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Tuesday, 10 November 2009

Bahrain keen to attract hedge funds and insurers

Bahrain is keen to attract and grow the alternative asset management sector, including hedge funds, according to Sheikh Salman Isa Al Khalifa, executive director of banking operations at the Central Bank of Bahrain.

Al Khalifa – speaking at the Hedge Funds Review Middle East Investment and Risk Middle East summit in Bahrain today – said the Kingdom was well placed to encourage the sector's growth, particularly for funds and managers that want access to the $1 trillion economy offered by the countries of the Gulf Co-operation Council (GCC). He also said Bahrain was a good base from which to access other states in the Middle East and North Africa.

Bahrain's developed infrastructure and services offer fund managers a "strong base of operations", according to Al Khalifa, who added: "Bahrain provides opportunities for the fund management and alternative assets industry as they explore the landscape post-financial crisis. It has much to offer." At present there are close to 3,000 fund management operations in the region, managing $15 billion worth of assets. He added that the Kingdom is also keen to encourage more insurance sector activity.

Investcorp gets $310 mln hedge fund mandates

Bahrain- and London-listed alternative investment house Investcorp INVB.BH (INVBq.L) said on Tuesday it has been appointed to manage two hedge fund accounts in the United States worth $310 million.

It said the deals bring the total new hedge fund mandates received this year in the United States to a total of more than $1 billion.

Investcorp said a large U.S. insurer had mandated it with a $250 million hedge fund portfolio, while a $60 million mandate came from a pension fund, without providing further details.

Dar's Bahraini unit extends claims freeze to 2010

The Bahraini unit of Kuwait's Investment Dar (TIDK.KW), which is in the midst of a debt restructuring, said on Tuesday it had extended its standstill agreement to March 31, 2010.

It was not clear from the statement, posted by Investment Dar Sukuk Co on the Bahrain stock exchange, whether this means that Dar's standstill agreement which was supposed to run until the end of 2009, had also been extended.

"The meeting of the certificate holders authorises the company to agree at its sole discretion to an extension to the standstill period ... until 31 March 2010," it said in the statement.

Islamic bonds spread beyond the Gulf

The swelling coffers of Middle East-based Islamic banks are spurring a wide variety of nations and international companies to prepare bond sales that comply with sharia law

The trend includes General Electric, the UK, South Korea and France

Islamic finance is one of the fastest-growing niches of the global financial system, but has largely remained a focus of Muslim countries and companies – and international investment banks keen on capitalising on the industry’s growth.

Dubai Leads Gulf Stocks Higher as Ruler Reassures Investors

Dubai shares rose for a third day, leading Gulf stocks higher, after the emirate’s ruler reassured investors that the sheikhdom’s next debt offering will be “well received.”

Dubai Financial Market, the only gulf stock exchange to sell shares to investors, gained as much as 4.4 percent. Emaar Properties PJSC is poised for its highest close in two weeks. The DFM General Index increased for a third day, the longest winning streak in almost a month, advancing 0.9 percent to 2,173.11 at 12:31 p.m. in Dubai. Abu Dhabi’s measure added 0.7 percent.

“This is a natural reaction to the Sheikh’s speech yesterday to international investors, which reassured them about Dubai being able to repay its debts,” said Yazan Abdeen, a fund manager at ING Investment Management Dubai Ltd.

Qatar to Sell Up to 25 Million Preferred Shares in Volkswagen

Qatar Holding LLC, part of the country’s sovereign wealth fund, plans to sell as much as 25 million of its preferred shares in Volkswagen AG, or about half its total stake in the carmaker.

The fund still plans to increase its holdings in the Wolfsburg, Germany-based automaker’s common shares to 17 percent, according to an e-mailed statement. Units of Credit Suisse Group AG and Goldman, Sachs & Co. will act as joint bookrunners in the sale of preferred shares.

Qatar Holding’s decision comes after the shares increased 88 percent this year to 71.50 euros ($107.28) a share. The move also comes as Volkswagen attempts to sell as many as 135 million non-voting preferred shares to help pay for a stake in Porsche Automobil Holding SE.

Foreign ownership a step closer

Foreigners who set up industrial companies may be the first to have 100 per cent controlling interests in their firms under the relaxation of ownership rules, a senior Ministry of Economy official says.

International firms in certain sectors, such as industry, would be allowed to own a greater stake under the new companies law, said Mohammed al Shihhi, the director general of the Ministry of Economy, on the sidelines of an export event in Dubai.

“It will give special Cabinet approval to certain sectors to have more ownership than 49 per cent,” Mr al Shihhi said, adding that certain sectors such as industry may be allowed 100 per cent ownership. “It will offer special approval from the Cabinet for certain sectors and certain strategic projects with certain minimum capital,” he said.

DFSA to tighten up corporate governance

The regulator of NASDAQ Dubai will further tighten corporate governance rules in its latest effort to align itself with global practices.

The move follows regional efforts to strengthen the role of shareholders, independent directors, audit and remuneration committees and other mechanisms aimed at providing “checks and balances” for corporate executives.

The proposed amendments to the 2004 law, which were seen by The National, will be sent to all firms listed on NASDAQ Dubai, one of the country’s three stock exchanges, within weeks. They can respond within 90 days.

Kuwait Reports $17.5 Billion Half-Year Budget Surplus

Kuwait had a preliminary budget surplus of 4.99 billion dinars ($17.5 billion) in the first six months of the fiscal year through March 2010 as oil revenue exceeded forecasts, the Finance Ministry said.

Government revenue was 8.22 billion dinars, while spending totaled 3.23 billion dinars, according to data posted on the ministry’s Web site today. Revenue fell 43 percent from the same period last year. About 10 percent of revenue will be saved in the Reserve Fund for Future Generations.

The government had forecast a budget deficit of 4.8 billion dinars for the fiscal year, based on an oil price of $35 a barrel. Oil is trading at about $78 a barrel.

Oman’s stalled IPOs likely by mid-2010

Four major Omani companies that have shelved bourse listings this year are expected to revive plans in the second quarter of 2010, analysts said yesterday.

Companies that have dropped IPO plans this year include Hasan Juma Backer Trading and Contracting, Oman Merchant Bank, Al Argan Towell Investment Company and Barr Al Jissah Resort, according to the companies or media reports.

“The market sentiment is not right at the moment for new IPOs,” Sankar Kailesam, analyst at Gulf Investment Services said. “The pricing of these IPOs is an issue when the market is still recovering,” Kailesam said.

Kuwait's Global makes Q3 loss of $19.6 million

Kuwait's Global Investment House (GLOB.KW) made a net loss of 5.6 million dinars ($19.6 million) in the third-quarter, on investment losses and the losses of associates, it said on Monday.

Global, which defaulted on most of its debt earlier this year, is one of the largest investment companies in the Gulf Arab state facing problems amid tight credit conditions.

"The size of total bank debt to be restructured is expected to be 500 million (dinars) ... The outstanding bonds of 89.5 million (dinars) are expected to be paid as per their scheduled maturities," Global said in the statement.

Qatar To Acquire Stake In Shell's Singapore Chemical Plants

State-owned Qatar Petroleum International is taking a stake in Royal Dutch Shell PLC's (RDSB.LN) chemical joint ventures in Singapore, extending cooperation between the two companies beyond Qatar.

Qatar Energy Minister Abdulla Bin Hamad Al-Attiyah and Shell Chief Executive Peter Voser will sign the agreement Wednesday, Shell said in a statement, without providing further details.

Shell Eastern Petroleum operates a 500,000-barrel-a-day refinery on Pulau Bukom. The company is building a petrochemical complex which comprises an 800,000-metric-ton-a-year steam cracker and two downstream units.

Singapore is Shell's largest petrochemical production and export center in the Asia Pacific region, according to its website.

Shell jointly operates Petrochemical Corporation of Singapore with a Japanese consortium led by Sumitomo Chemicals. It also co-owns a styrene monomer and propylene oxide plant with German chemical major BASF.END

Russia-Saudi Relations: The Kingdom and the Bear

Saudi Arabia's possible purchase of at least $2 billion of Russian military equipment has the potential to be the most significant Russian arms deal in the Middle East since the Soviet Union transferred SA-2s to Nasser's Egypt. By all indications, it seems that the two countries have reached an agreement for the arms transfer, after a two-year negotiation period. The deal may be part of a larger process that leads to a significant realignment in the external relations of both parties.

The arms transfer agreement, which covers a broad spectrum of weapons, is guided by the agreement on cooperation in military technology that was initiated during a visit of Russia's then-President Vladimir Putin to Riyadh in 2007, and later signed by the two countries in 2008. According to Russian sources, Saudi Arabia may purchase up to 150 helicopters (30 Mi-35 attack helicopters and 120 Mi-17 transport helicopters), more than 150 T-90S tanks, around 250 BMP-3 infantry fighting vehicles (IFVs), and "several dozen" air defense systems (including possibly the S-400 Triumf). Contracts for the sales of the helicopters, tanks and IFVs -- worth a combined $2 billion -- seem imminent, with more negotiations required on the air defense systems. In all, the Saudi market may absorb up to $7 billion worth of Russian equipment in the future.

The precise timing for the deal seems to have been guided by the worsening Iran nuclear crisis and the increasing enmity between the Iranians and the Saudis. The Saudi defense requirements also come at a time when Russian newspapers are awash with reports of the monetary loss -- in the billion-dollar range -- that Moscow must incur on the sale of S-300 air defense systems to Iran. That deal has been stalled due to pressure from Washington and Tel Aviv. Clearly, handsome compensation seems to be in the pipeline from Saudi quarters.

Dubai ruler seeks to combat critics

Dubai’s ruler on Monday sought to dispel concerns about the emirate’s economy, assuring investors that there would be strong support for an intended $10bn bond programme.

During a speech to investors, Sheikh Mohammed bin Rashid Al Maktoum turned from Arabic to English to deliver a strong reassertion of national unity, saying: “To the people who nag about Dubai and Abu Dhabi, shut up!”

The recession has hit Dubai hard, as its real estate bubble has burst amid a ballooning $80bn debt pile. In February the emirate was forced to take a $10bn soft loan from the central bank, which is bankrolled by oil-rich capital, in the first tranche of its $20bn bond programme.

Nomura bets on bridging cultural divide

It has been an eventful year for everyone in the financial industry, but a particularly turbulent one for Philip Lynch, regional head of Nomura, the Japanese securities group.

Just over a year ago Mr Lynch was co-head of European equities at Lehman Brothers, and was sent to Dubai to lead and reinforce the bank’s Middle East operations, at the time one of the many big-hitting investment bankers moving to the region – enticed by the gush of petrodollars.

“The story at the time was that the Gulf was decoupled, counter-cyclical and awash with money given the high oil price – which was famously forecast to reach $200,” Mr Lynch recalls. “The whole street [Wall Street] was dispatching senior bankers to develop new sources of revenue and win the arms race of demonstrable commitment to the region.”