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Historic political shake-up of area encouraging investors

Ceasefire expected to take pressure off Israel's finances

Major funds increasing positions in Egypt

Expects resolution of Lebanon's crisis driving up its bonds

(Recasts heading, adds emergency situation Arab summit in paragraph 8)

By Marc Jones and Steven Scheer

LONDON/JERUSALEM, Feb 9 (Reuters) - A historical shake-up of the Middle East is beginning to draw global 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 might have thrown 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 actually fed hopes of a reset.

Egypt, the area's most populated country and a key negotiator in the current peace talks, has simply handled its very first dollar debt sale in 4 years. Not too long ago it was facing financial meltdown.

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

"The last couple of months have extremely much reshaped the area and set 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 inflames tensions again, he added.

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

Responding to the outcry, Egypt said on Sunday it would host an emergency Arab top on February 27 to discuss what it explained as "serious" developments for wiki.snooze-hotelsoftware.de Palestinians.

Credit rating company S&P Global has indicated it will remove Israel's downgrade caution if the ceasefire lasts. It acknowledges the complexities, however it is a welcome possibility as Israel prepares its very first significant debt sale considering that the truce was signed.

(UN)PREDICTABILITY

Michael Fertik, a U.S. endeavor capitalist and CEO of expert system firm Modelcode.ai, said the easing of tensions had added to his decision to open an Israeli subsidiary.

He aspires to hire experienced regional software programmers, however geopolitics have actually been an aspect too.

"With Trump in the White House, no one doubts the United States has Israel ´ s back in a fight," 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 starting 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 package focusing on "bold economic development."

The snag for stock investors however, is that Israel was among the very best carrying out markets on the planet 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 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 stress," said Sabina Levy, photorum.eclat-mauve.fr head of research at Leader Capital Markets in Tel Aviv.

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

Some financiers have actually currently responded terribly to Trump's surprise Gaza move.

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

Both nations have baulked at Trump's concept however the danger is, Syzdykov explained, that the U.S. president utilizes Egypt's reliance on bilateral and IMF support to try to strong arm the nation offered its recent brush with a full-blown recession.

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 earnings last year as shippers diverted around Africa instead of threat 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 anticipate the rebuilding of bombed homes and facilities in Syria and somewhere else 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 reconstruct 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 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 addressed.

Lebanon's new President Michel Aoun's first state see will be to Saudi Arabia, a nation seen as a prospective key fan, and one that most likely sees this as a chance to further remove Lebanon from Iran's sphere of impact.

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

"Lebanon could be a big story in 2025 if we make development towards a debt restructuring," Magda Branet, head of emerging markets repaired income 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 and that Lebanese savers could see some of their money taken by the government as part of the plan.

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