The Extinction of Homo sapiens FinancialMarketus Arabia

This bipedal primate (Homo Sapiens FinancialMarketus Arabia) used to occupy large tracts of the Arabian Peninsula during the great boom years of easy credit. The Lehman bomb followed by the subsequent Nano Aktomic Eliminator Bomb (also known as the Naakel Bomb) dropped in the region resulted in the virtual extinction, migration or mutation of a large number of this sub species. An analysis of this species and sub species in greater detail led us to identify certain distinct migration and extinction patterns.

By definition ‘Extinction’ is the end of an organism or species. They become extinct when they are no longer able to thrive in the changed environment. Before we begin, here's a bit on the ‘Homo Sapiens Financiual Marketus’ - They were a prolific talking, good looking species, well fed and the mature ones developed beautiful feathers around themselves. During their hey days, they took an exceptional interest in dressing themselves up in finery (brands) to attract prey and mates.

The Extinct/ Migrated Species

• IPO Lead Managers - With the way the markets have been headed this summer, there is no realistic chance that we will find them in the region till around 2020, It is predicted by experts that the last of the few healthy remaining species of this class will starve to death or migrate to by the end of this summer.
• Foreign Institutional investors - They vanished by the end of 2009 from the GCC region. A few of them were seen eking a living by putting whatever AUM remained with them in emerging markets and some printing press stocks in the United states
• Real Estate Fund Managers - Scientifically they should have been renamed locusts – wikipedia defines locusts as ‘a species that can breed rapidly under suitable conditions and subsequently become gregarious and migratory. They form bands and rapidly strip fields and people. They have migrated after leaving a trail of destruction across the gulf region
• The ‘Oh I get a skin rash unless I wear Armani’ Hedge Fund Managers - In the late part of 19th century, this species roamed a certain parts of United States dressed in Stetson, cowboy boots and six gun. In the GCC a few years back these Jacksons, oh I meant these Texans…oops, I meant Hedge Managers were found in plenty investing in one hare brained scheme after the other. The last of this breed now survive in some parts of a place known as Abu Zaby.

Bomb radiation Mutated Species

Nature has an amazing way of evolving newer species from the old. Guess that’s life. The following have been found in large numbers in the region. We believe it is a mutated version of the old species.

• Chinese ‘looking’ Investment managers - Remember, they just look the part. At one instance, we found that one of them turned out to be actually the Nepali security guard of the investment bank who was given a suit by the CEO and taken for his press meetings and pow wow with local HNIs for announcing his Shariah compliant Asian Equity Fund. Today this security guard/fund manager is considered among the top Asian market experts residing in the middle east region.
• Commodities Experts - Suddenly the guy whom you knew as a equity day trader pops up with a visiting card saying Biriyani Rice & Pulses Portfolio Manager for Blue chip asset manager co.He confessed privately to us that he did not lie in the interview to get the job, he just said ‘yes’ and was not allowed to elaborate his answer to a question on ‘Does he have several years of experience in buying of these products,
• ETF Experts - Before the Bomb blast they were hidden away in the back office of a mutual fund and had not even managed to generate a proper NAV weekly is now going to give you an intraday NAV. Now they are ETF structuring experts who plan to generate Real time NAVs.
• Charitable Institution Development Manager - This has been one of Nature’s most interesting mutation. The guy whom you saw as a Private Banker/HNI relationship manager just before the bomb dropped is now chasing you for a meeting to show you some pictures of children starving in third world countries, and ask for some money. Same begging bowl in a different garb, nature’s wonders.

At a time of this economic uncertainty and daily flat stock market pain, we all need some comic relief. What is written above is to be taken only in a light hearted way. What is written above is in no way real and any resemblances to people who are living, extinct or mutated is purely accidental :-)

Harvard Fund & Middle East Peace - A correlation!

The 10 year annualized returns of this fund stands at 8.9%; compare this with an average 60/40 stock bond portfolio which invests in S&P 500 & Citi bonds, which would have given you in the same 10 year period an annualized return of 1.4%!!! The current AUM of the fund stands at approximately USD 28 Billlion; and by default the fund has access to some of the brightest economists, politicians and market makers in the world. We're talking about the Harvard Endowment Fund managed by the Harvard Management Company.

Their portfolio model as published on their website consists of 11% domestic equity (U.S), 11% in Foreign equity (which would be Europe etc.) and another 11% on Emerging Markets (ok, guys in Dubai and GCC can stop reading here). They don’t do frontier markets apparently, but they do have another 11% in PE which may interest you. All in all a very balanced portfolio mix.

The returns had always got me fascinated with the fund and I keenly watch out for any tit bit the Harvard Management Company throws out.

Last week’s news that Harvard Fund dumps all of its Israeli stocks, and the following hurriedly put together denial by the Harvard management and then the clarification by the portfolio manager who managed the Emerging markets component was all very badly managed. The Portfolio manager’s clarifications were actually hilarious, he apparently said that Israel was always in the emerging markets index and because of some index change, Israel moved to the develop markets scale in their systems and hence they dumped those stocks (you didn’t understand, well neither did I)

The elephants in the background

Let's take a step back and analyze the sequence of events. It was known that the latest round of direct Mid East peace talks would begin on Sept 2nd. I know ..I know..we’ve been there many a times and we may still end up being there in the next century with a Gay American president in the middle of the table.

This time around there’s one difference from the last 30 years of talks, there’s a black American man who's sane and not a Texan either, flying around in Air force 1 globally. Obama’s thinking might be this way – It may be easier to get a mid east peace treaty rather than get the sluggish American economy back on track, so am sure he’s going to give his best shot at it to win some votes (if not local at least global votes).

Israel clearly has a lot going against it in the past 12 months with one botched up after the other disasters. The Assassination of Al-Mabdouh in Dubai, The Aid Flotilla issue, the Lebanon border rocket firings etc have resulted in a global mood which is slowly moving towards ‘ bad bully boy needs a whipping and a cutting down to size’. This round of peace talks may result in substantial advantages for Palestine as a nation, which could result in Israeli stocks taking a tumbling nose dive.

- Is there someone at Harvard Management Company who is privy to the way the Mid East peace talks are planning to shape up.

- What other reason would be the correlation factor for these chain of events for buying into Turkish positions and selling off all its Israeli positions

Is this going to be the trigger for a rally in GCC markets with a wave of confidence sweeping across the region after the flat summer. From the best and brightest minds at Harvard who's given the world some outstanding returns, I'd say yes. Let’s wait and watch.

Sama Airlines - No longer flying 'high'

I've flown SAMA Airlines a couple of times, not by choice, more so because I didnt have any other option on that day. My 6'2 colleague who came with me for the meeting had an even more desperate look on his face, he was worried about the blood flow into his toes being cut off because of the amazing leg space available in the aircraft.

I may grumbled quite a few !#@#@%$#$ words that day on SAMA (though I was fully aware this was a low cost airline) but at no time had I wished that the airline to go bust. 3 years of average operations, one bad winter and a USD 266 Mn loss really does not count as good enough reasons for shutting down an airline, Do they? I always thought it was fashionable globally across the airline industry to make losses (and in some cases for decades over) until the stock prices becomes junk.


What is surprising is that this airline has/ had some serious backers in investors like Olayan Group, SISCO etc. Questions that remain unanswered at the time of blogging


i) Why had SAMA not listed after 2-3 years of operations?
ii) A low cost airline going should ideally not be going bust
iii) How did they rack up USD 266 Mn in losses, I mean this was a 6 aircraft airline
iv) Why didnt any PE investor/ investors come on board and give a lifeline or facelift


In Saudi Arabia, this is the third local Saudi airline after Saudia and NAS. What remains is NAS and Saudia. Are we to assume that in a country of 20 Mn+ population, there is a market size for local air travel which can be catered by two airlines? I dont believe it.


I know I'm missing something in between the lines of this SAMA airlines going bust news...eish I couild pin it down...I have this feeling we'll be seeing SAMA airlines with a new name and new management come out in the market soon..what do you say?