DUBAI-BASED INVESTMENT BANK EXITS SOUTH AFRICA

ARQAAM Capital is closing its South African office, a person familiar with the situation said, as the Dubai-based investment bank joins other brokers paring-back operations in the continent’s financial-markets hub. The company, which opened an office in Johannesburg in 2014, said on Monday that it was ceasing research coverage in South Africa, according to a note to clients. Customers haven’t yet been informed that the office, which employs about 17 people, is closing. Profit margins for equity trading companies that offer research have been squeezed in South Africa and other markets by the cost of MIFid II regulations, the growth in passive investing and a fall in trading volumes. It also comes amid an economy that is struggling to expand, with gross domestic product shrinking for a second quarter this year in the three months to September. The shutdown by Arqaam, which focuses on emerging markets, follows an announcement by Macquarie Group in October that it is closing its cash-equities business in South Africa. Deutsche Bank’s South African unit has made significant job cuts, while Credit Suisse Group has also reduced its presence in the country. “It’s a tough environment,” said Peter Koutromanos, the chief executive of Avior Capital Markets. The reduction in research coverage “is bad for transparency,” he said. “It’s bad for liquidity and price discovery.” A call to Arqaam’s corporate communications office in Dubai, where it was a public holiday yesterday, wasn’t answered.