“Investors Closely Watching UAE and Qatar for Potential MSCI Upgrade”

In a matter of hours, Morgan Stanley Capital International will decide whether the United Arab Emirates and Qatar will be upgraded from frontier market to emerging market status, and release the potential for a massive increase in foreign capital flows into these two countries. The Morgan Stanley Capital International (MSCI) Emerging Markets Index measures equity market performance in global emerging markets. At the moment, 21 countries are in the index.

The excitement coming from the possibility of a MSCI upgrade can be felt around the globe. There is a hush amongst the global audience - an upgrade to “emerging market status” would place Qatar and the UAE to the level of countries such as India, China and Russia. This would put them on the radar for large global emerging market investment funds. There is a potential that it would have a positive impact on investment flows into other GCC markets.

The early word from analysts is that caps on foreign ownership would crush growing ambitions. "The stringent foreign ownership limits in both countries,” according to Andrea Nannini, a HSBC fund manager, “remain a major obstacle for the upgrade--in particular in the case of Qatar.” Those who believe that an upgrade is imminent refer to initiatives such as DvP, or “delivery versus payment,” that was demanded by MSCI and supported and accepted by both markets. Critics point to issues such as fragmented markets, low trading volumes, and continuing limits on foreign ownership of companies as deterrents. With many analysts and investors watching and tracking emerging markets, an upgrade to emerging status would be essential to boosting liquidity and attracting investors to the region's stock markets.

Clearly, analysts are divided on the benefits of an upgrade. Some predict an increase in inflows of USD360 million for Qatar and about USD230 million for the UAE. Others worry that these inflows will feed asset-price bubbles in these markets. Regardless, this MSCI assessment will be one of the “must watch” events of the financial markets this week. We look forward to hearing your views on this subject.

“One Small Step for The Isle of Man, One Large Step in the Next Space Race”

If you were to take a poll on the street of the next likely nation to put a man on the Moon, which names do you believe you’d hear? The United States would be on the list of course, even with cuts to the Space budget and a neutering of NASA, the US is still the crowd favorite. China would most likely be a close second, as it is pretty common knowledge at this point that you can’t speak of leadership in anything in the future without mentioning China. And those who grew up with memories of the James Bond-era eye patch wearing, chain-smoking, Capitalism-hating Soviet stereotype would certainly suggest the Russian Federation. (This author is now missing the 80s) Take into consideration the group of BRIC nations, those up and coming countries known as the emerging markets (India, Brazil, etc.), and you could easily name a fourth. But how many times do you think people would mention the dark horse of the next century’s Space Race – The Isle Of Man???  

A few more than you might think, actually. This small island has been steadily creating big buzz in the industries of space exploration and interstellar tourism, and is currently looking like the frontrunner amongst European nations – even ahead of its neighbor and age-old benefactor the United Kingdom. Located in the Irish Sea within the British Isles between Great Britain and Ireland, the Isle of Man encompasses just over 220 square miles (572 square kilometers) and is home to an estimated 80,085 inhabitants, of whom just over 26,000 live in the island’s capital, Douglas. However, regardless of its size, The Isle of Man has had a disproportionate amount of success and impact on the global space industry as a whole. In a recent benchmarking report published by US research firm Futron Corporation, it is revealed that the Isle of Man government has played a key role in shaping the island’s niche in the space industry. “The Isle of Man’s unique approach to space activity allows it to punch above its weight in terms of global visibility in the space industry. The Isle has proactively created an innovative niche as a global provider of financial services and administrative services that support global space commerce. The maturity of space-related finance activities in the Isle, and the government’s approach to facilitating them, are advanced, especially given the relatively short amount of time for which the Isle of Man has been operating in the space industry.”

Fulton’s CEO, Joseph Fuller Jr. further elaborated on what he saw as the key elements of the Isle of Man’s success: "The space industry represents greater $275B (USD) in annual economic activity growing at approximately 9% a year - a rate well above that of the overall economy…their non-traditional strategy for space focuses on financial and corporate services, providing a fascinating model to foster hi-tech economic activities. I imagine other nations and jurisdictions will look to the Isle to replicate its success.” It probably doesn’t hurt that the Isle of Man offers one of the most business-friendly economic environments around – there is no capital gains tax, no wealth tax, no stamp tax, no inheritance tax, and income tax is capped at 20%. And let’s not forget that the corporate tax is 0%, unless you are a bank…then you are hit with a hefty 10% corporate tax. That’s certainly a welcoming place for foreign investors.

Foreign investors are not the only ones making their way to the Isle, as in July of this year NASA astronauts who crewed the final mission of the space shuttle Discovery will be on the Isle for 6 days. Coordinated by NASA and ManSat, the Isle’s government space industry consulting partner, the astronauts led by American astronaut Nicole Scott will meet with the island’s inhabitants and space exploration representatives. Considering that this is following the arrival of research space stations on the island in January, it’s not fully inconceivable to think that the next man on the Moon might actually be, The Isle of Man.

“Fixing Our Ailing Healthcare System – Private Equity, M&A To The Rescue?”

          Obama's passage of healthcare reform was not only a boon to those without insurance but will also be for hospitals that previously cared for those patients without any recompense, particularly in the emergency department. We need to look no further than our backyard and see the recent deals by Cerberus Capital Management's affiliate purchasing Caritas Christi for $830M (plus $400M in capital upgrades) and subsequent purchase of several other hospitals in the New England area. If you need further proof just look at Vanguard Health Systems Inc. (2/3 owned by the Blackstone Group) acquisition of Detroit Medical Center for $417M (plus $850M in capital improvements).

          What is it they are seeing that others aren't? Previously non-profit hospital were out of play, no one wanted to go near such a money losing proposition, but with new medical insurance laws coming online these previously pariahs are now being viewed as messiahs. On top of that packages for capital upgrades of substantial size are being attached to these deals indicating these are longer terms deals, not your typical 3-5 year cycle often seen the in private equity world.

          So what is it exactly that organizations like Cerberus Capital Management and Vanguard Health Systems see in these deals? “The fact that these two hospitals, which have struggled over the years and are situated in markets with lower incomes and higher uninsured patients, are targets of takeovers suggests [private companies] are looking at these types of systems as being beneficiaries under the new rules,” said Richard Ciccarone, head of municipal research at McDonnell Investment Management. With 40 million uninsured patients gaining access to insurance we think they are right.

          Going forward it will be necessary to finally tackle the cancer that has plagued our healthcare systems for years and that is cost. With Bush's push for EMR by 2014 we have already seen a surge in interest in healthcare IT organizations but the push for efficiency and cost-cutting in the industry will only accelerate this interest.