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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, adds emergency situation Arab top 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 global investors, warming to the prospects of relative peace and economic recovery after so much chaos.

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

Egypt, the region's most populated nation and a key negotiator in the recent peace talks, has actually just managed its first dollar financial obligation sale in four years. Not too long ago it was dealing with financial meltdown.

Investors have 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 an extremely different dynamic in a best-case situation," Charlie Robertson, a veteran emerging market analyst at FIM Partners, said.

The concern is whether Trump's strategy for Gaza irritates stress again, he included.

Trump's call to "clean out" Gaza and create a "Riviera of the Middle East" in the enclave was met with international 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 "severe" advancements for Palestinians.

Credit ranking firm S&P Global has indicated it will eliminate Israel's downgrade caution if the ceasefire lasts. It acknowledges the complexities, but it is a welcome possibility as Israel readies its very first significant debt sale considering that the truce was signed.

(UN)PREDICTABILITY

Michael Fertik, a U.S. investor and CEO of synthetic intelligence firm Modelcode.ai, said the easing of tensions had contributed to his decision to open an Israeli subsidiary.

He is excited to employ proficient regional software programmers, but geopolitics have been a factor too.

"With Trump in the White House, nobody 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 also beginning to come back, main bank information shows.

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

The snag for stock investors though, 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 actually accompanied a sizable U.S. tech selloff - it has actually remained in retreat.

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

And if the ceasefire buckles? "It is reasonable to assume a negative reaction."

Some financiers have actually already reacted terribly to Trump's surprise Gaza relocation.

Yerlan Syzdykov, wikitravel.org head of emerging markets at Europe's biggest property manager Amundi, said his company had purchased up Egypt's bonds after the ceasefire offer, but Trump's plan - which predicts Cairo and Jordan accepting 2 million Palestinian refugees - has actually altered that.

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

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

"Markets are not likely to like the concept of Egypt losing such (bilateral and multilateral) assistance, and we are taking a more mindful position to see how these settlements will unfold," Syzdykov said.

REBUILD AND RESTRUCTURE

Others expect the restoring of bombed homes and facilities in Syria and somewhere else to be a chance for Turkey's heavyweight building companies.

Trump's Middle East envoy, Steve Witkoff, has said it might take 10 to 15 years to rebuild Gaza. The World Bank, vmeste-so-vsemi.ru meanwhile, puts Lebanon's damage at $8.5 billion, 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 deteriorated and have continued to increase on hopes the nation's crisis is dealt with.

Lebanon's brand-new President Michel Aoun's very first state check out will be to Saudi Arabia, a nation seen as a potential crucial supporter, and one that likely sees this as an opportunity to further remove Lebanon from Iran's sphere of impact.

Bondholders state there have actually been preliminary contacts with the new authorities too.

"Lebanon might 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 simple" though she added, provided the country's track record, the $45 billion of debt that needs reworking which Lebanese savers might see a few of their money taken by the government as part of the plan.

(Reporting by Marc Jones and Steve Scheer