Arqaam Capital closing South Africa office after five years

Dubai-based investment bank says it is ceasing research coverage in South Africa.

Arqaam Capital, the Dubai-based investment bank focusing on emerging markets, is closing its South African office, according to Bloomberg.

The company, which opened an office in Johannesburg in 2014, said in a note to clients on Monday that it was ceasing research coverage in South Africa. Clients haven’t yet been informed that the office, which employs about 17 people, is closing, a source told Bloomberg, declining to be identified because an official notification on that hasn’t been sent out.

Arqaam’s closing follows an announcement by Macquarie Group in October that it’s shutting its cash-equities business in South Africa this year and a significant reduction in the South African staffing of Deutsche Bank AG. Credit Suisse Group AG reduced its presence in the country last year.

Profit margins for equity trading companies that offer research have been squeezed in SA and other markets by the cost of markets in financial instruments directive (MIFid) II regulations, the growth in passive investing and a fall in trading volumes.

 MiFID II is a regulatory intervention that among other things, requires fund managers to be charged separately for the research and trading services offered by banks and brokers.

It also comes amid an economy that is struggling to expand, with GDP shrinking for a second quarter this year in the three months to end-September.