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Sunday, 6 September 2009

Foreign investors return to Pakistan

Pakistan has “come a long way from the end of last year when we were basically looking at a default [on foreign debt payments]”, according to finance minister Shaukat Tarin.

It seems foreign investors agree with his assessment, returning in force to the Karachi stock exchange (KSE), Pakistan’s main stock market, just 18 months after many chose to exit in the midst of economic, political and security related turmoil.

In August, foreign equity investments rose to approximately $95m (£58m, €66.4m), a higher monthly average than the $85m a month seen in 2007 when the KSE figured prominently as a destination for foreign investors. Investor enthusiasm has been strengthened by the KSE recently becoming the most undervalued market across Asia.

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Asian investors eye big Zain stake

Zain GroupImage via Wikipedia

A group of Asian investors that is in the final stages of buying a 46 percent stake in Kuwaiti telecom firm Zain has offered 2 dinars ($6.96) a share, Al- Arabiya television reported on Sunday.

Al-Arabia did not give a source for the information.

When asked to confirm whether shareholders were in talks to sell a stake in Zain, Chief Executive Officer Saad al Barrak said "Yes."

Zain shares closed up 5.41 percent at 1.56 dinars on Sunday.END

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Batelco weighs $2 bln S. Africa buy

Bahrain Telecommunications (Batelco) is studying an acquisition in North Africa of up to $2 billion, its chief executive said in remarks published on Sunday.

The Al-Watan newspaper cited Batelco's chief executive, Peter Kaliaropoulos, saying the telecoms operator expected to announce the deal before the end of the year, without providing further details.

A spokeswoman for the company had no immediate comment on the report.

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$400m skyscraper goes ahead, is Dubai nuts? (Re-post)

News that the $400 million Pentominium skyscraper contract has been awarded in Dubai dominates the headlines today.

Privately held Trident Holdings has secured the backing of the state-owned Islamic bank Noor to build what will be the tallest residential building in the world in the Dubai Marina, with completion in 48 months.

Each apartment will take one or half a floor of the 120-storey skyscraper that will soar 618 metres above Dubai. Trident is an international property developer originally from Hong Kong and has delivered four out of six towers already announced, with the fifth on schedule for delivery by the end of 2010.

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Kuwait to retain Merrill, Citi stake

Kuwait has no intention to sell its investments in U.S. banks Merrill Lynch and Citigroup, in the short term, its sovereign wealth fund said in a report published on Sunday.

"The Kuwait Investment Authority (KIA) has no intention to sell its investments in Merrill Lynch or Citigroup in the short term, as the authority relies in its investment policies on a long-term look," KIA said in a statement obtained by daily al-Rai and published on Sunday.

Kuwait's sovereign wealth fund, which manages state assets in the world's fourth-biggest oil exporter, has come under fire from some parliamentarians for investing $5 billion in Citigroup and Merrill Lynch. Merrill has since been bought by Bank of America.

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NBK's new fund to give 6.25% returns

The National Bank of Kuwait (NBK) announced yesterday the launch of its "Islamic KD Ijara Fund II", which will offer 6.25 per cent to investors throughout the fund's term.

The fund is the 18th edition of the Islamic Ijara funds and the second from the Kuwaiti Dinar series.

The bank said the second edition follows the launch of the overwhelming success of the first edition, which was launched in June and was fully subscribed. NBK Capital's Managing Director of Asset Management, Nabil Maroof, said the fund provides reliable monthly returns and relatively low risk.

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'Financial system needs liquidity'

The UAE government should pump liquidity into the financial system on a regular basis in the next two years to bolster the economy, a leading banker told Gulf News.

Adnan Ahmad Yousuf, President and CEO of Albaraka Banking Group and the head of Arab Banks Union, said: "I think the economic situation will improve this year. However, if the government fails to inject regular doses of capital into the financial system, the situation will be critical by 2010-11.

Yousuf said: "The UAE Central Bank's initiative of pumping a large volume of capital into the financial system has been the best in the GCC, but the economic downturn will not end without the persistent support of the government in ensuring the flow of liquidity into the market."

Also see http://rupertbumfrey.blogspot.com/2009/09/industry-chief-urges-central-banks-to.html
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Rating agencies must sharpen up (Editorial)

Credit rating agencies - which give their opinions on companies and investment instruments, helping rated institutions seek better deals in securing debt and investment - need to get their act together if they are to regain investor confidence.

They have been accused, on a number of occasions, of giving inflated ratings on risky debt instruments as well as on financial institutions, helping these institutions secure credit against risky mortgages. This trend has damaged the reputation of some rating agencies.

A US district judge on Wednesday rejected efforts by Moody's Investors Service and Standard and Poor's to seek dismissal of a fraud lawsuit. Abu Dhabi Commercial Bank (ADCB) last year filed a class action suit against the agencies, accusing them of issuing false and misleading statements about notes backed by subprime mortgages and other debts. ADCB last year had to make provision for losses to the tune of nearly half a billion dirhams as a result of purchasing the notes.

Negligence on the part of ratings agencies could have catastrophic consequences for financial institutions. There is an obvious need for increased regulation.END

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Industry chief urges central banks to share information

GCC central banks should exchange more information on borrowers to prevent alleged fraud cases such as those involving the two Saudi conglomerates Saad and Al Gosaibi, according to the chairman of the Union of Arab Banks. But Adnan Yousif reassured bankers that their defaults could be contained, and posed no real threat to banking in the Gulf.

“We should have a system within the GCC countries to enable banks to know the debt size of any borrower,” said Mr Yousif, who is also the president and chief executive of Al Baraka Bank, Bahrain’s largest Islamic bank by market value.

“We already have that information of individuals and corporations. We should encourage central banks to start exchanging that information [on borrowers].”

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Easy oil is never far from the cutting edge

Fly out by helicopter 300 kilometres over the Gulf of Mexico. The water here is more than a kilometre deep, and hurricanes like 2005’s Katrina sweep through every year. Now drill an exploration well costing some US$100 million (Dh367m), through sand and shifting layers of salt. The well, one of the deepest ever, goes further beneath the seabed than Mount Everest is tall. The temperature underground is 120°C, and pressures are extreme. That is BP’s latest giant oil discovery, made last Wednesday: Tiber, the new frontier of oil exploration in US waters.

Tiber is reported to hold some 4 to 6 billion barrels of oil equivalent, of which a third or more might be recoverable. That makes it bigger than BP’s nearby find from 2006, Kaskida, with 3 billion barrels, and adds very substantially to the company’s existing reserves of 18 billion barrels.

These are not the only finds in the Gulf of Mexico’s “Lower Tertiary” province. Chevron, Shell, ConocoPhillips and other big oil players are also active there, with a string of colourfully named finds including Great White, Tiger and Trident. As yet, none of these fields has begun production, but the first Lower Tertiary oil, from developments by Shell and the Brazilian state oil giant Petrobras, is due next year.

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Allegation of $400m Ponzi fraud leads to arrest in Lebanon

Investors in the Gulf may have lost hundreds of millions of dollars after the bankruptcy and arrest of a Lebanese businessman who was prominent in that country’s Shia community.

Salah Ezzedine, who ran a publishing house in Beirut’s southern Shia suburb and also owned a travel agency for pilgrims to Mecca, is alleged to have run a Bernard Madoff-style Ponzi scheme, according to an official at Lebanon’s central bank.

The official estimated the total amount of money lost in the scheme at about US$400 million (Dh1.47 billion), with half of that coming from investors in the Gulf, including Qatar and Kuwait, and the rest from investors in Lebanon.

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Developer faces fraud charge

The chief executive of Lake View Real Estate, the property developer behind a five-tower project in Ajman, has been arrested on suspicion of fraud, Dubai Police have confirmed.

Up to 30 investors in the project in Emirates City, Ajman, lodged police complaints against AQ, an Indian national, claiming to have lost track of him at the beginning of the year, when work on the towers apparently came to a virtual stop. AQ was arrested on August 24 at the Rifaa police station in Dubai after a criminal case was filed against him.

“This person has been transferred to the Central jail,” said a source at the Rifaa station, who also confirmed the case number.

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Political wrangling delays Iraq gas deal

Political opposition to a gas venture between the Iraqi government, Royal Dutch Shell and Mitsubishi may delay its finalisation until after national elections in January, a senior oil official said on Saturday.

Deputy Oil Minister Ahmed al-Shamma, stressing he spoke for himself rather than the Iraqi Oil Ministry, said he expected the project in southern Iraq would be not be signed until after the Jan. 16 elections in which Iraq will select a new parliament.

"In the current climate, signing the deal and making a decision is very difficult ... essentially because there is strong opposition, used by politicians for other reasons not related to gas and investment in gas for political objectives."

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British Airways in talks to land BMI British Midland

British Airways is considering a possible bid for BMI British Midland, in a move that would increase its dominance of flights in and out of Heathrow airport.

Tentative discussions are believed to have taken place between Martin Broughton, BA’s chairman, and BMI’s German owner Lufthansa. Broughton flew to Germany last week with Roger Maynard, BA’s director of investments and alliances.

Virgin Atlantic and Etihad Airways, the United Arab Emirates airline, are also believed to be examining a possible offer. Any deal with Lufthansa is viewed as secondary to BA’s continuing merger talks with Spanish rival Iberia. Broughton is due to fly to Madrid this week.

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