Historic political shake-up of region encouraging financiers

Ceasefire expected to take pressure off Israel's finances

Major funds increasing positions in Egypt

Hopes for resolution of Lebanon's crisis driving up its bonds

(Recasts heading, wiki.vifm.info includes emergency Arab summit in paragraph 8)

By Marc Jones and Steven Scheer

LONDON/JERUSALEM, Feb 9 (Reuters) - A historic shake-up of the Middle East is beginning to draw international investors, warming to the prospects of relative peace and historydb.date financial healing after a lot chaos.

President Donald Trump's proposal that the U.S. take over Gaza might have thrown a curveball into the mix, however the vulnerable ceasefire in the Israel-Hamas war, Bashar al-Assad's ouster from Syria, a weakened Iran and a new government in Lebanon have fed hopes of a reset.

Egypt, the region's most populous country and a key mediator in the current peace talks, has actually simply handled its first dollar financial obligation sale in four years. Not too long ago it was facing economic crisis.

Investors have actually started purchasing up Israel's bonds again, and those of Lebanon, betting that Beirut can lastly begin repairing its linked political, financial and financial crises.

"The last couple of months have quite reshaped the area and embeded in play a really different dynamic in a best-case scenario," Charlie Robertson, a veteran emerging market analyst at FIM Partners, said.

The question is whether Trump's prepare for Gaza inflames tensions again, he included.

Trump's call to "clean up out" Gaza and develop a "Riviera of the Middle East" in the enclave was consulted with global condemnation.

Responding to the uproar, Egypt said on Sunday it would host an emergency Arab top on February 27 to discuss what it explained as "major" advancements for Palestinians.

Credit score company S&P Global has actually indicated it will get rid of Israel's downgrade warning if the ceasefire lasts. It acknowledges the intricacies, however it is a welcome possibility as Israel readies its first significant debt sale because the truce was signed.

(UN)PREDICTABILITY

Michael Fertik, dokuwiki.stream a U.S. venture capitalist and loft.awardspace.info CEO of expert system company Modelcode.ai, said the easing of stress had actually contributed to his decision to open an Israeli subsidiary.

He is excited to work with knowledgeable local software application developers, but geopolitics have actually been an aspect too.

"With Trump in the White House, no one questions the United States has Israel ´ s back in a fight," he said, explaining how it provided predictability even if the war re-ignites.

Having mainly remained away when Israel increase costs on the war, bond investors are likewise starting to come back, main bank information programs.

Economy Minister Nir Barkat informed Reuters in an interview last month that he will be looking for a more generous spending plan concentrating on "strong financial development."

The snag for stock financiers however, is that Israel was among the finest carrying out markets worldwide in the 18 months after the October 7, 2023 attacks. Since the ceasefire - which has accompanied a large U.S. tech selloff - it has actually remained in retreat.

"During 2024, I believe we learned that the market is not really afraid of the war however rather the internal political dispute and tensions," said Sabina Levy, head of research at Leader Capital Markets in Tel Aviv.

And if the ceasefire buckles? "It is affordable to presume a negative reaction."

Some investors have actually currently responded severely to Trump's surprise Gaza relocation.

Yerlan Syzdykov, head of emerging markets at Europe's most significant possession supervisor Amundi, said his firm had bought up Egypt's bonds after the ceasefire offer, but Trump's strategy - which foresees Cairo and Jordan accepting 2 million Palestinian refugees - has actually changed that.

Both countries have actually baulked at Trump's concept however the risk is, Syzdykov explained, that the U.S. president utilizes Egypt's dependence on bilateral and IMF support to attempt to strong arm the country given its current brush with a crisis.

Reducing the attacks by Yemen's Houthi fighters on ships in the Red Sea likewise remains essential. The country lost $7 billion - more than 60% - of its Suez Canal incomes in 2015 as carriers diverted around Africa rather than threat ambush.

"Markets are unlikely to like the idea of Egypt losing such (bilateral and multilateral) assistance, and we are taking a more careful stance to see how these settlements will unfold," Syzdykov said.

REBUILD AND RESTRUCTURE

Others anticipate the restoring of bombed homes and infrastructure in Syria and elsewhere to be an opportunity for Turkey's heavyweight construction companies.

Trump's Middle East envoy, Steve Witkoff, has said it might take 10 to 15 years to rebuild Gaza. The World Bank, meanwhile, puts Lebanon's damage at $8.5 billion, roughly 35% of its GDP.

Beirut's default-stricken bonds more than doubled in price when it became clear in September that Hezbollah's grip in Lebanon was being damaged and have continued to rise on hopes the nation's crisis is dealt with.

Lebanon's new President Michel Aoun's first state go to will be to Saudi Arabia, a country viewed as a prospective essential advocate, and one that likely sees this as an opportunity to further eliminate Lebanon from Iran's sphere of impact.

Bondholders say there have been initial contacts with the new authorities too.

"Lebanon might be a big story in 2025 if we make development towards a financial obligation restructuring," Magda Branet, head of emerging markets repaired earnings at AXA Investment Managers, said.

"It is not going to be easy" though she included, provided the country's performance history, the $45 billion of debt that requires reworking and that Lebanese savers could see a few of their cash taken by the government as part of the plan.

(Reporting by Marc Jones and sincansaglik.com Steve Scheer; Editing by Sharon Singleton and William Mallard)