Historic political shake-up of area motivating investors

Ceasefire expected to take pressure off Israel's financial resources

Major funds increasing positions in Egypt

Expects resolution of Lebanon's crisis driving up its bonds

(Recasts headline, adds emergency Arab top in paragraph 8)

By Marc Jones and Steven Scheer

LONDON/JERUSALEM, Feb 9 (Reuters) - A of the Middle East is beginning to draw international financiers, warming to the prospects of relative peace and economic recovery after a lot chaos.

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

Egypt, the region's most populated country and a key arbitrator in the recent peace talks, has actually simply managed its first dollar financial obligation sale in four years. Not too long ago it was facing financial meltdown.

Investors have started buying up Israel's bonds again, and those of Lebanon, betting that Beirut can finally start repairing its intertwined political, economic and financial crises.

"The last couple of months have very much improved the region and set in play an extremely different dynamic in a best-case circumstance," Charlie Robertson, a veteran emerging market analyst at FIM Partners, said.

The question is whether Trump's prepare for Gaza irritates tensions again, he added.

Trump's call to "clear out" Gaza and create a "Riviera of the Middle East" in the enclave was met with worldwide condemnation.

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

Credit ranking agency S&P Global has actually signalled it will remove Israel's downgrade warning if the ceasefire lasts. It acknowledges the complexities, but it is a welcome possibility as Israel prepares its very first significant debt sale because the truce was signed.

(UN)PREDICTABILITY

Michael Fertik, a U.S. investor and CEO of artificial intelligence company Modelcode.ai, said the easing of stress had actually contributed to his decision to open an Israeli subsidiary.

He aspires to hire competent local software application developers, however geopolitics have actually been a factor too.

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

Having mainly remained away when Israel ramped up spending on the war, bond investors are likewise starting to come back, main bank information shows.

Economy Minister Nir Barkat told Reuters in an interview last month that he will be seeking a more generous spending plan concentrating on "strong economic growth."

The snag for stock investors however, is that Israel was among the best performing markets in the world in the 18 months after the October 7, 2023 attacks. Since the ceasefire - which has actually coincided with a sizable U.S. tech selloff - it has actually remained in retreat.

"During 2024, I believe we found out that the market is not truly afraid of the war but rather the internal political conflict and tensions," said Sabina Levy, head of research study at Leader Capital Markets in Tel Aviv.

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

Some financiers have actually currently reacted badly to Trump's surprise Gaza relocation.

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

Both countries have actually baulked at Trump's idea however the danger is, Syzdykov explained, that the U.S. president utilizes Egypt's dependence on bilateral and IMF support to attempt to strong arm the country offered its recent brush with a full-blown financial crisis.

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

"Markets are unlikely to like the concept of Egypt losing such (bilateral and multilateral) assistance, and we are taking a more cautious position to see how these negotiations will unfold," Syzdykov said.

REBUILD AND RESTRUCTURE

Others anticipate the rebuilding of bombed homes and facilities in Syria and elsewhere to be a chance for Turkey's heavyweight construction firms.

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, approximately 35% of its GDP.

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

Lebanon's new President Michel Aoun's first state see will be to Saudi Arabia, a country seen as a possible key supporter, and one that likely sees this as a chance to further eliminate Lebanon from Iran's sphere of influence.

Bondholders state there have actually been initial contacts with the brand-new authorities too.

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

"It is not going to be easy" though she added, mariskamast.net given the nation's performance history, the $45 billion of financial obligation that needs reworking which Lebanese savers might see a few of their cash seized by the government as part of the plan.

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