.

Another brother, Sheikh Mansour, deputy prime minister and owner of Manchester City football club, is also renowned for his extensive commercial interests, but has been associated with financial scandal, most notably the 1MDB fraud. Other brothers in the frame include Sheikh Hazza, who was tipped as a future crown prince a decade ago.

There is no procedure for the selection of a crown prince. Sheikh Zayed appointed Khalifa as crown prince a few years after his ascent in 1966 and before his death named MBZ as deputy crown prince. But some local observers are convinced that, for the sake of stable government, the announcement could be made after the 40-day mourning period.

Christopher Davidson, associate fellow at the Henry Jackson Society think-tank, said MBZ’s strength means he has the freedom to act “tomorrow or next year”, but that he may well allow “the dust to settle”, providing some time for his son’s image to be cemented in the media.

MBZ could also take a leaf out of his father’s playbook, nominating a brother as crown prince and his son as deputy crown prince, or a similar balancing act to give Khaled more time to grow into the role.

“They are considering a few options — one is to have a de jure and a de facto crown prince,” said Bianco. “It’s gaining traction because there is absolutely not a consensus candidate.”

FT : China bull Baillie Gifford warns of growing threat to foreign investors

China bull Baillie Gifford warns of growing threat to foreign investors
Fund manager’s caution comes as Scottish Mortgage Investment Trust reveals hit from tech sell-off

Baillie Gifford has warned of the mounting risks to foreign investors in China after a punishing year for the fund manager’s Scottish Mortgage Investment Trust as its bold bets on the country’s growth companies and the global tech sector suffered.

Tom Slater, manager of the £14.4bn Scottish Mortgage trust, which last year added to its Chinese holdings, said the war in Ukraine had worsened US-China relations and that foreign investors needed to reckon with any limits Beijing might impose on their investment gains.

“The challenge now for western investors is twofold: incorporating the low but increased chances of future US sanctions into their evaluation of Chinese investments and considering how the Chinese state may limit the upside in stock prices for the breakthrough winners,” he said.

The verdict is a striking one as Baillie Gifford has been one of the biggest bulls on China in recent years, a strategy that helped turn Scottish Mortgage into the UK’s largest investment trust.

Slater added: “In retrospect, it has been a mistake to reduce our holdings in western online platform companies rather than their Chinese counterparts,” but said the trust’s investments in China were “largely unchanged” this year.

The comments came as Scottish Mortgage’s wagers on Chinese groups and tech companies have been hammered by the sell-off in high-growth shares triggered by rising interest rates and China’s strict zero-Covid approach to managing the coronavirus pandemic. Shares in the trust have fallen by about half since their peak in November.

After record returns last year, the trust on Thursday reported its performance lagged behind the wider market in the 12 months to the end of March, with a drop of 9.5 per cent against a 13 per cent rise for its benchmark FTSE World Index.

Scottish Mortgage’s early and tenacious backing of innovative companies such as Tesla, Tencent and Moderna has made it one of the UK’s best-performing investment vehicles in recent years, with an army of loyal followers among small investors.

The results came on the heels of the departure of James Anderson, who over more than 20 years at the helm of Scottish Mortgage became one of the UK’s best-known tech investors. In November, he urged investors not to “give up on China”.

Anderson, who announced plans to step down last year, had co-managed the trust with Slater since 2015.

Even after the recent fall, the 113-year-old trust has returned 697 per cent, measured in share price total return, over 10 years against a 231 per cent rise in its benchmark index. Edinburgh-based Baillie Gifford is known for its long-term investment philosophy and urged investors to look past the short-term pain.

“Genuine long-term investing requires not just patience but the ability to endure periods of intense discomfort,” said deputy manager Lawrence Burns.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • DMTK +10.1%, SQM +5.3%, RCKT +4.9%, SNPS +3.8%, KBR +3.5%, HWKN +3.5%, KDNY +1.7%, FYBR +1.7%, SMR +1.5%, NTR +1.4%, AUR +1.4%, CURO +1.4%, CPRT +1.4%, GDS +1.3%, PKG +0.8%
  • Gapping down:
    • ENTA -15.1%, CSCO -12.6%, BBWI -7.9%, ANET -7.3%, JNPR -6.7%, VIPS -6.6%, CIEN -6.2%, UAA -5.6%, VUZI -5.6%, GMED -5%, TRQ -4.5%, AVGO -4%, BB -2.4%, TSLA -2.4%, HCI -2.2%, NOK -2.1%, CS -2%, EXTR -1.4%, LITE -1.3%, DISH -1%

>>> Stoxx 600 Pre-Market Indications

  • Orpea (OPA TH) +4.1%
    • Orpea Hasn’t Identified Material Hit From Fraudulent Activities
  • Orsted (D2G TH) +1.2%
    • Utilities on Life Support Until High Power Prices Fuel Earnings
  • Nibe (NJB TH) +0.6%
  • Evotec SE (EVT TH) +0.3%
    • Evotec, Almirall Form Alliance in Medical Dermatology
  • Nokia (NOA3 TH) -1.9%
  • Siemens Gamesa (GTQ1 TH) -1.9%
  • Siemens Healthineers (SHL TH) -2.1%
  • ASML (ASME TH) -2.1%
    • Watch European Tech Stocks After Nasdaq’s 5.1% Slump Wednesday
  • EDF (E2F TH) -2.3%
  • Equinor (DNQ TH) -2.4%
  • K+S (SDF TH) -2.5%
  • AMS-Osram (DQW1 TH) -2.5%
  • OMV (OMV TH) -2.6%
  • Adyen (1N8 TH) -3.1%
    • Watch European Tech Stocks After Nasdaq’s 5.1% Slump Wednesday

>>> TradeGate Pre-Market Indications

DAX:
  • BMW (BMW TH) -1.6%
  • Bayer (BAYN TH) -1.6%
  • Daimler Truck (DTG TH) -1.7%
MDAX:
  • Evotec SE (EVT TH) +0.8%
    • Evotec, Almirall Form Alliance in Medical Dermatology
  • Lufthansa (LHA TH) -1.6%
  • ProSieben (PSM TH) -1.8%
  • Thyssenkrupp (TKA TH) -1.8%
  • K+S (SDF TH) -2.1%
  • Aixtron (AIXA TH) -2.1%
SDAX:
  • SGL (SGL TH) +1.7%
  • Hamborner REIT (HABA TH) +1.4%
  • Nordex (NDX1 TH) +1.1%
  • LPKF (LPK TH) +0.2%
  • Heidelberger Druck (HDD TH) -0.1%
  • Vitesco (VTSC TH) -0.9%
  • Deutsche Euroshop (DEQ TH) -1.3%
  • SAF-Holland SE (SFQ TH) -1.5%
  • Instone Real Estate (INS TH) -2.1%
  • Schaeffler (SHA TH) -2.

>>> What to look at today - 19th of May 2022

Stocks slid Thursday on fears of an economic downturn, though cooling demand for havens like bonds hinted at slightly steadier sentiment.  An Asia-Pacific equity index shed about 1.5%, led by losses in Japan and in Chinese technology firms. US and European futures wavered but came off session lows as traders evaluated whether a 4% plunge in the S&P 500 index -- the biggest daily drop in almost two years -- might give way to dip-buying.
Earnings reports Tuesday from US consumer titans stoked worries that high inflation is weighing on margins and consumer spending. Target Corp. sank the most since Black Monday in 1987, a day after Walmart Inc. also spiraled lower. Demand risks from China’s Covid lockdowns are also impacting markets, keeping oil near $110 a barrel after a fall this week. The challenge from inflation for bellwether retailers weakens the argument that corporate earnings can help stem this year’s rout in stocks. Instead, global equities are sliding toward a bear market as recession fears mount.  Signs of stress are building in credit markets. Yield premiums on US investment-grade corporate dollar bonds jumped five basis points Wednesday, in one of their biggest moves this year, a Bloomberg indexshows. They are now at their highest since mid-2020. Tencent Holdings Ltd. dived after warning it will take time for Beijing to act on promises to prop up the Chinese tech sector. Cisco Systems Inc. slid in extended US trading on a disappointing revenue outlook. Janet Yellen confirmed it’s unlikely the US will allow Russia to continue making bond payments on its foreign-currency debt, as investors have had time to adjust to Moscow’s exclusion from the global financial system for the war in Ukraine. US After Hours CSCO -12.1% drops on earnings/guidance, taking down JNPR -6.2%, CIEN -6.2%, ANET -5.4%, AVGO -3.5%; SNPS +3.5% higher on earning

Nikkei -1.90% Hang Seng -2.25% CSI -0.25% Shanghai -0.08% Shenzen +0.0%

Eur$ 1.0498 CNH 6.7756 CNY 6.7594 JPY 128.86 GBP 1.2386 CHF 0.9859 RUB 63.9547 TRY 15.9678 WTI$ 110.51 +0.84% Gold 1,815.45 -0.06% BTC 29,081 -0.44% ETH 1947.48 -0.85%

S&P -0.05% Nasdaq -0.26% EuroStoxx -0.79% FTSE -0.62% Dax -0.86% SMI -0.77%

Macro :
- JPMorgan’s Kolanovic Says Stocks ‘Can Climb Out of This Hole’

Keep an eye on :
- AALB NA : Aalberts Organic Revenue Growth 9% in Jan.-April
- ACKB BB : Valneva: EMA Accepts Covid Vaccine Marketing Application Filing
- ALM SM : Evotec, Almirall Form Alliance in Medical Dermatology
- ALV GY : Allianz Sues Enel Wind Farm in Latest Fallout from Texas Freeze
- ANORA FH : Anora Group Oyj 1Q EPS Beats Estimates
- BBVA SM : BBVA Holds 86% of Turkish Lender Garanti After Offer
- BNP FP BNP Seen as Main Suitor for BBVA’s Depositary Unit: Cinco Dias
- BDT GY : Bertrandt 1H Ebit EU20.8M Vs. EU11.1M Y/y
- BWLPG NO : BW LPG 1Q Ebitda Meets Estimates
- LCAA US : Carousell, L Catterton SPAC Merger Talks Said to Have Ended
- CFEB BB : CFE 1Q Revenue EU889.5M Vs. EU742.1M Y/y
- CLN SW : Clariant 4Q Adjusted Ebitda CHF230M Vs. CHF179M Y/y
- CSCO US : *CISCO SEES 4Q REV -1% TO -5.5% Y/Y; EST. +5.7% --> -12% in after Hours
- DUFN SW : Dufry 1Q Revenue Beats Estimates
- EDF FP : EDF Cuts 2022 French Nuclear Output Estimate; 2023 Unchanged
- ENEL IM : Allianz Sues Enel Wind Farm in Latest Fallout from Texas Freeze
- ENGI FP : Engie Brasil Signs Partnership With Copel to Join Auction
- RF FP : Eurazeo SE Assets Under Management EU32.2B Vs. EU30.9B Q/Q
- EUCAR FP : Volkswagen to Get Unconditional EU Nod for Europcar Deal: Rtrs
- G IM : Generali 1Q Operating Profit Beats Estimates
- GIMB BB : Gimv FY Net Income EU174.3M Vs. EU205.7M Y/y
- HSV LN : Brookfield Agrees to Buy Homeserve for 1,200P Per Share in Cash
- IBAB BB : IBA Sees Modest Impact From Global Effects of Ukraine War
- BAER SW : Julius Baer Common Equity Tier 1 Ratio 15.7% Vs. 16.4% At Yr End
- BAER SW : Aalberts Organic Revenue Growth 9% in Jan.-April (1)
- PRS SM : *TELEFONICA READIES SALE OF 9% STAKE IN PRISA: EL CONFIDENCIAL
- SIM DC : Simcorp 1Q Ebit Misses Estimates
- SWON SW : SoftwareONE 1Q Gross Profit CHF212.9M
- GLE FP : SocGen's Russian Exit Shows the Way for ING, French Peers: React
- SON PL : Sonae 1Q Net Income EU42M Vs. EU1M Y/y
- SUN SW :Sulzer to Wind Down Polish Units After Sanctions Removal Denied
- UAA US : Under Armour CEO to Exit After 2 Years With Stock in Free Fall
- VK FP : Vallourec 1Q Ebitda Misses Estimates
- VK FP : Vallourec to Cut 2,950 Jobs in Streamlining Effort
- VLA FP : Valneva: EMA Accepts Covid Vaccine Marketing Application Filing
- VIE FP : *CMA: VEOLIA-SUEZ PROVISIONAL REVIEW FINDS COMPETITION CONCERNS
- VOW GY : Volkswagen to Get Unconditional EU Nod for Europcar Deal: Rtrs
- VOW GY : Mahindra, Volkswagen to Partner for Electric Components