Zahir Z Khan

Saudi valuation dispersion is high: headline TASI sits ~20x P/E, but excluding conv. banks, chemicals, Aramco & ACWA it jumps to ~24x—about 4–5 turns (+~23%). That premium remains well above GCC (~16x) and EM (~17x), while Dubai/Qatar screen cheaper (~11–12x) and Abu Dhabi is ~21x. Bottom line: index mix drives the optics .stock selection matters more than market beta. #Saudi #GCC #EM #Valuations #Equities #StockPicking (Source: Bloomberg)

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KKR is making strong progress toward its $20 billion fundraising target for its latest North America buyout fund, having already secured $14 billion ahead of its first close. This signals strong investor demand despite a challenging environment for private equity. While higher interest rates have slowed dealmaking, KKR’s 14% private equity returns over the past year and its strategic approach—such as long-term investments through its strategic holdings unit—are setting it apart from peers. The firm is also leveraging global capital sources, including investors from the Middle East and Asia, to sustain momentum. KKR’s success highlights that high-quality managers with strong track records are still attracting capital, particularly as investors seek resilient, long-term opportunities. The firm’s ability to continue raising and deploying capital suggests the fundraising environment is stabilizing, with increasing optimism for 2025 as exits improve.

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Interesting to see Abu Dhabi Investment Authority (ADIA) shifting its private equity strategy towards secondaries and carve-outs. In a market where exits are harder to come by and fundraising feels tighter, this kind of move says a lot. They’ve been deploying meaningful capital into attractively priced LP portfolios, often alongside GPs — a smart way to get exposure without waiting years for deployment. The focus on take-privates and carve-outs also feels very 2025: complexity + control = value, if you’ve got the infrastructure to handle it. https://lnkd.in/eewPVmmM

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The strong December jobs report fueled talk of re-acceleration, especially for inflation. The resulting rise in bond yields has brought back talk of bond vigilantes. Such developments are not surprising, but likely to be proven false. The underlying trends for the economy paint a more sanguine picture. Yes, the jobs report was strong, but one shouldn't read too much into any one report. Data quality has deteriorated post-pandemic due to lower response rates, distorted seasonal adjustment factors, and large subsequent revisions, all of which weaken the signal-to-noise ratio for the data release. The 6-month rolling average of job growth, a reasonable proxy for the underlying trend, shows gradual cooling over the past two years. Similar trend analysis of inflation produces the same conclusion.  Interest rates react strongly to the latest data, but they should also weigh the trends. Market pricing for the neutral fed funds rate has fluctuated widely over the past two years, and in the past four months has ranged from 3.15% on September 16 when the Fed cut rates 50bps to 4.23% on Friday. Such volatility belies the notion of a neutral rate that should not be sensitive to the cycle. It also indicates that investors have low conviction on the true state of the economy if market pricing moves that much on just a few data points. The average market-implied neutral rate over the past year of 3.67% might be a better signal than the current spot rate of 4.23%. Just because investors should focus more on the trends in the economy than the latest noisy data point doesn’t mean that they will. For that reason, expect markets to be volatile and range-bound as investors react to incoming data and Trump 2.0 policy news. The bottom line: Markets are off to a choppy start this year, but there hasn’t been any fundamentally negative economic news. Instead, the underlying trends remain favorable. That may not matter much in the near term because of policy and inflation uncertainty keeping investors on edge. Read the report for all the details.  

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“The Middle East is polarised – home to both large players and an increasing number of smaller new funds”. Ahead of the Hedge Funds Club event in Dubai on 1st October, Mazen Najjar, VP of prime services sales at Marex, shares insights for fund managers seeking to raise funds or set up in the region. https://lnkd.in/gKdyVDKd

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