The Weekly Circuit
👋 Good Monday morning in the Middle East!
The massive surprise attack by Hamas and Israel’s retaliatory bombardment of the Gaza Strip scrambled the latest hopes for Middle East peace. As the death toll of Israelis and Palestinians continues to rise, with threats looming of a bloody ground war, investors are recalibrating their expectations about Israeli markets and the conflict’s impact on the region.
Israel’s blue-chip TA-35 stock index plunged 6.5% in Sunday trading, its worst drop in three years, as Prime Minister Benjamin Netanyahu’s security cabinet formally declared war on Hamas, considered a terrorist organization by the U.S. and European Union. Stocks also fell in Saudi Arabia and Egypt, while oil prices rose. The Israeli shekel, which fell to a seven-year low last week against the dollar, is likely to continue its descent amid concerns about how a prolonged war will affect the economy.
After warning that Israel’s political crisis over the past nine months may boost investor risk, Moody’s is preparing an updated report for release next week that will probably include projections of economic damage from war in Gaza. Investors are also watching the Israel-Lebanon border where the Iranian-backed Hezbollah militia is threatening to open a second front, armed with an estimated 150,000 missiles ready to fire across the frontier.
Saudi Arabia’s public acknowledgement that it’s engaged in U.S.-backed normalization efforts with Israel was also dealt a setback. Israel’s promise to launch a crippling response against Hamas and the likelihood that many more Palestinians will die in Gaza may inflame the Muslim world, making it tougher for Saudi leaders to establish open ties with Israel.
Natural disaster in Morocco hasn’t prevented the World Bank and International Monetary Fund from holding their annual meetings this week in Marrakech. Taking place one month after a 6.8-magnitude earthquake killed more than 2,800 people, the conference will host finance ministers, central bank chiefs and other senior leaders from 190 member-countries. Bankers and investors will be among the 14,000 expected for the six days of meetings starting on Monday.
Prominent on the agenda in Marrakech, the first time in 50 years that the World Bank and IMF meetings have taken place in Africa, are efforts to fight poverty and stimulate growth in the continent’s 54 countries. Led by World Bank President Ajay Banga of the U.S. and IMF Managing Director Kristalina Georgieva, a Bulgarian, the meetings will also concentrate on fostering recovery from the global economic slowdown, the impact on world markets of Russia’s invasion of Ukraine, and strategies to stop global warming.
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Oman bets big on cryptocurrency mining despite Bitcoin’s volatility
For the last two years, the market value of Bitcoin has been on a rollercoaster ride, the volatility leading institutional investors and regulators to question the cryptocurrency’s long-term viability. But look to the Gulf countries and a different story is taking shape, The Circuit’s Kelsey Warner reports.
Cheap energy: The United Arab Emirates and Oman are looking seriously at regulating digital assets while crypto firms are flocking to Dubai to set up shop. Oman, for its part, is betting big on cryptocurrency mining. Observers say a cooler climate in Salalah, in the south, compared to elsewhere in the desert region, as well as business-friendly regulation and cheap energy could help it succeed.
Crypto farm: In August, the oil-rich country announced close to $800 million in investments in crypto-mining operations, including $300 million with Abu Dhabi-based Phoenix Group to develop a 150-megawatt crypto-mining farm with Green Data City, Oman’s first licensed crypto-mining entity, slated to go online next year. Weeks earlier, Muscat approved a $370 million farm operated by Exahertz International.
Beyond oil: Oman is looking to diversify beyond fossil fuel revenues under its “Vision 2040” economic agenda, which focuses on the buildout of modern energy and telecommunication infrastructure that aims to attract foreign investment and create knowledge-worker jobs.
Well-suited: “Crypto might be uniquely suited to Oman’s policy style to diversify its trading partners and sources of non-hydrocarbon income,” Sam Blatteis, CEO and co-founder of the MENA Catalysts, a government relations firm for tech companies, told The Circuit.
🚂 Trade Tracks: Abu Dhabi wealth fund ADQ and Turkey are in talks to build a railway over Istanbul’s Bosphorus strait, linking Europe to the Middle East and Asia, Bloomberg reports.
🔋 Power Broker: Chinese makers of battery materials are investing in Morocco as a gateway to Europe and the U.S. as political tensions create obstacles to Chinese sales.
🌎 New Clientele: Since 2020, Israel has raised from 42 to 61 the number of countries that can buy its defense exports amid increased arms spending in Europe and the Midle East.
💸 Non-surplussed: Saudi Arabia has revised down its 2024 budget forecast, projecting a deficit until at least 2026 as it increases spending and deals with oil market uncertainty.
☕ Coffee Binge: Saudi Arabia intends to plant 1.2 million coffee trees by 2026 and increase coffee production as part of its plan to diversify its oil-dependent economy.
🤖 Head for Success: A robot that does hair transplants may provide a boost to Dubai health tourism, The National reports.
🏦 Road Show: Mubadala tapped Abu Dhabi Commercial Bank, First Abu Dhabi Bank, HSBC and ING to line up investors for its new Green Finance Framework.
🌴 Hot Property: Dubai is the world’s busiest market for luxury homebuyers, according to new transaction data from Knight Frank.
🇦🇪 Paying Off: Abu Dhabi’s non-oil economy is getting a boost from successfully attracting financial firms. Goldman Sachs, Brevan Howard Asset Management and Ray Dalio’s family office are all recent additions to the capital as its financial sector expanded by nearly 30% year-on-year.
🚜 Hydrated Harvest: A Saudi-owned alfalfa farm in Arizona, used to feed livestock in the kingdom, is facing eviction after pumping an unfettered amount of groundwater in the dry Southwestern state.
🌎 Climate of Convenience: Barclays, Citigroup and Standard Chartered will send larger delegations to COP28 in Dubai, in part because they have offices in the UAE.
🧺 Cleaning Up: Abu Dhabi’s financial services regulator slapped a $486,000 fine on neobank Pyypl for failing to enact adequate anti-money laundering practices in 2021 and 2022.
🇦🇪 Made in the UAE: Adnoc inked deals worth up to $2.7 billion with 30 local companies to manufacture non-oil products in its supply chain.
🎢 Fun and Games: PIF-backed Riyadh Season provided most of the $55 million in debt and equity raised by Dubai’s HyperSpace, a three-year-old startup that develops digital theme parks.
🛍️ Shopping Around: ADIA, following an investment from KKR, agreed to buy an additional stake in Indian billionaire Mukesh Ambani’s retail unit for $597 million.
✅ Blank Check: ADC Acquisition Corporation, the UAE’s first SPAC established by ADQ and Chimera Investments, raised $200 million and was 10-times oversubscribed, according to filings to the Abu Dhabi exchange.
💰 California Dreamin’: Dharma, an Abu Dhabi-based B2B travel startup and a portfolio company of Flat6Labs, raised $4.7 million in a pre-series A led by San Francisco-based Convivialite Ventures and with participation from Equinox and SoulCycle owner Stephen Ross.
🦷 Reason to Smile: Mubadala is investing an undisclosed sum in Korea’s largest dental implant material manufacturer, Osstem Implant, in partnership with MBK Partners and Unison Capital.
🛰️ Eyes in the Skies: Israel Aerospace Industries sold two spy satellites to Azerbaijan’s space agency Azercosmos for $120 million.
💰 Saudi Capital: Intella, an Egyptian AI startup, raised $3.4 million in a pre-Series A funding round led by two of Saudi Arabia’s biggest venture capital funds, Hala Ventures and Wa’ed Ventures, the VC arm of Saudi Aramco.
🚗 EU Drive: ADQ-backed AD Ports will acquire Spanish automotive logistics company Sesé Auto Logistics for $84.7 million, pending regulatory approvals.
💰 Triple Threat: Saudi Venture Capital (SVC) is investing $30 million to target pre-IPO growth stage companies in the Middle East, in a third fund managed by asset management and advisory firm IMPACT 46.
💰 Financial Muscle: Stampli, an Israeli fintech company, raised $61 million in a Series D funding round led by Blackstone, the world’s largest alternative asset manager.
🖥️ Know Your Client: Israel’s Nice Systems will pay $350 million for LiveVox, a San Francisco-based maker of AI-driven software for client contact centers.
On the Circuit
Mark Cuban, Dallas Mavericks owner and investor, was in Abu Dhabi for his team’s two-loss preseason outing against the Minnesota Timberwolves and met with the crown prince, Sheikh Khaled bin Mohamed.
Sheikh Tamim bin Hamad al-Thani, the emir of Qatar, laid the foundation stone for an expansion of North Field, creating the world’s biggest liquefied natural gas facility.
Sen. Ben Cardin, (D-MD) the new chairman of the Senate Foreign Relations Committee, blocked $235 million in U.S. military aid to Egypt days after replacing Sen. Bob Menendez (D-NJ), who is under investigation for allegations he took bribes from the Egyptian government.
Viswas Raghavan, head of JPMorgan Chase’s business in Europe, the Middle East and Africa, remarked on the “swagger” of Gulf countries amid a jump in dealmaking and capital markets activity the last couple quarters.
Alex Aliper, co-founder of Hong Kong A.I. drug development company Insilico, will speak on advanced technology and medicine on Tuesday at the Forbes Middle East Healthcare Summit in Abu Dhabi.
🎤 Mars Landing: Bruno Mars, the American singer-songwriter known for hit tunes “Uptown Funk” and “24K Magic,” canceled concerts in Israel and Qatar after being caught in Tel Aviv during the surprise Hamas missile barrage on Saturday. Mars performed to a sold-out crowd of 60,000 last week in the Israeli city’s Hayarkon Park. He was scheduled to appear Sunday night in a concert north of Qatar’s capital city of Doha to cap the three-day Formula 1 Grand Prix car race and sent regrets on Instagram.
🏎️ Fast Track: Dutch car racing champ star Max Verstappen won the Qatar Grand Prix on Sunday, beating Oscar Piastri and Lando Norris in the 18th round of the Formula 1 season. The competition moves to the Circuit of the Americas track in Austin, Texas, next week and concludes with the Abu Dhabi Grand Prix at the end of November.
⚽ All Corners: Australia has less than a month to challenge Saudi Arabia’s bid to host the 2034 men’s World Cup. Meanwhile, Morocco, Spain and Portugal are set to host the 2030 games. The opening three matches of the tournament will be played in Uruguay which hosted the first-ever World Cup – Argentina and Paraguay – to mark the tournament’s 100th anniversary. All six countries will automatically qualify in what will be the first time the World Cup will be hosted by three continents.
⛰️ Vertical Vision: Saudi Arabia’s Neom has released otherworldly renderings of a skyscraper jutting from its planned mountaintop resort town Trojena. Designed by U.K. firm Zaha Hadid Architects, the 1,000-foot Discovery Tower, designed to resemble a crystal, will overlook the district’s central lake and host a hotel, restaurants and observation decks. The tower will also be home to a “vertical village” with residential units, offices and retail spaces.
Ahead on the Circuit
Oct. 8-10, Abu Dhabi, UAE: Forbes Middle East Healthcare Summit. Experts and practitioners coming together under the theme “Health For Everyone: Advancing Healthcare.” The St. Regis Saadiyat Island Resort.
Oct. 9-12, Riyadh, Saudi Arabia: MENA Climate Week. Hosted by Saudi Arabia, a convening of regional stakeholders ahead of COP28. The Boulevard Riyadh City.
Oct. 9-15, Marrakech, Morocco: Annual Meetings of the World Bank and International Monetary Fund. Financial leaders from governments and industry chart direction for coming year. Bab Ighli campus.
Oct. 16-20, Dubai, UAE: GITEX. The biggest consumer technology and startup show in the world. Dubai World Trade Center.
Oct. 16-20, Dubai, UAE: AI Everything. Hosted by the UAE’s minister of state for artificial intelligence and held on the sidelines of GITEX. Dubai World Trade Center.
Oct. 16-20, Abu Dhabi, UAE: World Investment Forum. A gathering of global leaders brought together by the United Nations Conference on Trade and Development to tackle issues related to sustainable development. ADNEC Abu Dhabi.
Oct. 17-19, Tel Aviv, Israel: Agritech Israel. Showcase for companies developing agricultural, water and food technologies. David Intercontinental Hotel.
Oct. 19, Tel Aviv: Israel Machine Vision Conference. Startups, investors meet to discuss issues including computer vision, medical imaging and artificial intelligence. Expo Tel Aviv.
Oct. 24-26, Riyadh, Saudi Arabia: Future Investment Initiative. An annual gathering of executives, investors and government officials exploring the future of investment. The Ritz Carlton.
Oct. 29-31, Riyadh, Saudi Arabia: Global Health Saudi. A gathering of Saudi and international players in health care and medical devices. Riyadh Front Exhibition & Conference Center.
Oct. 30-31, Dubai, UAE: AIM Summit. A meeting of leaders from the alternative investment industry including hedge funds and private equity to discuss market trends and opportunities. Jumeirah Emirates Towers.
Oct. 31-Nov. 1, Abu Dhabi, UAE: Abu Dhabi Smart City Summit. Bringing together key government and private organizations to collaborate and discuss initiatives and technology requirements to make Abu Dhabi a leading global smart city. Conrad Hotel.