Lebanese need restraint in face of provocations



Lebanese are used to foreign meddling in their politics. Some might say, Lebanese politics are defined by it. But not since the 2006 war with Israel and the 2005 assassination of former prime minister Rafiq Hariri have more powerful neighbours threatened the country's stability so much.

Syria's troubles were always going to spill over into Lebanon given the complex overlap of kinship and communal ties. Is is perhaps surprising that the country stayed relatively peaceful for so long as Syria spiralled out of the Assads' control.

That is a cold comfort as the past week in Lebanon has seen the worst violence yet. At least 13 have been killed, and more than 70 injured, in recent fighting in Tripoli. Local politicians' attempts to negotiate a ceasefire between Alawite and Sunni neighbourhoods in the northern city were marred yesterday as sniper fire continued to terrorise the streets.

The Lebanese army has deployed across Tripoli to enforce the ceasefire, but its ability to force the combatants to stand down is in doubt.

Part of Lebanon's fragility comes from the indisputable fact that the state is not the only - or indeed the strongest - military power in the country. Hizbollah keeps a leash on its powerful militia, and will probably continue to do so, but it is a reminder of why Lebanese politicians need to do everything they can to prevent the violence from spreading.

There is credible evidence that Syria's regime is deliberately trying to pull its smaller neighbour in. Former MP Michel Samaha was arrested earlier this month on charges of planning a string of bombing attacks, in coordination with Syria's security bureau. The Shia Meqdad clan still holds Syrian and Turkish hostages in Beirut, demanding a family member's release in Syria.

The government has an unenviable task here, facing serious national security challenges while negotiating its own factional loyalties. Prime Minister Najib Mikati's administration - notably undistinguished since it took office in June 2011 - has done well striking a neutral tone throughout the crisis, despite Mr Mikati's links to what was once a formidable pro-Syrian camp.

In the past two days, Mr Mikati has reassured Lebanon that he will remain in office at least until an emergency government is formed. The last thing the country needs is a political vacuum. So far, most parties have adopted a cautious approach. It is in everybody's interest for the politicians to keep talking to prevent the violence on the streets from spreading.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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