Russian assets back in demand amid hopes for a ceasefire

Middle Eastern investors eye Russian assets amid hopes of an end to the Russia-Ukraine war: Middle Eastern investors are driving a surge in demand for Russian assets, particularly USD-denominated bonds issued by energy giant Gazprom, as hopes for an end to Russian sanctions return amid ceasefire talks, Bloomberg reports. However, transactions remain challenging due to limited supply, with bondholders either unwilling to sell or demanding high prices, unnamed sources told the newswire. This demand has pushed down yields on Russian bonds, signaling renewed investor confidence.

What’s fueling the interest? US President Trump has expressed intentions to broker an agreement to end the Russia-Ukraine war, raising speculation about a potential easing of sanctions. Investors see this as an opportunity to buy discounted Russian assets in anticipation of a market rebound.

Investors are also exploring opportunities related to the RUB through non-deliverable forwards—derivatives that provide indirect access to Russian markets without violating sanctions. Major investment banks, including Goldman Sachs and JPMorgan Chase, are reportedly facilitating such transactions.

Risks and challenges are dire: Despite the optimism, Russian assets carry significant financial, legal, and reputational risks. If sanctions are not lifted—or are later reimposed—investors could face serious losses. Trump has sent mixed signals, warning of possible new banking sanctions on Russia while also preparing for negotiations. Even if sanctions ease, Russia’s economy has increasingly shifted toward a war-driven model, raising concerns that foreign investments could indirectly support its military efforts, one expert noted.

The Kremlin isn’t rushing to welcome back Western businesses: Russia imposed tough conditions on foreign firms that existed after the war began, often forcing them to sell assets at high losses or to Kremlin-approved buyers. As a result, any return of Western investors may come with stringent terms, including demands for technology transfers and local production requirements.

MARKETS THIS MORNING-

Asian markets are in the green this morning, once again breaking away from the sell-off on Wall Street. Japan’s benchmark Nikkei index was up 0.2%, as was South Korea’s Kospi. China’s CSI 300 also reversed losses from yesterday to trade up 0.97%, while Hong Kong’s Hang Seng started the day 1.1% higher.

Some relief on Wall Street? Futures are pointing to a rebound after the S&P 500 suffered losses yesterday that dragged it into correction territory. Investors will be keeping a close eye on data on consumer sentiment out today, as well as the Fed’s interest rate decision next week.

THE CLOSING BELL-

The DFM rose 0.5% yesterday on turnover of AED 431.2 mn. The index is down 0.5% YTD.

In the green: Dubai Refreshment Company (+14.7%), BHM Capital Financial Services (+6.7%) and Chimera S&P UAE Shariah ETF (+2.9%).

In the red: Depa Limited (-10.0%), International Financial Advisors (-5.5%) and Emirates REIT (-3.5%).

Over on the ADX, the index fell 0.1 % on turnover of AED 1.7 bn. Nasdaq Dubai was up 0.6%, and 2.0% YTD.

CORPORATE ACTIONS-

#1- Shuaa’s board approved the final amounts of its MCB issuances: Shuaa Capital’s board gave the final green light to issue AED 85 mn in new investor mandatory convertible bonds (MCBs) and AED 274.5 mn in MCBs to existing noteholders, according to DFM disclosures pdf (here and here).

The breakdown: The company authorized the issuance of AED 50 mn in new investor MCBs to Eshraq Investments, AED 25 mn to Albaher Real Estate Development, and AED 10 mn to United Motors and Heavy Equipment Company. The company will also issue AED 78.3 mn in existing noteholder MCBs to GFH Financial Group. Existing noteholder MCBs are subject to pro-rata scaling at a pro-ration factor of 99%.

ICYMI- The firm’s management previously approved initial issuance amounts of AED 267.1 mn in mandatory convertible bonds (MCBs) to existing noteholders as part of the exchange offer for Shuaa’s USD 150 mn notes due 31 March 2025. It also approved the issuance of AED 85-150 mn in new investor MCBs earlier this week. The final results are pending approval from the Securities and Commodities Authority (SCA).

#2- Dubai Refreshment approved a dividend of AED 90 mn for 2024, according to a DFMdisclosure (pdf).

#3- MBME Group’s shareholders approved the issuance of AED 5.5 mn in bonus shares, according to an ADX disclosure (pdf). This represents 275 mn shares, or 10% of the company’s share capital in 2024. The issuance is subject to approval from the Economy Ministry to amend the company’s articles of association regarding share capital.

Dubai Islamic Bank’s (DIB) board approved distributing AED 3.3 bn in dividends at 45 fils per share, and equivalent to 45% of its paid-up capital, for 2024, it said in a disclosure (pdf) to the DFM. It also authorized the board to issue senior debt instruments of up to USD 12.5 bn, a tier 2 non-convertible sukuk issuance of up to USD 1 bn, and an additional non-convertible tier 1 issuance of up to USD 1 bn.

Medical services firm Response Plus Holding’s board approved distributing AED 20 mn in dividends, amounting to 10% of its share capital, and AED 0.1 per share, it said in a disclosure (pdf).