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Wednesday, 7 October 2009

'Cash Plus million$ found in Dubai' -

'Cash Plus million$ found in Dubai' -

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Kuwait's Kipco US$500 bond oversubscribed

Kuwait Projects Co., Kipco, the countrys largest non state-owned investment firm, said on Tuesday its seven-year US$500 million benchmark bond drew orders worth US$3.3 billion.

"The bonds carry a fixed rate coupon of 8.875%, and priced at a spread of 608 bps over the US dollar mid-swap curve," the company said in a statement.

BNP Paribas, Goldman Sachs and JP Morgan were arranging the issue.END

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Qatari fund to inject $412 mln in local banks

Qatar Investment Authority, or QIA, the country's sovereign wealth fund, will start early next month implementing procedures to acquire an additional 5% stake in the capital of local banks, Doha-based Asharq daily reports Wednesday.

QIA is expected to inject between 1.5 billion Qatari riyals ($412 million) and QAR2 billion before the end of the current year to acquire the stakes, the paper reports citing people familiar with the matter.

This will bring QIA's stake in local banks to 10% and the move is part of the government's decision last year to acquire between 10% and 20% of banks' capital to help them through the global economic slowdown, the daily says.

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Iran Says It Is Ready for Foreign Investment in Energy Industry

Iran, holder of the world’s second- largest gas reserves, is open to foreign companies investing in its energy sector, the country’s deputy oil minister said.

“Many companies that belong to the government now will become private very soon,” Azizollah Ramazani, deputy Iranian oil minister, said yesterday in an interview in Buenos Aires. “I think the Iranian energy sector in very interesting for foreign companies, including American companies.”

Iran is executing a plan to sell 80 percent of its major state-owned companies to boost the economy and stock values, following a 2006 order by Supreme Leader Ayatollah Ali Khamenei, the country’s highest authority. At least three- quarters of the Iranian economy is controlled by the state.

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Suez Canal Says September Revenue Drops 19% to $382.5 Million

One of the first traverses in the 19th century.Image via Wikipedia

Egypt’s revenue from the Suez Canal declined 19 percent to $382.5 million in September, an official from the Suez Canal Authority said on condition of anonymity because the figure hasn’t been made public yet.

The Suez Canal’s revenue in September the previous year was $469.6 million, the official said.END

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Playing the GCC Trend (Re-post)

October 7, 2009 by Saud

The year is just about to end, research analysts, fund managers and investors are studying their investments and the market to fully capitalize on the stock movements that will result for their year end performance. Now as most of us believe that the gloomy days are over, companies should post relatively good earnings compared to last year; but the question is, how good? This post might interest you if you believe in trend analysis or quants and believe that history does repeat itself. Just for the sake of clarity, I don’t. I like to dig deep in the company’s financials and management to get my answer, then reconfirm it with technicals and other means of analysis. But here it is for those of you who believe in them or just like me want to confirm your view.

This table has a collection of returns from different indices beginning Q1 2003 to Q3 2009. As you might noticed each country had a different trend in their Q4 performance, implying that Q4 is not necessarily the best quarter in terms of return.

Saudi Arabia: Q4 has been the most volatile, meaning that it is either the best or worst performer of the year.

Qatar: Q4 is the least volatile, its either the second best or third best performer.

Kuwait: Q4 is the least favorable, with the performance being the worst or the second to worst.

I know I have been harsh towards our beloved Kuwait SE in my last 2 posts! I’ll explain the details behind this negative outlook in a separate post soon.

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Saudi banks profit down 6.8% in eight months

A severe debt default problem in Saudi Arabia has combined with an economic slowdown and lower credit growth to depress the combined net income of the kingdom's banks by 6.8 per cent in the first eight months of 2009.

Official figures showed the net profits of the Gulf country's 12 commercial banks dipped to about SR21.497 billion (Dh21.28bn) in the first eight months of this year from SR23.060bn in the first eight months of 2008.

The Saudi Arabian Monetary Agency (Sama), the kingdom's Central Bank, gave no reason for the decline but analysts attributed this to slow lending because of waning domestic demand, a general business downturn, stricter lending policy by banks and allocation of large provisions for bad debt as most banks are believed to be exposed to the troubled Saudi Saad and Algosaibi family businesses.

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Government stimulus plan woos back foreign funds

When the global financial tremor jolted key markets and rocked the UAE, foreign investors fled the country with most of their funds. They began to trickle back after the government announced a series of counter-measures and their numbers rose sharply after those measures started to make an impact.

During the peak of capital flight, many analysts blamed the exit of those funds for the collapse of the UAE markets but regulators have dismissed such claims. Some experts again believe the recent surge in local markets have to do with the return of those funds but others see the rise as natural results of growing public confidence in the government's commitment to fiscal stability and its massive overseas financial muscle to carry out this task.

After a steady decline in foreign investment in the UAE bourses in the few months that followed the eruption of the global crisis in mid-September 2008, such funds began to stream back into the country in the second quarter of 2009 and largely gained momentum in the following months.

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Banks need more liquidity support

The UAE's banking sector will need further liquidity support to boost lending to key economic sectors in the country, according to bankers and analysts.

"Direct fund injections by the government and support from the Central Bank have helped to ease the liquidity in the UAE banking system to a great extent. But even now many UAE banks have loan to deposit ratios in excess of 100 per cent. In the absence of deposit growth, only additional government deposits can fill this gap," said Philippe Dauba-Pantanacce, senior economist with Standard Chartered Bank, Middle East and North Africa.

A few bank chief executives who spoke to Gulf News agreed the big outflow of deposits from the banking system following the end of speculation on the dirham last year has not been fully bridged. However, all agree that government support has helped to improve the liquidity situation.

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Another oil strike for Keystone in Kurdistan

Britain’s Gulf Keystone Petroleum has found more oil in Iraqi Kurdistan, while Norway’s DNO International is restarting its oil operations after settling a dispute with the Kurdish government.

Gulf Keystone, a minor oil explorer, said high quality light crude oil flowed from its Shaikan-1 well at rates as high as 2,000 barrels per day during tests, along with up to 2 million cubic feet per day of gas.

Todd Kozel, its chairman and chief executive, said the company’s latest discovery was “very significant in its own right” and would “prove very beneficial” to the future development of large reserves of heavier oil it had previously found in deeper rock formations.

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UAE’s insolvency laws delay business closure up to five years

It takes an average of five years to close a business in the UAE because of inadequate insolvency laws, according to a senior adviser for the World Bank.

The Government needs to create an insolvency regime to make the legal process easier for companies unable to continue trading, said Dahlia Khalifa, the senior strategy adviser for the Doing Business 2010 report, which analyses the process of operating businesses across the globe on behalf of the World Bank’s International Finance Corporation. The report reveals it also costs UAE company owners an average of 30 per cent of the value of their estate to close their business.

“In the UAE, because there is not a very strong insolvency regime, there are actually very few companies that go through the insolvency process,” Ms Khalifa said at an event in Dubai to discuss the results of the Doing Business 2010 report.

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Viva Las Vegas despite slump

Elvis has not left the building. In fact, at Dubai World’s CityCenter project in Las Vegas, as many as 130 backstage workers are being hired just for a show dedicated to “The King”.

Developers of the US$8.6 billion (Dh31.58bn) CityCenter are confident of their prospects despite the trying economic climate.

Described by MGM Mirage, Dubai World’s joint venture partner, as an “unprecedented urban metropolis”, the 27-hectare Las Vegas Strip resort is to include a permanent Cirque du Soleil Elvis show, a 4,004-room gaming resort, 2,400 condominiums and luxury non-gaming hotels including Las Vegas’s first Mandarin Oriental.

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Dubai companies tackling debts

Dubai’s largest companies are starting to deal with an estimated US$85 billion (Dh312.2bn) in debt and obligations that will require repayments every few months in the years ahead.

Dubai Holding said today it had fully paid off the last instalment of a three-year $300 million loan facility for its property developer, Sama Dubai.

“As we have previously stated, Dubai Holding and its entities will meet their financial obligations in full and on the maturity date,” said a spokesman for the company. “The Sama Dubai loan matured on October 5. The final instalment of $50m was settled on the same day.”

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Qatar shows how to work through a ‘good’ crisis

If there is such a thing as a “good” crisis, Qatar has had one. The gas-rich emirate – long in the shadow of its more high-profile neighbours to the east, Abu Dhabi and Dubai, as well as the regional behemoth, Saudi Arabia to the west – has emerged from the global financial hurricane with kudos, self-confidence and most of its expansion ambitions intact.

Certainly, that was the impression I got last week on a three-day trip to Doha. It had been about 18 months since I last visited the country, and where I had previously detected a sleepy, small-town atmosphere – certainly in comparison to the boldness of Dubai or the solid affluence of Abu Dhabi – there is now a sense of maturity and progress.

From the vantage point of the stunning Museum of Islamic Art, built offshore but linked to the mainland via a short causeway, you see a distinct Manhattan-style skyline emerging from what was before a forest of cranes and scaffolding. The road system is no longer a jumble of construction works and diversions. The malls have lost that “just built” feel and the hotels and conference halls seem lived-in and well attended.

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GCC oil exporters stand behind dollar pricing

GCC oil exporters denied a report from the UK that they were negotiating with China, France, Japan and Russia to move away from pricing oil sales in the beleaguered US dollar.

Citing unnamed sources in Hong Kong and the Gulf, the London-based Independent newspaper reported that secret talks between several Gulf states and the four oil importers had resulted in a plan to price oil against a basket of currencies that included the Chinese yuan, the yen, the euro, gold and an eventually unified GCC currency.
“We have never heard of this or discussed this, not even secretly,” Abdullah al Attiyah, the Qatari oil minister who is also the country’s deputy prime minister, told Dow Jones.
“We did not discuss this at all,” said Dmitry Pankin, the Russian deputy finance minister, told reporters on the sidelines of an IMF conference in Istanbul.

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Dubai Financial Services Authority consults on representative office regime for DIFC

The Dubai Financial Services Authority (DFSA) issued this week a Consultation Paper setting out proposals to introduce a Representative Office regime in the Dubai International Financial Centre (DIFC).

Consultation Paper No. 65, which is posted on the DFSA website, seeks public comment on proposed Rules for financial institutions wishing to establish a Representative Office in the DIFC. The deadline for comment is 4 November 2009.

This new regime will permit financial institutions, based outside the DIFC, to have a presence in the DIFC for the limited purpose of marketing the financial products and services available from the institution outside the DIFC. The Representative Office regime will be available to institutions in all financial services sectors, provided that they are regulated in an acceptable home jurisdiction.

Mr Paul Koster, Chief Executive of the DFSA said, “These proposals demonstrate our commitment to developing our regime in line with international standards and the needs of the changing marketplace in which we operate.”END

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MGM Mirage climbs following condo unit discount

MGM Mirage shares surged Tuesday after the casino operator said it would cut prices by 30 percent on some condos when already lined up buyers close on deals at its $8.5 billion CityCenter development in Las Vegas.

MGM Mirage said Monday that CityCenter will start closing on the nearly 2,400 units at the lowered prices in January. More than half of the units are under contract.

The price cut roughly parallels the decline in Nevada's real estate market since the units first went on sale in January 2007. The 67-acre project is co-owned by MGM and Dubai World, the development arm of Dubai, one of the United Arab Emirates. Several analysts have said the price cuts were necessary to close deals in Vegas, one of the nation's hardest hit housing markets.

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Qatar Shares Rise to 12-Month High as Gas Trades Near 2009 Peak

Doha’s benchmark index climbed to a year-high, after natural gas prices reached their highest level since January, boosting investor confidence in the country with the world’s third-largest gas reserves.

Doha Bank QSC advanced to the highest in more than a year, after Referans newspaper said the third-largest Qatari lender by assets wants to buy a stake in a Turkish bank and open branches there. Qatar National Bank SAQ, the country’s biggest bank, also rose. Qatar’s DSM 20 Index gained 0.9 percent to 7,624.45, the highest close since Oct. 22. Qatari shares have added 11 percent this year, while Saudi shares are up 32 percent.

“Qatar is playing catch up to the other markets right now and I think Saudi and Qatar are going to be the beef of performance in the fourth quarter,” said Yazan Abdeen, a fund manager at ING Investment Management Dubai Ltd. “Qatar benefits more from gas prices than it does from oil and the gas price only started to gain recently.”

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Dubai World debt pile decision looms

Crunch time is approaching for Dubai World as the government is nearing a decision on how much money it can apportion to deal with the holding company’s estimated $22bn debt pile, most of which is held by one of its subsidiaries, the developer Nakheel.

The Dubai Financial Support Fund, which oversees the $10bn in bail-out loans extended by the United Arab Emirates central bank in February, is expected to make a recommendation either this week or next week on the holding company’s request for billions of US dollars to aid its debt restructuring plan.

Dubai is showing signs of recovery amid global economic optimism. But how the emirate copes with its $80bn-plus debt pile will impact on the speed of any recovery and is also preying on the minds of institutions with Dubai exposure.

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