Category: 3. Business

The rollout of kerbside glass collection will start in two months after it was delayed by a fire at a waste storage site, a local authority said.

Bedford Borough Council said glass bottles, jars and containers will be collected from orange recycling bins from 1 December.

The fire at Elstow Waste Transfer Station near Bedford broke out at about 21:00 BST on 4 July and was put out seven days later.

The building, which temporarily stored the borough’s non-hazardous waste, was demolished so the blaze could be extinguished.

The authority said it had worked closely with contractors to “ensure that the necessary infrastructure is fully in place to manage the expected increase in recycled glass tonnage effectively”.

A glass collection pilot scheme, which began in May 2024 and expanded to other parts of the borough that December, led “to increased recycling rates”, the council said.

Nicola Gribble, an independent councillor at the authority and portfolio holder for environment, said: “The strong response to our trial proves that residents want to recycle more glass, and making this part of regular collections is a straightforward way to help our environment and reduce waste.”

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HSBC has made a HK$106bn ($13.6bn) offer to buy out minority investors in Hong Kong lender Hang Seng Bank as it presses ahead with a restructuring plan.

Europe’s largest bank has offered HK$155 a share, a 30 per cent premium over Hang Seng’s closing price on Wednesday, to take the unit fully private and delist its Hong Kong-listed shares. The all-cash deal values Hang Seng at HK$290bn.

HSBC’s share price was down as much as 7.3 per cent by mid-morning in Hong Kong after it said it would not make share buybacks for the next three financial quarters in order to generate the cash needed for the deal.

The bank returned $11bn to shareholders in 2024 through share buybacks alone.

HSBC took control of Hang Seng during a banking crisis in 1965 and owns about 63 per cent. It ranks among the global bank’s most significant acquisitions alongside the UK’s Midland Bank in 1992.

Hang Seng has been hard hit by Hong Kong’s recent property slump, with its non-performing loan ratio at 6.7 per cent at the end of June — an all-time high.

HSBC had already kicked off a restructuring at Hang Seng, bringing in a new chief executive in October.

“This investment is primarily to enhance the capabilities of Hang Seng in terms of additional products and additional scale and technology investments, as well as obviously giving customers the same access to our international network,” said group chief executive Georges Elhedery. 

Elhedery took on the role of chief executive last year and kicked off a worldwide restructuring that included shutting HSBC’s investment bank in the US and Europe and pulling out of some markets.

He denied that the move to tighten HSBC’s grip on Hang Seng was sparked by concerns over its commercial real estate exposure.

“We remain constructive on the outlook for the [Hong Kong real estate] sector in the medium to long term. So we see this as a short-term credit cycle,” he said.

HSBC considers Hong Kong a “home” market along with the UK. The global bank has been under pressure amid greater tension between China and the west, with its largest shareholder Ping An launching a campaign in 2022 for it to split up its Asian and western businesses.

In an internal email to staff Elhedery added that he expected “an opportunity to create greater alignment across HSBC and Hang Seng Bank that may result in better operational leverage and efficiencies”.

Some analysts greeted the move positively as a simplification measure for HSBC. “Either Hang Seng Bank should be separate and a competitor or it should be fully owned, so this move makes sense,” said Michael Makdad of Morningstar.

Hang Seng has traditionally operated as a more retail, mass market franchise while HSBC targeted wealthier clients and businesses.

Hang Seng recorded net income of HK$6.9bn in the first half of 2025, compared with HK$10bn in the same period the previous year.

In a call with journalists Elhedery added that there might be “opportunities for alignment between the two entities”, including offering Hang Seng customers more access to HSBC’s international network.

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Europeans are at risk of cold showers after materials critical to hot water tanks were not included on an EU list of authorised substances, which was revised as part of the bloc’s sprawling environmental legislation.

Applia, the home appliance lobby group, has estimated that more than 90 per cent of hot water storage tanks would no longer be marketable in the EU if hafnium, a highly heat resistant metal, and its sister element zirconium are not recognised as safe for household use.

The two elements were not listed in the bloc’s rules for drinking water, which enter into force in 2027 and aim to protect consumers and improve water quality standards. The European Commission appears to have overlooked the fact that hot water tanks also hold potable water, with manufacturers warning they risk fines if they do not comply with the list of authorised substances.

“[Hafnium] is absolutely safe to use,” said Paolo Falcioni, director-general of Applia, stressing that the element had been used for more than 100 years in enamelled hot water tanks. If hafnium or zirconium are not mixed with the enamel, he explained, the glazing “cracks and the hot water is not hot”.

The two elements are also used in enamelling heat pumps, which have become more popular in recent years as households move away from gas boilers.

Falcioni said alternatives to hafnium, such as steel or copper, cost four to five times as much, which would be transferred to consumers at a time when household finances are tight.

“The impact would be huge,” said Jérôme Martel, regulatory affairs manager at the French heating and ventilation company Groupe Atlantic. Italy’s Ariston, another major manufacturer of hot water tanks, raised similar concerns.

European companies have pushed the commission to simplify the bloc’s regulatory burden, arguing it only adds to their woes ranging from high energy prices to US tariffs and cheap Chinese competition. Falcioni warned, however, that the complexity of the existing rule book also meant that more oversights, such as the exclusion of hafnium, were likely unless the commission paid greater attention to industry concerns.

The commission said it was up to member states to notify it of the need to authorise hafnium and so far none had done so. Brussels previously told companies they can apply for toxicological assessments to get them approved.

But industry argues this process would take too long and they would be forced to make costly changes to their production lines in the interim.

“This would place European manufacturers at a severe disadvantage compared to non-EU competitors,” said an industry executive, who asked not to be named.

Member states can approve hafnium’s use on a national level but this option is also costlier and more time-consuming than EU authorisation.

Falcioni warned the lack of regulatory clarity in this area risked deterring foreign investors, too.

“There are companies that are willing to reshore the manufacturing to Europe but without this certainty they may not,” he said.

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The writer is an external member of the Bank of England’s Monetary Policy Committee

Generations of economists — myself included — were taught to think about changes in economic activity primarily in terms of demand. But supply can prove every bit as consequential for output and inflation, as we recently experienced in the face of a pandemic and a war in Europe. We’ve learnt a number of lessons about how negative supply shocks propagate through the economy and how central banks might respond to them.

The conventional wisdom is that monetary policymakers should look through adverse supply shocks. First, they are often transitory and there is a lag before monetary policy has an impact on the economy, so any response would probably come to bear too late. Second, adverse supply shocks tend to push output down and inflation up. Monetary policymakers generally respond more cautiously to these shocks as they weigh the benefits of stabilising prices with the costs of weakening output. Third, if inflation expectations are well anchored, second-round effects should be avoided. Finally, interest rates are a demand-management tool, with little direct impact on supply.

In the face of recent supply shocks, inflation peaked at 9.1 per cent in the US, 11.1 per cent in the UK and 10.6 per cent in the Eurozone. More than five years after the onset of the pandemic, it remains above target in the US and UK.

The past few years have taught us a lot about the nature and transmission of supply shocks. First, different supply shocks can propagate through the economy in different ways. Recent research by Bank of England staff suggests a fall in productivity growth and a wage mark-up both result in a sharp initial jump in core inflation, but a negative labour supply shock results in a much more persistent rise.

The extent to which supply shocks have a lasting impact depends in part on whether second-round effects take hold, which act mainly through inflation expectations. The level of inflation influences how expectations form. Bank research shows households’ and companies’ attentiveness to inflation is greater when it reaches 3-4 per cent in the UK.

In projecting their own price growth over the next year, companies are more influenced by inflation changes when inflation is high than when it is lower, as it was before the pandemic. Household and company expectations are more sensitive to rising than falling inflation as well. Finally, expectations are particularly responsive to price changes in items such as food and energy.

The state of the economy matters when gauging whether elevated inflation expectations will feed into higher wages and prices. We saw this after the pandemic, when the inflationary impact of energy price and supply chain shocks was perpetuated by a tight labour market, boosting wage growth and services inflation. According to the bank’s Decision Makers Panel, many companies also set prices according to the state of the economy rather than on a schedule, and they changed their prices more frequently when inflation was high in 2022.

These lessons can help central banks respond to supply shocks both now and in the future. Last August, the Monetary Policy Committee considered a hypothetical scenario in which inflation expectations were more backward-looking and productivity growth was weaker than in our baseline forecast. This results in higher and more persistent inflation, barring a monetary policy response.

Bank staff then applied a policy rule that minimises deviations of inflation from target and output from potential, and prescribes a policy path to achieve this. The rule’s path is more restrictive than both the market curve underpinning our baseline forecast and the more recent, higher market curve — in fact it suggests a near-term rate rise.

This prescribed path is not gospel. Policy reversals undermine central bank credibility, and restrictiveness could also be achieved by skipping rate cuts.

Uncertainty around the structural features of an economy may affect the appropriate policy response as well. Bank research finds that if policymakers are uncertain about the persistence of inflation — as they are likely to be in the case of a supply shock — policy should respond more forcefully to inflation than under conditions of certainty.

Learning the lessons from recent supply shocks is not just an academic exercise. Transformational issues such as climate change, economic fragmentation and economic statecraft mean supply shocks are likely to become more frequent and successive.

Central banks need to understand how these shocks might impact the economy and how our policy stance might best evolve accordingly.

A number of economies in sub-Saharan Africa have seen
inflationary pressures wane in recent months amid currency
appreciation versus the US dollar. In turn, this is allowing
central banks to lower interest rates, helping business activity in
the region to expand solidly. PMI® data and the anecdotal evidence
provided by our survey respondents can help to illustrate the
impact of currency movements.

Range of currencies gain versus the US dollar in 2025

Of the seven economies in sub-Saharan Africa for which S&P
Global compile PMI surveys, five have seen currency appreciation
against the US dollar over the course of 2025 so far. While this to
some extent reflects the weakness of the dollar itself this year,
there have also been positive factors supporting local currencies,
including support from IMF programmes, fiscal consolidation and
tight monetary policy.

In particular, the Ghanaian cedi and Zambian kwacha have each
appreciated by 15% against the US dollar in 2025 so far, while the
South African rand and Nigerian naira have also seen gains.

Currency appreciation has contributed to a sustained easing of
inflationary pressures in the sub-Saharan Africa business sector.
PMI data showed that overall input costs increased at the slowest
pace since the COVID-19 pandemic in September. While selling prices
rose at a slightly faster pace than in August, here too the pace of
inflation was among the weakest in the past five years.

Country level PMI data show that most of the economies we cover
in sub-Saharan Africa have seen either a slowdown in inflation of
purchase costs or outright falls in prices over the course of 2025.
Those countries seeing the strongest currency appreciations against
the US dollar – Ghana and Zambia – have recorded periods of
decreasing purchase prices. Such price falls are rarely seen among
the sub-Saharan Africa PMIs, which normally suffer from marked
inflationary pressures. Even Nigeria, where purchase costs
continued to rise sharply during the third quarter, posted the
weakest pace of inflation since March 2020.

Survey comments highlight impact of currency gains

Anecdotal evidence from our PMI surveys can help us to see what
is driving the drop in price pressures in the region, with comments
from panellists highlighting the impact of currency appreciation on
purchase costs.

Normally we see any references to exchange rates or the dollar
being linked to rises in purchase prices as downward pressure on
local currencies feeds through to higher costs for imported items
and those priced in dollars. But between June and August this year
we recorded more mentions of these factors pushing down
prices rather than lifting them; the only time this has been the
case since we have had the full complement of seven sub-Saharan
Africa PMI surveys.

Similarly, recent months have seen above-average mentions of
either exchange rates or the dollar causing a drop in purchase
prices, to a degree second only to that seen in April 2024, when
firms in Kenya were responding to a substantial appreciation of the
shilling against the US dollar.

Central banks lower interest rates amid waning inflation

Easing inflationary pressures have enabled central banks across
much of the region to lower their interest rates over the course of
2025. Of the seven economies we cover, five have lower levels of
interest rates now than at the start of the year. Most notably is
Ghana, where the central bank has cut rates by 650 basis points in
the past two meetings. Interest rates in Uganda are at the same
level as they were at the start of 2025, while only Zambia has
posted an increase. Here though, S&P Global Market Intelligence
expects a cut of 50-100 basis points at the upcoming November
monetary policy committee meeting.

Output rises solidly at end of third quarter

The softening inflation environment has coincided with a period
of solid growth in the sub-Saharan Africa private sector. September
saw output increase at the fastest pace in five months in response
to higher inflows of new orders. Employment rose for the twelfth
month running, while firms increased their purchasing activity and
inventory holdings.

Most notably, the Stanbic Bank Zambia PMI signalled the fastest
rise in business activity since June 2023, while Stanbic Bank PMI
data for Kenya signalled a return to growth following mid-year
disruptions caused by protests. The only economy covered by PMI
data to see a drop in output during September was Ghana, but even
here new orders expanded and business confidence remained elevated,
meaning that we could potentially see renewed growth in the months
ahead.

Overall, the sub-Saharan Africa private sector enters the final
quarter of the year on a solid footing, in part at least due to the
currency gains seen over the course of 2025 so far.

Access the global PMI press releases.

Andrew Harker, Economics Director, S&P Global Market
Intelligence

Tel: +44 134 432 8196

andrew.harker@spglobal.com

© 2025, S&P Global. All rights reserved. Reproduction in
whole or in part without permission is prohibited.

Purchasing Managers’ Index™ (PMI^®) data are compiled by S&P Global for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

Learn more about PMI data

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

China has tightened its rules on the export of rare earths – the elements that are crucial to the manufacture of many high-tech products.

New regulations announced by the country’s Ministry of Commerce formalise existing rules on processing technology and unauthorised overseas cooperation.

China is also likely to block exports to foreign arms manufacturers and some semiconductor firms.

Rare earth exports are a key sticking point in the months-long negotiations between Beijing and Washington over trade and tariffs. The announcement comes as China’s President Xi Jinping and his US counterpart Donald Trump are expected to meet later this month.

Technology used to mine and process rare earths, or to make magnets from rare earths, can only be exported with permission from the government, the Ministry of Commerce said.

Many of these technologies are already restricted. China had added several rare earths and related material to its export control list in April, which caused a major shortage back then.

But the new announcement makes clear that licenses are unlikely to be issued to arms manufacturers and certain companies in the chip industry.

Chinese firms are also banned from working with foreign companies on rare earths without government permission.

China has been accused by the US and other Western countries of aiding Russia’s war on Ukraine by allowing dual technology exports – materials that can be used for either civilian or military purposes – to be sent to Moscow. Beijing has repeatedly denied this.

The latest announcement also clarifies the specific technologies and processes that are restricted.

These include mining, smelting and separation, magnetic material manufacturing, and recycling rare earths from other resources.

The assembly, debugging, maintenance, repair, and upgrading of production equipment are also prohibited from export without permission, the announcement added.

This could have an impact on the US, which has a significant rare earths mining industry but lacks processing facilities.

Rare earths are a group of 17 chemically similar elements that are crucial to the manufacture of many high-tech products.

Most are abundant in nature, but they are known as “rare” because it is very unusual to find them in a pure form, and they are very hazardous to extract.

Although you may not be familiar with the names of these rare earths – like neodymium, yttrium and europium – you will be very familiar with the products that they are used in.

For instance, neodymium is used to make the powerful magnets used in loudspeakers, computer hard drives, electric car motors and jet engines that enable them to be smaller and more efficient.

China has a near monopoly on extracting rare earths as well as on refining them – which is the process of separating them from other minerals.

The International Energy Agency (IEA) estimates that China accounts for about 61% of rare earth production and 92% of their processing.

Additional reporting by Ian Tang of BBC Monitoring.

ASEAN+3 Remains Resilient Amid Heightened Global Uncertainties

In the October 2025 update of the AREO, AMRO forecasts the ASEAN+3 region to grow at 4.1 percent in 2025 and 3.8 percent in 2026, an upward revision from July’s forecast, supported by robust first-half performance and stronger-than-expected export momentum. Market pressures have gradually eased since peaking in April following the announcement of the “Liberation Day” tariffs.

SINGAPORE, October 9, 2025 – The ASEAN+3 Macroeconomic Research Office (AMRO) today released its ASEAN+3 Financial Stability Report (AFSR) 2025 and the ASEAN+3 Regional Economic Outlook (AREO) October Update, highlighting the region’s broad resilience in the face of heightened uncertainties driven by US trade policy shifts and geopolitical tensions.

Growth in the ASEAN+3 region is projected at 4.1 percent in 2025 and 3.8 percent in 2026, an upward revision from July’s forecast, supported by robust first-half performance and stronger-than-expected export momentum. Market pressures have gradually eased since peaking in April following the announcement of the “Liberation Day” tariffs.

“While intra-regional trade and domestic demand have become increasingly important growth drivers across ASEAN+3, the region remains deeply connected to the global financial system and is therefore not insulated from global shocks,” said AMRO Chief Economist Dong He. “Overall, the region’s financial system remains resilient, although pockets of vulnerabilities persist.”

Export-oriented corporate sectors—particularly smaller firms with high exposure to US demand—may face pressures on profit margins amid shifting trade dynamics. Inflation pressures in the US could persist amid higher import tariffs, complicating the Fed’s monetary policy stance and potentially triggering spillovers to other parts of the world. Additionally, growing uncertainty around the US dollar’s safe-haven status could further fragment the global financial landscape.

Despite these challenges, ASEAN+3 economies remain well-positioned to navigate global headwinds. Well-calibrated policy mixes and strong fundamentals—including robust banking systems, deepening financial markets, ample foreign reserves, and available policy space—have provided critical buffers. With inflation largely subdued and expectations well-anchored in most economies, central banks can maintain accommodative monetary policy to support growth.

At the same time, macroprudential tools, along with foreign exchange and capital flow management measures, offer additional safeguards to maintain financial stability and mitigate external spillovers. However, AMRO underscores that support should be carefully targeted to vulnerable sectors and deployed prudently to preserve policy space amid elevated external uncertainty.

Beyond near-term risks, the region is undergoing deeper structural transitions. Most notably, the rapid digitalization of financial services presents opportunities for greater financial inclusion and efficiency, while also introducing new challenges to financial stability.

“Digitalization of the banking sector is reshaping the market structure, offering new pathways for inclusion and efficiency,” said Runchana Pongsaparn, AMRO Group Head for Financial Surveillance. “But it also alters the nature and distribution of financial stability risks. Policymakers must adopt a multi-pronged strategy that promotes innovation while managing risks, calibrated to the maturity of each market segment.”

As ASEAN+3 manages near-term uncertainties, AMRO emphasizes the importance of reinforcing policy frameworks, improving transparency, and deepening domestic markets and buffers to mitigate spillover risks from external shocks.

Dr. He concluded: “With coordinated actions and deeper financial cooperation and integration, ASEAN+3 can turn today’s challenges into tomorrow’s opportunities, and emerge stronger, more connected, and more resilient.”

For more insights, refer to AMRO’s latest flagship publications: the ASEAN+3 Financial Stability Report 2025, and the ASEAN+3 Regional Economic Outlook October Update.

Also available in Chinese | Japanese | Korean

 

About AMRO

The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization established to contribute toward securing macroeconomic and financial resilience and stability of the ASEAN+3 region, comprising 10 members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to the members. In addition, AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.

 

Tokyo, October 9, 2025 – The space brewing equipment jointly developed by Mitsubishi Heavy Industries, Ltd. (MHI) and DASSAI Inc., a sake company based in Iwakuni City, Yamaguchi Prefecture, and ingredients will be launched by the Japan Aerospace Exploration Agency (JAXA) for the DASSAI MOON Project, a project to brew sake in space. The launch will take place from Tanegashima Island on October 21, 2025 using H3 Rocket No. 7, a new mainstay launch vehicle built in Japan.

The items will be transported to the International Space Station (ISS) using HTV-X, a new Japanese-built unmanned cargo transfer spacecraft that will undergo its first demonstration test with this launch, and arrangements are being made with JAXA for the brewing test to be conducted in the Japanese experiment module Kibo on the ISS by astronaut Kimiya Yui. The Japanese-led mission aims to brew sake in space for the first time in the history of humanity.

　

■ About the DASSAI MOON Project

In 2024, DASSAI commenced the DASSAI MOON Project, seeking to build a brewery on the surface of the moon and brew its sake there with the aim of improving quality of life in activities on the moon in future. In Phase 1 of the DASSAI MOON Project, planned jointly by DASSAI and MHI, the world’s first test brewing of sake in space will be conducted in an environment simulating the gravity of the moon’s surface in the Japanese experiment module Kibo in the fall of 2025.
Past link: https://dassai.com/us/news/info/005853.html

　

■ Schedule and mission details for Phase 1 of the DASSAI MOON Project

The ingredients from DASSAI (rice, malt, yeast, and water) and purpose-built space brewing equipment that will be used on the mission will be launched from the Tanegashima Space Center at approximately 10:58am on Tuesday, October 21, 2025 and taken to the ISS. The items will be launched on the new Japanese-made H3 rocket, which commenced operation in 2024, together with the HTV-X, the resupply vehicle being used to transport them to the ISS, which is being taken to space for the first time. Upon arrival at the ISS, the brewing equipment will be set up and water will be placed inside to start multiple parallel fermentation, a fermentation reaction unique to Japanese sake, for the test brew. DASSAI will brew the sake during the mission and MHI has been developing the space brewing equipment. Processes such as the loading of the equipment on the rocket at the launch site, followed by the launch and the operations at the ISS, will be a collaborative effort between JAXA and various Japanese administrative bodies, companies such as MHI, and other organizations, for an all-Japanese technological endeavor.

Testing in orbit will commence around 10 days after the launch, with the sake brewed in a 1/6G environment, equivalent to the gravity of the moon’s surface, over a period of approximately two weeks while various data is monitored from Earth. After the fermentation in space is completed, the raw sake will be frozen and stored in orbit; it is expected to be brought back to earth no sooner than the end of the year. After being collected, the raw sake will be thawed and refined on Earth, half of the collected sake will be sent to the purchaser, while the remaining half will be analyzed to glean information for future Japanese space industry development.

■ “DASSAI MOON Project” Dedicated website: https://dassai.com/moon/en/

I recently spent time in Saudi Arabia, Kuwait, and the UAE — my second trip to the region in 2025 — with local KKR colleagues, CEOs, CIOs, business executives, and investors. KKR has been on the ground in the region for over sixteen years, but the firm’s momentum certainly accelerated after the landmark 2019 ADNOC Oil Pipelines deal, which created a template for investment in the Middle East. That momentum has increased further still since the appointments of General David Petraeus (U.S. Army, Retired) as Chair of KKR Middle East and Julian Barratt-Due as head of our dedicated regional investment team, and with two transactions announced this year.

Ahead of my trip, Aidan Corcoran and other colleagues on the global macro team, in conjunction with our EMEA deal teams, conducted substantial preparatory work by revisiting the opportunity set in the region, focusing this trip on the countries sharing a political and economic union as part of the Gulf Cooperation Council (GCC). As detailed below, five key areas stood out:

1. There is a clear, shared push to diversify the region’s economies. Pro-growth policy frameworks — driven by focused and effective leadership — are helping to make that a reality, including a thoughtful approach to financial services. All told, the GCC markets now rank among the top five regions globally for IPO activity, with markets like the UAE showing meaningful gains in capitalization relative to GDP, signaling improving liquidity and broader investing options. We expect this dynamic to strengthen further as foreign ownership increases and corporate governance continues to improve. At the same time, GCC governments are doubling down on hospitality, real estate, healthcare, and digitalization. Importantly, these changes are occurring against a backdrop where current oil prices largely stay the same, underscoring our view that sound policy implementation — not higher commodity prices — holds the key to success, including attracting more foreign capital into the region.

2. The labor force in the region is changing – and for the better, but more can be done. Already, more women are joining the workforce, which is a tailwind. Consider that Saudi Arabia has driven a remarkable rise in women entering the workforce — from 18% in 2010 to 36% now, and likely to reach 40% ahead of 2030; however, there is also a need for more local worker training (and retraining). That said, during this transition period locals do have more access to high quality healthcare, Internet, and impressive public transportation than we see in other growth markets. Overall, we think more policies that encourage broad-based growth in financial services, technology, healthcare, and leisure/travel, for example, should also accelerate some of the positive momentum we believe can be unleashed in the region’s services economy.

3. The infrastructure opportunity is especially noteworthy, driven by sizable investment plans that will be needed to hit national strategic and economic goals across the region. We see upside across diversified PPPs, the energy transition, the digital economy, and broader corporate infrastructure, each strong areas for foreign capital deployment. In particular, low energy costs and ample land make this region appealing for the digital transformation we are seeing across key industries, including the reshaping of financial services as parts of the sector decentralize. Artificial intelligence is also a centerpiece of government leadership, a backing that we believe has already begun to pay handsome dividends.

4. However, more work is needed to attract foreign capital into the liquid capital markets. We believe more focus on improving external shareholder returns as well as offering securities and indices that are reflective of the region’s improving GDP-per-capita could significantly boost capital flows into the GCC states (Exhibit 1). Ultimately, we think these types of initiatives will be required to move investor mentality from valuing equities off dividend yields to price-to-earnings ratios.

5. On the private side, however, we believe the story is compelling for those who are willing to create a domestic presence as well as leverage their global footprint. Local national champions want foreign capital and their operational expertise to expand abroad, but — more importantly — they also want more foreign capital to help ‘right-size’ and improve existing local businesses as well as to increase investment behind rising GDP-per-capita stories. As such, we continue to believe the opportunity for global players with a local presence, particularly in Asset-Based Finance, Structured Credit Solutions, and Preferred Equity, is quite compelling. The reality is that the region has many attractive ‘hard assets’ with contracted revenue streams where traditional securitization technology can both unlock value for owners and expand the potential market for allocators of capital beyond what currently exists in the region, we believe.

Importantly, our latest trip only confirms our central thesis laid out earlier in March 2025 (see Thoughts From the Road: Europe and the Middle East) that the GCC region has transformed itself from ‘just’ a fundraising hub for global investors to one of domestic opportunity for global investors, especially on the infrastructure side. The region boasts strong structural GDP growth, liberalizing capital markets, and economic diversification. A pro-business philosophy, competitive taxes, low government leverage, and compelling demographics all serve as positive macro tailwinds for investors as well as companies targeting new markets for growth. Overall, our base view is that this region is potentially on track to challenge existing financial hubs, especially on the human talent front, such as Hong Kong, London, Dublin, and Singapore.

EXHIBIT 1: We Think Broadening of GCC Capital Markets Sectoral Composition May Be Warranted

Sector Weights %: GCC vs. U.S. vs. India