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Sunday, 24 October 2010

Middle East, North African Economies Will Accelerate Next Year, IMF Says - Bloomberg

Growth in Middle Eastern and North African oil-exporting economies will accelerate next year as crude production rises, the International Monetary Fund said.

Gross domestic product in those countries will expand 5 percent in 2011 after growing 3.8 percent this year and 1.1 percent in 2009, the Washington-based lender said in its regional Economic Outlook released today.

Those forecasts put oil exporters on course to grow faster than most of the world’s major economies, which are still struggling to overcome the worst global slump since World War II. The IMF said on Oct. 6 that it expects global gross domestic product to expand 4.2 percent in 2011.

Abu Dhabi Shares Rise to Six-Month High Led by Etisalat, Waha; Egypt Gains - Bloomberg

Abu Dhabi shares rose to the highest in six months as Waha Capital PJSC said third-quarter profit jumped and after global markets gained last week on speculation the Federal Reserve will help stimulate the economy.

Waha Capital, an Abu Dhabi-based leasing company, increased 2.5 percent and Emirates Telecommunications Corp., the biggest phone company in the United Arab Emirates, gained for a second day. The ADX General Index advanced 0.5 percent to 2,821.01, the highest close since April 25. The Bloomberg GCC 200 Index gained 0.4 percent in Dubai. Israel’s TA-25 Index was little changed.

“Gains in U.S. and European markets last week helped boost investor confidence,” said Ziad Dabbas, a financial analyst at National Bank of Abu Dhabi PJSC, the U.A.E.’s second-largest lender by assets.

Saturday, 23 October 2010

Saudi monetary policy outperforms key economies

Saudi Arabia is adopting a monetary policy that is more stable than that of advanced economies given its massive local currency reserves, the Gulf Kingdom's largest bank has said.

National Commercial Bank (NCB) said a surge in foreign assets because of strong oil prices has turned Saudi Arabia into a major net creditor with the world's highest foreign reserves after China and Japan.

'It is no wonder these days that monetary policy in Saudi Arabia is exhibiting a high degree of stability and predictability compared to advanced economies that are still deliberating over another round of quantitative easing in a fiscally tight environment,' NCB said in a study sent to Emirates 24|7."

gulfnews : Minister justifies Emaar MGF deal

An Indian minister defended the Delhi Development Authority's (DDA) so-called "bailout" to developer Emaar MGF in connection with construction of the Commonwealth Games Village.

Urban Development Minister Jaipal Reddy said the DDA bought 333 apartments from Emaar MGF for Rs7.6 billion (Dh626.54 million) so that the developer would have enough cash to complete the Village. He said he was not consulted on the deal but supported it.

While investigating agencies are zeroing in on all aspects of the Village's construction, including possible financial anomalies and construction defects that caused a huge embarrassment to the country before the Games got under way, Reddy's statement has caused ripples in political circles and is being termed as a "shrinking of the probe".

THE HOUSING DOUBLE DIP IS HERE | PRAGMATIC CAPITALISM


This could have enormous macro impacts if this becomes a protracted decline (via Clear Capital):
Clear Capital’s latest data through October 22 shows even more pronounced price declines than our most recent HDI market report released two weeks ago. At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.
This special Clear Capital Home Data Index (HDI) alert shows that national home prices have declined 5.9% in just two months and are now at the same level as in mid April 2010, two weeks prior to the expiration of the recent federal homebuyer tax credit. This significant drop in prices, in advance of the typical winter housing market slowdowns, paints an ominous picture that will likely show up in other home data indices in the coming months.

Friday, 22 October 2010

Bulgaria: Dubai-based Oger Telecom Takes over Bulgaria's Vivacom - Report - Novinite.com - Sofia News Agency

Dubai-based Oger Telecom will take over the management of Bulgaria's top fixed-line operator Vivacom following negotiations that have dragged on for nearly half a year, according to reports.

Oger Telecom representatives have confirmed for local Dnevnik daily that the company is a side in the lock-up agreement that the major lenders signed on the restructuring options for the debt-laden company with the mezzanine creditors, the most junior lenders in the capital structure.

Under the agreement the mezzanine subordinated non-performing loans, which total EUR 400 M, will be transformed into equity capital of a Dutch-based company, which will be a majority owner in BTC.

Libyan Investment Authority May Sell 2.6% UniCredit Stake, Sole Reports - Bloomberg

The Libyan Investment Authority is considering the sale of its 2.6 percent stake in UniCredit SpA, daily Il Sole 24 Ore reported, without saying where it got the information.

The sovereign fund is weighing whether to keep the stake after the bank’s management asked it for further details about its links to Libya’s central bank, which owns about 5 percent of UniCredit, according to the Italian newspaper.

UniCredit restricts voting rights above 5 percent.

FT.com - Growing trade in goods between Gulf Arab states bodes well for the region

Fresh milk and yoghurt produced by Almarai of Saudi Arabia dot the shelves of grocery stores in Dubai, Riyadh and throughout the Gulf Arab states. From a humble start as a single milk processing plant in 1976, Almarai now counts more than 60,000 dairy cows at its facilities in the Saudi desert. The company provides 27 per cent of the region’s milk, 40 per cent of its yoghurt and 44 per cent of the market for laban, a yoghurt drink popular in the Gulf.

Almarai’s growth provides a lesson in how a Middle Eastern company can expand beyond the borders of its base country to create a presence across the region – helped in part by the Gulf Co-operation Council, whose member nations do not pay tariffs when exporting to each other, giving regional trade a competitive edge.

Saudi Arabia’s population of 27m remains Almarai’s largest market, accounting for 70 per cent of the company’s revenue. But the United Arab Emirates is now its second-largest market, at 11 per cent. Every day, Almarai trucks fresh dairy to more than 40,000 customers.

FT.com - Kef Holdings ready for recovery in Sharjah

Sharjah, one of the seven mini-states of the United Arab Emirates, has little oil to speak of itself, but Kef Holdings, based in the emirate’s Hamriyah industrial zone, plays an important part in the Gulf’s hydrocarbon industry.

Kef Holdings started out in 1995 as Emirates Techno Casting, a scrap-metal dealing business, but its industrial foundries now produce pure-steel juggernaut valves, which can weigh up to 45 tons, for the regional oil and gas sector. These valves can cope with the high pressures under the Earth’s surface, and typically make up 8-12 per cent of an energy project’s total costs.

The annual global valve industry is worth roughly $18.5bn, according to estimates by Kef Holdings. For much of the past decade, it was a good business niche in the Gulf. Soaring energy prices spurred vast investments in oil and gas projects as governments tried to build capacity.

Awal Bank BSC Files for Chapter 11 Bankruptcy - BusinessWeek

Awal Bank BSC, a Bahrain lender owned by Saudi Arabian Saad Group, filed for Chapter 11 bankruptcy in New York almost 13 months after it sought court protection from U.S. creditors.

The bank listed assets of $50 million to $100 million and liabilities of more than $1 billion in a filing today in U.S. Bankruptcy Court in Manhattan.

Awal Bank was taken into administration by Bahrain’s central bank in July 2009 after defaulting on loans. U.S. lawyers for the bank said last year that under Bahrain law, Awal’s administrator had two years to decide if the bank should liquidate or be returned to management and shareholders.

Golden Pass LNG Terminal in Texas Receives Its First Cargo - Bloomberg

Golden Pass LNG’s liquefied-natural- gas terminal in Texas received its first cargo of the fuel today.

The LNG tanker Al Khuwair arrived at the terminal from Qatar, according to Clark Vega, a company spokesman. The ship can carry 211,885 cubic meters of LNG, according to Bloomberg vessel-tracking data. The amount would equal about 4.56 billion cubic feet when converted to a gas, The cargo represents about 7.4 percent of daily U.S. gas production.

The terminal, near Sabine Pass, Texas, is a joint venture between Qatar Petroleum International, Exxon Mobil Corp., and ConocoPhillips.

Q A-Turkey's ambitions to become a gas hub | Energy & Oil | Reuters

Turkish state oil company TPAO won contracts to develop two gas fields in Iraq, aiding Ankara's ambitions to become an energy bridge between Europe and the Middle East. [ID:nLDE69J0FQ]

Turkey will invest some $3.2 billion to develop the Mansuriyah field near the Iranian border alongside Kuwait Energy Company and South Korea's Kogas (036460.KS: Quote), and the southern Siba field with Kuwait Energy, Turkey's energy minister said.

The winners of Wednesday's auction will have to brave violence and political uncertainty to build infrastructure and pipelines for the gas which Iraq wants used for domestic consumption, but there is potential for export later."

gulfnews : Zain deal is 'great value'

The acquisition price of 1.70 Kuwaiti dinars (Dh22.16) per share that the UAE's Emirates Telecommunications Corporation, or etisalat, has offered to acquire a 46 per cent stake in Zain offers "great value" to the UAE telecoms firm's shareholders, etisalat's chairman said yesterday.

Mohammad Hassan Omran said he is confident etisalat can obtain the required funding to finance the acquisition, valued at about $11.8 billion. "We have received several attractive proposals from banks that would enable us to finance the transaction," he said in a statement to Gulf News.

Omran said his company is still in the early stages of the deal, on which the due diligence process is yet to commence. Omran said it "will take a number of weeks".

AHL books $60m profit on cinema sale

Entertainment, hospitality and leisure operator Amalgamated Holdings Ltd (AHL) says it booked a profit of $60.6 million on the sale of its 49 per cent share of MAF Greater Union LLC in the United Arab Emirates (UAE).

AHL overnight sold its share of the joint venture to its UAE partner Majid Al Futtaim Group for $78.7 million.

The listed operator also says global market conditions remain uncertain, but is well positioned to capitalise on improvements in the hotel market.

FT Alphaville � On SWFs and private money

A couple of items to note for the Sovereign Wealth Fund trend-watchers out there.

First, a milestone of sorts. The Sovereign Wealth Fund Institute just reported that SWF assets have crossed the $4,000bn mark, put over the top by the latest updatefrom Norway’s Government Pension Fund Global. With the caveat that these estimates are bound to be somewhat imprecise, you can click here to see the updated rankings.

Second, from a new report by the Monitor Group, a summary of what these funds were doing in the first half of 2010, such as:

– investing more frequently but in smaller amounts
– cautiously returning to investments in North America
– diversifying further into natural resources and energy
– looking increasingly towards frontier markets
– Chinese and Singaporean funds remain the most active

The report contains a lot of detail and some wonderful chart porn if you want to dig deeper, but far more interesting to us is a discussion near the end of the paper about the reasons certain SWFs are increasingly raising funds from private markets.

A few recent examples:

FT Alphaville � A matter of (not having any) trust


Your chart du jour:
It shows the findings of the latest quarterly Financial Trust Index from professors at the University of Chicago and Northwestern University business schools. The index found that “trust in the financial system dropped to 25 percent in September from 26 percent in July 2010, the Index’s all-time high.” (The index is only about two years old.)
Not that Americans love the banking sector, they just dislike Dodd-Frank even more:
In what was one of the most sweeping pieces of legislation enacted since the Great Depression, only 12 percent of respondents declared they were satisfied with the Dodd-Frank Bill while 54 percent of Americans were dissatisfied. Two-thirds of respondents believe it is insufficient to protect against future bailouts. The majority of Republicans (80 percent) are dissatisfied with the bill, as are Independents (54 percent). The level of those “satisfied” and “very satisfied” is low even among Democrats (35 percent).
The origins of the overwhelming dissatisfaction with the bill were examined using two questions related to its key provisions: the creation of the Consumer Financial Protection Agency (CFPA) and the new regulation of banks enacted to prevent future bailouts. The responses suggest that the Dodd-Frank Bill failed to convince American voters of its utility on both dimensions and found that only 34 percent of respondents think that the CFPA is a “useful agency to protect consumers.” The majority of the opposition stems from the perception that the CFPA is “useless bureaucracy” (27 percent) and “overreaching of government power” (25 percent).

Thursday, 21 October 2010

Abu Dhabi Shares Head for Highest Close Since April on Profit Expectations - Bloomberg

Abu Dhabi shares rose for a fourth time this week as banks advanced on investor speculation third- quarter profit will beat expectations.

Abu Dhabi Islamic Bank PJSC surged to the highest close in almost two years and Abu Dhabi Commercial Bank PJSC gained the most since Oct. 11. The chief executive officer of ADCB, the United Arab Emirates’ third-biggest bank, said it aims to diversify lending after being hurt by Dubai World’s $24.9 billion debt restructuring. ADCB is scheduled to announce earnings next week. The ADX General Index rose 0.8 percent to 2,807.5 at the close in Abu Dhabi. The measure gained 1.8 percent this week.

“There are positive expectations for third-quarter earnings, especially for banks,” said Waleed Al Khateeb, senior finance manager at Dubai-based Daman Securities LLC.

Foreigners Buy Iran Shares at Three Times Pace as Investment Rules Change - Bloomberg

Foreigners bought three times as many shares in Iran’s publicly traded companies in the past six months as they did a year earlier after the authorities changed the rules to attract international investors.

Foreigners invested $250 million in Iranian stocks since March 21, the beginning of the Iranian year, after investing $140 million in all of the preceding 12 months, Hassan Ghalibaf- Asl, the Tehran Stock Exchange’s president said in an interview in Paris after attending the annual meeting of the World Federation of Exchanges.

TSE’s benchmark index, the Tepix, has surged 63 percent year-to-date, making it the third-fastest growing primary index in the world, according to data compiled by Bloomberg.>

Oman telco Nawras Q3 net profit up 62 pct | Reuters

Nawras, the Omani telco undergoing an initial public offering (IPO), said on Thursday its third-quarter net profit soared 62.3 percent compared with a year ago, driven by mobile and fixed-line services.

Nawras made a net profit of 12.5 million rials ($32.47 million), compared with 7.7 million in the period in 2009, it said in an e-mailed statement.

Results for the period included a non-recurring provision of 1.8 million rials for one-off payments to staff related to the launch of the fixed service and the IPO, it said."

Those Supposedly Ballooning OPEC Oil Reserves | GantDaily.com

slew of reports have been populating my feed reader recently announcing the growth of OPEC oil reserves, first from Iraq, then Iran, and now Kuwait.

I pay attention to this stuff because peak oil is very much on my radar, and has been for about a decade now. It’s more than disheartening to see these reports presented to the public without any sort of context. Before everyone starts jumping for joy, there are a few things that need to be taken into account.

First, OPEC countries — which include Iraq, Iran and Kuwait — are on the honor system when it comes to reporting their reserves. There is no independent audit to confirm whether their reported reserves are accurate or not.

When will another oil price boom restore GCC economic growth? � ArabianMoney

It is surely only a matter of time before the higher oil prices determined by Peak Oil theory return to give the Gulf Oil States another bout of serious economic growth. Indeed, cash flow from oil this year is set to bounce back from $570 billion in 2009 to around $720 billion.

Outside the UAE and Bahrain orders are already picking up. Saudi Arabia is placing multi-billion dollar construction contracts. Qatar has not slowed down much, and Majid Al Futtaim has just started building Doha’s largest shopping mall.

gulfnews : India plans to confiscate Emaar-MGF's bank guarantee

Dubai-based construction company Emaar and its Indian associate MGF may have to forfeit Rs1.83 billion (approximately Dh175 million) for doing a shoddy work in construction of the Commonwealth Games Village.

The federal Urban Development Ministry has instructed the Delhi Development Authority (DDA) to confiscate Rs1.83 billion that the construction company Emaar-MGF had given in the form of the bank guarantee when the project was awarded to it.

However, the developer said in a statement sent to Gulf News that the bank guarantee (BG) was extended till December 31, 2010, at the behest of DDA and that it had “not received any notice for encashment of the BG”.

Qatar Telecom Third-Quarter Profit Declines 8% Amid Domestic Competition - Bloomberg

Qatar Telecom QSC, the Persian Gulf country’s biggest company in revenue, posted an 8.3 percent decline in third-quarter profit amid increased competition in its home market.

Net income for the three months to Sept. 30 fell to 651.9 million riyals ($179 million) from 710.9 million riyals a year earlier, Qtel said in an e-mailed statement today.

“This period’s performance illustrates our ability to overcome challenges, capitalize on opportunities, and deliver meaningful returns for our shareholders,” Chairman Abdullah bin Mohammed Al Thani said in the statement.

Gulf IPOs making slow comeback | Reuters

Major initial public offerings in the region are still scarce but banks are starting to win mandates again with consumer and healthcare companies expected to lead new equity listings, participants told the Reuters Middle East Summit.

Thin volumes and high trading volatility -- sparked mainly by regional retail investors -- have sunk valuations on the region's exchanges and kept international institutions on the sidelines, awaiting clarity on companies' debt troubles.

Middle East IPOs raised $1 billion in the first half of 2010, a report by Ernst & Young said in September, a 9 percent decrease from the same period a year ago. But a recent slew of deals is signaling a return of confidence.

gulfnews : ADCB will focus on core business after cleanup

Abu Dhabi Commercial Bank, the UAE's third-biggest bank by assets, aims to diversify lending after being hurt by Dubai World's $24.9 billion (Dh91.4 billion) debt-restructuring, its CEO said.

The lesson "for all banks is sticking to certain diversified thresholds no matter how great the borrower is," Ala'a Eraiqat said in an interview in London yesterday. "We learned from the lack of diversification or large concentration."

State-controlled Abu Dhabi Commercial Bank is one of the biggest lenders to holding company Dubai World, which announced plans to restructure its debt. "We were hit harder than everybody else," Eraiqat said.

FT.com - Bond sales demonstrate stronger Asia links

One of the more curious revelations in Dubai’s recent government bond prospectus was a previously unknown $1bn loan from China Construction Bank.

Disclosure of the loan underlines the increasingly close ties between the Gulf states and Asia, a trend that is apparent in recent bond sales, where Asian investors have become markedly more significant.

More than a third of investors in Dubai’s recent $1.25bn sovereign bond issue – divided into five-year and 10-year tranches – were based in Asia. In the dollar-denominated tranche of Dubai’s October 2009 Islamic bond, only 17 per cent of investors were Asian.

FT.com - Gulf telecoms set for calmer times

Two tones: owning more than one mobile phone has become increasingly common in the region

Nokia-toting teenagers and BlackBerry-wielding businessmen have been a gold mine for telecommunications companies across the Gulf, turning the government-owned operators into some of the region’s most aggressive and ambitious corporate giants.

But after deals worth $33bn in the Gulf alone in the past four years, the industry may soon enter a period of more measured, “organic” growth, as acquisitions targets are scarcer and competition heats up in domestic markets, analysts and bankers say.

Etisalat’s $11.7bn blockbuster bid for 46 per cent of Zain, the Kuwaiti operator, is expected to go through and lead to the eventual sale of Zain’s 25 per cent stake in its Saudi subsidiary – which competes against Etisalat’s Mobily.


Wednesday, 20 October 2010

Standard Chartered eyes US$100 million Middle East private equity deal - bi-me.com

Standard Chartered Bank plans to close a US$100 million private equity deal before the end of this year, its first in the Middle East, a senior executive of the bank said on Wednesday.

"We are working on a lot of deals, our first deal in private equity in this region will be before end 2010," Taimoor Labib, head of private equity, Middle East & North Africa told Reuters, declining to be more specific as the deal is not yet announced.

"Our bank has the appetite for MENA assets, we have cash on our balance sheet and we do not have to worry about third party funds," he said.

Reuters Summit-Saudi bourse unlikely to fully open soon | Reuters

Saudi Arabia wants to attract more foreign investments to its bourse but is unlikely to fully open up the biggest Arab bourse and allow full ownership anytime soon, executives told the Reuters Middle East Investment summit.

The Saudi bourse -- the region's largest and most liquid stock market -- has gradually opened up to foreigners but does not allow foreign funds to directly own and trade Saudis shares.

'I don't think they will do anything soon,' said Hisham Tuffaha, head of investment research and financial analysis at Saudi investment bank Bakheet Investment Group."

Batelco Q3 net profit falls 24 percent | Reuters

Bahrain Telecommunications BTEL.BH (Batelco) posted on Wednesday a 24 percent fall in third-quarter profits due to lower revenues in its home market.

The company said in a statement that net profit in the quarter ended Sept. 30 was 19.3 million dinars ($51.19 million), compared to 25.3 million dinars in the year-earlier quarter. ($1=.3770 dinar)"

UPDATE 1-Bahrain's Ahli United Q3 net surges 63 pct | Reuters

Bahrain's largest bank, Ahli United Bank AUBB.BH (AUB>, posted on Wednesday a 63 percent rise in third-quarter profits on higher income and lower loan provisions.

The bank said in a statement net profit in the quarter ended Sept. 30 was $65.2 million compared to $40.1 million in the year-earlier quarter.

Banks in the Gulf Arab region have posted higher quarterly profit as their books are not as burdened with provisions against bad loans as during 2009, the peak of the financial crisis in the Gulf.

Iraq May Get $4.2 Trillion From Oilfield Developments, Shahristani Says - Bloomberg

Iraq may earn $4.2 trillion in revenue from oil fields being developed by international companies after rights for production from the deposits were auctioned last year, Oil Minister Hussain al-Shahristani said.

The fields, whose development rights were assigned after two bid rounds held last year, will produce 60 billion barrels of oil, he said. The Iraqi government will get 99 percent of the revenue from those deposits, al-Shahristani said today opening the country’s third hydrocarbon bid round in Baghdad.

Reuters Summit-Abu Dhabi eyes foreign buys in 2011-HSBC | Reuters

The emirate of Abu Dhabi is on the prowl for international acquisitions and is eyeing deals in the energy and hospitality sectors in 2011, a senior executive at HSBC Middle East (HSBA.L) said.

Declan Hegarty, managing director and head of HSBC's Abu Dhabi office, also said he expects regional bond issuance to hit $40 billion in 2011 in contrast to about $35 billion last year.

"There are a number of entities in Abu Dhabi who are considering acquisitions that are consistent with 2030," Hegarty told the Reuters Middle East Investment summit, referring to the emirate's Plan 2030 strategic development blueprint.

Dubai Shares Drop to Two-Week Low on China Interest Rates, Recovery Risk - Bloomberg

Dubai shares dropped to the lowest level in almost two weeks, leading a decline in Persian Gulf markets, after China unexpectedly raised interest rates, stoking concern policy tightening may slow the global economic recovery.

Emaar Properties PJSC, builder of the world’s tallest skyscraper, led the drop and Dubai Islamic Bank lost 1.7 percent. The DFM General Index retreated 1.2 percent to 1,724.17, the lowest intraday level since Oct. 10, at 11:21 a.m. in Dubai, trimming gains in the second half to 18 percent. Abu Dhabi’s index fell the most in more than two months, slipping 1 percent after Emirates Telecommunications Corp. said third- quarter profit dropped 23 percent. The Bloomberg GCC 200 Index declined 0.3 percent.

“A paucity of any independent United Arab Emirates drivers means the DFM and ADX remain hitched to global markets,” said Julian Bruce, director of equity sales at EFG-Hermes Holding SAE in Dubai.

DGCX & Dow Jones Indexes to launch new futures products - bi-me.com

Dow Jones Indexes, a leading global index provider, and Dubai Gold & Commodities Exchange (DGCX), have entered into a license agreement pursuant to which DGCX aims to list futures contracts on Dow Jones-branded indexes including the Dow Jones Islamic Market Titans 100 Index.

The license agreement represents the commitment and collaboration between the two companies for DGCX to bring futures trading in regional and Islamic blue-chip indexes to the Middle East and for Dow Jones Indexes to make those indexes readily available in that market. The first product expected to launch on DGCX is the Dow Jones Islamic Market Titans 100 Index Future, which is subject to regulatory approval. The Islamic index represents the top 100 blue-chip, Shari’ah compliant stocks globally.

“This agreement with DGCX reflects growing investor interest in the Middle East generally and in Islamic finance, which in turn is increasing the demand for unique concepts and products in passive investing,” said Michael A. Petronella, president, Dow Jones Indexes. “The Dow Jones Islamic Market Titans 100 index is an ideal tool for measuring the performance of the largest 100 Shari’ah-compliant companies globally. Our Islamic index family is recognized worldwide as the standard in Shari'ah compliant investing," Petronella added.

Qatar most preferred equity mkt in GCC

Twenty-five brokers published 288 research notes on 133 companies during 3Q10, compared to the 270 research notes on 110 companies published in 2Q10, according to a recent report by Kuwait Financial Centre “Markaz” on GCC Equity Research Statistics... During this quarter, 19 percent of all GCC companies received research coverage, representing 71 percent of the total market cap. Saudi Arabia, which continued to attract the most attention, accounted for 45 percent of research notes and 40 percent of the companies covered. A wave of optimism continued in GCC markets, with 55 percent “Buy” calls, 36 percent “Hold” calls, and 10 percent “Sell” calls.

The market cap of researched companies in Saudi Arabia accounted for 90 percent of the domestic market capitalization. This was followed by UAE (63 percent), Kuwait (59 percent), Oman (58 percent), Qatar (47 percent) and Bahrain (41 percent). The proportion of “Buy” ratings in Saudi Arabia increased to 50 percent in 3Q10 from 45 percent in 2Q10.

Qatar remained the most preferred equity market, with all 19 research notes during 3Q10 receiving “Buy” ratings. On the flip side, Kuwait recorded the maximum sell ratings. The market accounted for 39 percent of the 28 “Sell” ratings during the quarter. Furthermore, 33 percent of the research notes covered in Kuwait were assigned “Sell” ratings, higher than other GCC markets. In Bahrain, the contribution of “Buy” ratin

Kuwait-led consortium wins 2nd Iraq gas field - Forbes.com

Iraqi Oil Minister Hussain al-Shahristani says a consortium grouping Kuwait Energy and the Turkish Petroleum International Co. has won the right to develop the 1.1 trillion cubic feet Siba gas field.

The Kuwaiti-Turkish consortium beat out Kazakhstan's KazMunaiGas EP JSC with an offer of $7.50 per barrel of oil equivalent and a targeted plateau production of 100 million cubic feet per day from the field that sits near Iraq's border with Kuwait and Iran.

Kuwait Energy chief executive Sara Akbar said the company's winning bid represents a "turning point in relation between the two countries, and their improvement in the future."

Qatar drops huge Greek energy project - Maktoob Business

Qatar has dropped plans to build a 3.5 billion euro ($4.82 billion) energy hub in Greece, a Greek official said on Wednesday, a setback for Greek hopes to receive up to $5 billion in investment from the cash-rich Arab emirate.

"The two Qatari companies involved, Qatar Petroleum and the Qatar Investment Authority could not agree with their Greek partners on the viability of the project," deputy foreign minister Spyros Kouvelis told Flash radio.

The two countries signed in May a non-binding memorandum to explore the possibility of building a complex of LNG terminals and a power station to export electricity to Italy.

UAE Central Bank assets rise to Dh214bn

Access to credit remains closely controlled as the Central Bank continues its tight hold on lending, its monthly bulletin shows.

The Central Bank bulletin showed its total assets ran to Dh214 billion (US$58.26bn) in July, up more than Dh12bn, or 6 per cent, on June. That was a rise of 5 per cent since the start of the year.

And the bank has seen its foreign assets rise sharply to their highest since the end of last year - to Dh100bn in July, from Dh83bn June.

Saudi economy back on track

The Saudi economy is back, but not with a bang. The experts agree the kingdom is recovering nicely from the aftermath of the financial crisis two years ago, and looks ready to resume its role as the dynamo of regional economic growth.

But there are "variables" that could affect the rate of recovery and global perception of the Middle East's biggest but most enigmatic business centre.

A recent report from Banque Saudi Fransi (BSF) underlined the good news: business confidence is on the rise again. After a dip in the third quarter this year, largely because of worries about euro zone and sovereign debt fears, executives are more optimistic again.

New PE funds and investment deals give the Middle East hope

Private equity firms revealed a flurry of new funds and investment deals this week, raising hopes that activity will pick up in the Middle East after the financial crisis stunted growth and raised the spectre of a string of closures because of poor returns.

Industry players ranging from Citadel Capital of Egypt to the Abu Dhabi companies The National Investor, Invest AD and National Bank of Abu Dhabi, are grasping at signs of a recovery in global and regional markets as they contemplate raising new money and selling off some of their stakes.

"I firmly believe we're just about to turn the corner and get into a rather interesting few years up ahead," Ammar Alkhudairy, the managing director of Amwal AlKhaleej in Saudi Arabia, said at a private equity conference in Abu Dhabi. "When it's darkest is when opportunities become manifest."

Nobel laureate joins Central Bank

A Nobel Prize-winning economist who lay the groundwork for the creation of the euro is part of a team of international experts hired by the UAE Central Bank to guide future financial policy.

Nobel laureate Professor Robert Mundell and Sir John Bond, a former group chief executive and chairman of the UK banking giant HSBC, have been appointed to the newly formed International Advisory Council.

Dr David Dodge, a former governor of the Bank of Canada, and Dr Joseph Yam, the executive vice-president of the China Society for Finance and Banking, take the other seats on the council.

Rubenstein Says Emerging Markets to Get Higher Private Equity Investments - Bloomberg

David Rubenstein, co-founder of the Carlyle Group, said emerging markets will get higher private equity investments.

He said no emerging market can compete with China for private equity deals, while Brazil and India will also attract investments. Rubenstein was speaking in Abu Dhabi today.

Mumtalakat CEO Says Saudi Sabic Won't Sell Aluminium Bahrain Stake in IPO - Bloomberg

ahrain Mumtalakat Holding, which plans to offer 11.5 percent in Aluminuim Bahrain to the public, said Saudi Basic Industries Corp. has no plans to sell its stake in the smelter.

Mumtalakat Chief Executive Officer Talal al-Zain made the comment to Al Arabiya television in an interview aired today.

Abu Dhabi developers focus on project completions - bi-me.com

Abu Dhabi's property market is set for another year of consolidation in 2011 and the supply of high-end homes over the next 15 months will do little to address a shortage in mid-income housing, an executive said on Tuesday.

Developers in the emirate will continue with the completion and handover projects next year while some 8,000 higher-end homes are set to hit the market by end-2011, Gurjit Singh, chief operating officer at Sorouh Real Estate, told the Reuters Middle East Investment Summit in Dubai.

"The undersupply that is focused on in Abu Dhabi... is predominantly middle income and therefore is a gap that needs to be filled," he said, adding that Abu Dhabi's government was encouraging more middle income rental housing projects.

Turkmenistan: Ashgabat Unlikely to Supply Southern Pipeline - Diplomat | EurasiaNet.org

The top US diplomat dealing with Caspian energy issues remains certain that a “southern corridor” taking natural gas from the Caspian Basin to Europe will be built. But the envoy added that Turkmenistan is unlikely to be one of the countries supplying the gas.

“I'm as convinced as ever that there will be a southern corridor,” Richard Morningstar, US special envoy for Eurasian energy, said during a recent appearance at the Central Asia-Caucasus Institute in Washington, DC. A long-awaited sales and transit agreement signed in June between Azerbaijan and Turkey “certainly opens the door to that,” Morningstar said. “There is a lot of work to be done, but there will be a southern corridor.”

Morningstar said the United States still prefers the larger Nabucco pipeline to the smaller ITGI (Interconnector Turkey-Greece-Italy) and TAP (Trans-Adriatic Pipeline) projects. “In the abstract, Nabucco would be the preferable project. It's most advantageous from a political standpoint, from a strategic standpoint.”
But questions remain, he acknowledged, over where the gas would come from to fill the capacity of Nabucco.

Tuesday, 19 October 2010

FT Alphaville � US commercial real estate hits recession low

FT Alphaville � US commercial real estate hits recession low

FT Alphaville � Underwater mortgages and US housing


Thanks to Economix for directing us to these two impressive charts from the San Francisco Fed:
The charts show the dramatic rise in underwater mortgages throughout the US in the last ten years, a result of the big fall in house prices since the crisis. As we’ve noted before, a prevalence of underwater homes has reduced labour mobility in the US, and there is preliminary evidence showing that negative equity is correlated with unemployment.
In separate housing-related news, New York Fed president William Dudleycommented at length today about the housing market, but we’ve excerpted the especially interesting parts:
Housing market activity—both new construction and sales—remains depressed. On the construction side, total housing starts are running at just 600,000 units per year (seasonally-adjusted) in recent months. This is up from 530,000 units at the trough in the first quarter of 2009 but it is still extremely low by the standards of the last 50 years. In fact, the rate of new construction is so low that there is barely any net growth in the U.S. housing stock these days.
One reason why so little housing is being built is that many existing homes stand vacant. We estimate that there are roughly 3 million vacant housing units more than usual.
Impediments to home sales include tight lending standards, a weak job market and continued uncertainty regarding the future path of home prices. The large decline in home prices that occurred between 2006 and 2008 is also important. This decline reduced the amount of equity that owners have in their homes, making it difficult for people to come up with the funds needed to “trade-up” and move into better homes. …
While RealtyTrac reports that foreclosure completions in the United States exceeded 100,000 for the first time in September, it is important to remember that foreclosure is a lengthy process in most states. Our data indicate that, in recent quarters, borrowers are becoming less likely to fall behind on their mortgages, so fewer households are now entering the foreclosure process. At the same time, though, major lenders have acknowledged serious problems in the processes they have used to repossess homes and announced moratoria on new foreclosures. Taken together, these developments suggest that the situation in housing remains uncertain for the foreseeable future.
At present, the extent of the documentation problem and its wider ramifications are still uncertain. In conjunction with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, the Federal Reserve is therefore seeking to establish the facts through a review of the foreclosure practices, governance and documentation at the major bank mortgage servicers.
And as we mentioned earlier this month, the number of underwater homeowners means that increasingly lower rates are required for people to refinance.
Needless to say, all of this adds a sobering perspective to the news this week that housing starts climbed again in September, and that homebuilder confidence has rebounded somewhat. It’s always a relief when these figures don’t surprise the other way, but neither represents a dramatic improvement in this depressed market.

Abu Dhabi Shares Advance to April-High on Earnings; ADIB, First Gulf Gain - Bloomberg

Abu Dhabi shares climbed for a fifth day to the highest level since April as investors bet third- quarter earnings will increase and after First Gulf Bank PJSC’s recommendation was raised at EFG Hermes Holding.

Abu Dhabi Islamic Bank PJSC, the United Arab Emirates’ second-biggest bank complying with Shariah banking principles, climbed the most in more than a week after it said profit advanced 31 percent. First Gulf, the U.A.E. lender controlled by Abu Dhabi’s ruling family, jumped 2 percent after it was raised to “buy” at EFG Hermes. The ADX General Index increased 1.1 percent to 2,807.77, the highest level since April 26, at the 2 p.m. close in Abu Dhabi.

Lenders “should be coming in line with expectations on earnings,” said Anastasios Dalgiannakis, a Dubai-based trader at Mubasher Financial Services. “Banks have seen inflows from foreign institutional investors with FGB opening higher this morning on the back of an EFG upgrade.”

Shuaa likely to make profit in Q4: CEO | Reuters

Investment bank Shuaa Capital SHUA.DU expects to swing to a profit in the fourth quarter and has mandates for five initial public offerings (IPOs) in the United Arab Emirates, its chief executive said on Tuesday.

Sameer al-Ansari told the Reuters Middle East Investment Summit in Dubai the mandates for IPOs were in the healthcare, consumer and food product sectors.

The IPOs could be concluded in 2011, while a planned 1 billion dirham ($272.3 million) IPO for an Abu Dhabi-based infrastructure firm may instead be a private placement, he said."

Saudi economy slowly improving but lending weak | Reuters

Saudi Arabia's economy is slowly improving but growth comes mainly from government spending and growth in lending to the private sector will only reach healthier levels next year, bankers said.

Speakers at the Reuters Middle East Investment Summit in Riyadh said the top Arab economy is gradually shaking off any impact of global turmoil but banks would remain cautious to lend following the central bank's request that they raise provisions.

Major Saudi banks saw profits dropping in the third quarter after central bank governor Muhammad al-Jasser said banks should make provisions cover more than 100 percent of the non-performing loans."

Gulf Bank expects turnaround in Q3 | Reuters

Kuwait's Gulf Bank (GBKK.KW) expects the third quarter of this year to be a turnaround quarter as it executes a two-year plan to rebuild itself, its chief executive said on Tuesday. 'What everybody expects, is that this (third quarter) will be the turnaround quarter... and going forward every quarter should be slightly better than the previous one,' Michel Accad said at the Reuters Middle East Investment Summit in Kuwait. Gulf Bank was rescued by the Kuwaiti central bank in 2008, after about 260 million dinars ($921.6 million) of derivatives losses. Its troubles prompted the government to guarantee all deposits in local banks to restore confidence. The lender made a net profit of 1.48 million dinars in the second quarter this year, from a 9.1 million dinars loss a year earlier."

UPDATE 1-UAE's Etisalat Q3 net profit falls 23 percent | Reuters

Former state monopoly Emirates Telecommunications Corp (Etisalat) (ETEL.AD) reported a 23 percent fall in third-quarter net profit on Tuesday, as it seeks expansion abroad to tap into new markets.

The Arab world's second-largest telecom operator by market value said net profit fell to 1.7 billion dirhams ($463 million) in the quarter from 2.25 billion a year ago.

Analysts polled by Reuters had on average forecast a net profit of 2.05 billion dirhams and the result was below the lowest forecast of 1.95 billion."

UPDATE 1-Bahrain to inject $1 billion into Gulf Air | Reuters

Bahrain plans to give an extra 400 million Bahraini dinars ($1 billion) in fresh capital to loss-making national carrier Gulf Air [GULF.UL], the company said on Tuesday, adding to the country's fiscal burden.

'Gulf Air can confirm that its owners have raised its authorized share capital by an additional 400 million (dinars),' a spokeswoman for Gulf Air said in an e-mailed statement to Reuters.

She said the airline's capital would be increased to 530 million dinars."

UniCredit Reviews Libyan, Abu Dhabi Investors for Links, Messaggero Says - Bloomberg

UniCredit SpA’s Libyan and Abu Dhabi investors, which jointly own about 12.6 percent of the Italian lender, may have legal connections that would lead the bank to consider them as a single shareholder, Il Messaggero reported, without saying how it obtained the information.

UniCredit’s internal auditor, Ranieri de Marchis, is examining if the Libyan Investment Authority and the Central Bank of Libya, which together own about 7.6 percent of UniCredit, are independent entities amid a regulator inquiry, the daily said. De Marchis has found that the two investors may be linked to Abu Dhabi’s Aabar, which owns about 5 percent of UniCredit, through a Luxembourg fund, the newspaper said.

Voting rights of UniCredit’s shareholders are limited to 5 percent.

Dubai Denies Linking Sovereign Bond Sale to $500 Million Loan, Bayan Says - Bloomberg

Dubai’s finance department denied asking lenders for a $500 million loan as part of an arrangement to sell a sovereign bond, al-Bayan newspaper reported today without saying where it obtained the information.

The Financial Times reported yesterday that the emirate asked lenders seeking to manage its recent sovereign bond sale to offer the government a $500 million loan over three years at 300 basis points over the London interbank offered rate. The newspaper cited two senior bankers with knowledge of the matter.

U.S. Pushes Middle East Exports on $1 Trillion Investment Plans - Bloomberg

More than $1 trillion in planned infrastructure spending in nine Arab nations is driving U.S. ambassadors to encourage small- and medium-sized American businesses to export to the region.

The diplomats, in a six-city tour in the U.S. this week, detailed opportunities including a $325 billion investment plan over the next five to 10 years in Libya aimed at creating a railway system, improving healthcare and upgrading the power company. Algeria plans to spend $287 billion over five years on infrastructure, telecommunications and water treatment, said David Pearce, the U.S. ambassador to the country, in an interview at Bloomberg’s headquarters in New York.

The ambassadors are calling on U.S. company executives to set aside concerns about terrorism in the region and Iran’s nuclear program and tap into expanding economies seeking job creation. They pointed out the 19 percent gross domestic product growth rate in Qatar, the world’s fastest according to forecasts by the International Monetary Fund, a free trade agreement with Oman and a reduced tax rate on foreign corporations in Kuwait.

Saudi Mortgage Law Could Spark $32 Billion of Lending a Year - Bloomberg

After five years of searching for a mortgage in the Saudi Arabian capital, Riyadh, 28-year-old Abdulaziz Al Salem has some advice for his peers: Forget it.

“Home ownership in this country is nothing short of a nightmare,” said the father of one. “If you’re not descended from a wealthy family or have an extremely successful business, you probably should give the whole thing a pass.”

Frustrated young Saudis like Al Salem could spark a lending market that Capitas Group International estimates at $32 billion a year for the next decade if the kingdom passes a mortgage law that’s been a decade in the making. Saudi Arabia is literally millions of homes short of meeting its needs, after housing finance failed to keep up with a population that has quadrupled over 40 years to 28.7 million.

GCC Market Analytics: What's On My Financial Radar

GCC Market Analytics is primarily focused on Gulf equity markets. Occasionally, however, it's a good idea to take a broader look at what's happening in the world. Below are some of the things that have appeared on my financial radar over the past week or so.

1.) Foreclosure Mess in the US

You know something's serious when a new term is coined to refer to it: Fraudclosure. The emerging mortgage foreclosure debacle in the U.S. has the potential to get very bad, very quickly. If you're not yet familiar with this subject I suggest you read this primer.

If there is a significant slowdown in the foreclosure process (Bank of America has already halted foreclosures in all fifty states) then that's bad news for the housing market, bank revenues and potentially their bottom lines.

However, it gets worse. Other issues connected to the foreclosure problem are also emerging. For example, check out this Felix Salmon article. Should anything close to this come about 2011 could see these part two of the subprime crisis.

2.) QE2

Ben Bernake looks set to crank up his money printing machine again. The big question, however, is how much money will be printed. This article makes the case that consensus market expectations on the size of QE2 may be far higher that what the Fed is actually planning.

If consensus expectations are currently being priced into the markets and the Fed action falls short of them then QE2 may not be the big party that everyone is hoping for.

3.) Sliding US Dollar



Down 13% since the June high, it looks like the prospect of QE2 is being priced into the US Dollar as well. However, should QE2 not meet expectations this fall may prove to be overdone, at least in the short-term.

There's a lot ot talk about competitive devaluation and the possibility of a currency war (see here for example). A sliding dollar may beneficial to the US but it's at the expense of someone else's share of world trade.

4.) China now in a bull market (again)

Better news for China equities. After falling 30% following the market top in July 2009 the Shanghai Composite Index has now rebounded by 25%. That's bull market territory.



Dubai brokers still closing despite 20% stock market rally � ArabianMoney

Last week Mac Capital closed its brokerage operations in Dubai, making 25 staff redundant, the unlucky 13th closure of a broker in the UAE this year, and that despite a post-Ramadan stock market rally that has left the Dubai Financial Market up 20 per cent on the lows of July.

It is not very hard to see why brokers continue to make these painful decisions. Trading volumes are a tiny fraction of boom levels and commission rates very low.

FT.com - Investment: Rainy day funds recast

Up until three years ago, they were widely demonised as a possible threat to western security. Then they became saviours of first resort to the world’s ailing banks. Today many of them are chastened but on the mend.

EDITOR’S CHOICE
In depth: Sovereign wealth funds - Feb-06

Korean fund shows adventurous side - May-16

Seoul sovereign fund eyes private equity alternatives - Apr-04

Quiet SWFs no good for companies - Apr-04

Norway to curb risk to SWF - Mar-28

Sovereign wealth funds courted in debt sales - Mar-24

Sovereign wealth funds – managers of an estimated $3,000bn-$4,000bn of government-owned investments – have not had a uniformly good crisis. “In 2007 and 2008, [they] proved to be neither an unqualified threat nor an unqualified salvation for anyone involved,” says Edwin Truman of the Washington-based Peterson Institute for International Economics, author of a new book on the funds.

While the most heavily publicised hits are the result of ill-timed investments in such financial giants as Citigroup, Merrill Lynch, Morgan Stanley, Blackstone Group and Barclays, more lasting damage may come from the hijacking of the funds by their own governments. The SWFs of Kuwait, Qatar, Russia, China, Kazakhstan and Ireland have together put more than $100bn into propping up troubled domestic banks and collapsing markets. Further raids on national nest eggs cannot be ruled out.

DIC to sell off major stakes and extend loan

Dubai International Capital (DIC), the private equity arm of Dubai Holding, aims to sell off all its major stakes within five years and has no plans to make new investments as it seeks an extension on repayment of US$1.25 billion (Dh4.59bn) in loans.

"Our first priority is to defend our existing portfolio," David Smoot, the fund's chief investment officer, said on the sidelines of a private equity conference in Abu Dhabi yesterday.

"We will sell within the next five years but there's no rush."

Private option the way to go

Embattled private equity companies may be forced to recoup their multimillion-dollar investments through means other than public share sales in the coming year, says the head of a Saudi buyout firm.

Slack demand for initial public offerings (IPOs) could have severe consequences for private equity firms in the Gulf seeking to exit their investments. Many are already struggling to raise the cash for takeover bids.

"Get ready for exits other than IPOs," said Ammar Alkhudairy, a managing partner of Amwal AlKhaleej.

Regional bank growth forecast to slow down

Bank revenue and profit growth will stagnate in the Gulf this year, trailing international rivals that are experiencing a recovery in earnings after the financial crisis, a study by the Boston Consulting Group shows.

After years of expansion, revenue growth of GCC banks will slow to single digits this year, with UAE banks expected to be flat, the study said.

Banks in the Emirates were forecast to experience a 2 per cent decline in profits overall. Only Oman was expected to perform worse, with profits expected to shrink by 11 per cent.

UAE banks had been among the region's star performers, showing an average annual growth of 21 per cent since 2005.

Uncertainty lifts on Mideast investment outlook | Reuters

Speakers at the Reuters Middle East investment summit were upbeat on prospects for the region, buoyed by rising consumer sentiment and cash-rich investors keen to make emerging market plays.

'In 2008, the whole world stopped - for good investments, bad investments, everything. And that has picked up again,' said Ziad Makhzoumi, chief financial officer at Dubai's Arabtec ARTC.DU, the UAE's largest listed contractor.

The signs of recovery have gone 'beyond the green shoots stage' said Abdul Kadir Hussain, chief executive of Mashreq Capital. The pick-up is evident in different sectors across the region."

UPDATE 2-Saudi Arabia says easy oil is not over-Naimi | Energy & Oil | Reuters

Saudi Arabia's oil minister said on Monday the age of easy oil was not over as the kingdom still holds at least 88 billion barrels of oil in its largest oilfield.

'I am sorry to disappoint people, easy oil is not over,' Ali Al-Naimi told reporters in Riyadh on the occasion of OPEC's 50th anniversary.

'How can you say that easy oil is over, when we still have over 88 billion (barrels) in the Ghawar field...You can dismiss that notion that easy oil in Saudi Arabia is gone,' he added."

Kuwait's Global sees more layoffs | Reuters

Kuwait's Global Investment House (GLOB.KW), one of the country's biggest investment firms, will continue to monitor costs and expects more job cuts this year, although it expects an improvement in results, its managing director said on Monday. Speaking at the Reuters Middle East Investment Summit in Kuwait, Maha al-Ghunaim said she expected the firm's results to be better in the second half of 2010 than they were in the same period a year ago.

"I'm very positive that we will continue to see an appreciation in our revenue line, and if things start to move in the region, you bet that Global will have a place," she said.

"This crisis has been a blessing in disguise, because today Global is much better, stronger than where it was five years ago, regardless of the profitability," she added.

FT.com - High stakes played for in UAE nuclear scheme

When Abu Dhabi awarded a $20.4bn contract last December to a consortium led by the Korea Electric Power Corporation to oversee construction of a nuclear programme, many observers were taken by surprise.

The bid battle had been considered a two-horse race between US- and French-led consortia. Critical to Kepco’s success was a commitment to technology transfer and to train and employ a high proportion of UAE nationals in the massive plants to be built.

But that commitment may be difficult to meet, say industry watchers and participants, because of a dearth of qualified engineers locally and because of high international demand for skills. Today, some 60 nuclear plants are being built worldwide.

FT.com - Kuwait sparks confusion with labour U-turn

As media strategies go it was not the most consistent. Last month Mohammad al-Afasi, the Kuwaiti labour minister, announced that the oil-rich emirate would cancel the kafeel sponsorship system by February 2011 as a “gift” to expatriates to mark the anniversary of the country’s liberation from the 1991 Iraqi occupation.

A day later, however, an under-secretary for the same ministry performed an about-turn. The government, the official told Al Jazeera, the satellite channel, was not about to cancel the system but only to amend it to make it easier for foreign workers to transfer sponsors.

The result is confusion about the government’s real intentions, fuelling opposition and scepticism and pitting officials against recruitment agency owners.

Qatar: Brazil bank buy is just the start | beyondbrics | FT.com

Qatar may be a fresh-faced entrant at the top of the world’s richest nations table, but its gas-fuelled wealth has already led to the coining of a new phrase among some Middle East-based financiers: “Where Qatar’s emir goes, money follows.”

So it proved in Brazil. Qatar Holding’s $2.7bn purchase of a 5 per cent stake in Banco Santander Brazil comes eight months after the country’s emir, Sheikh Hamad bin Khalifa al Thani (pictured above), visited Latin America’s economic giant.

His wife, the strong-willed Sheikha Mozah, came along, as did Qatar’s powerful premier, Sheikh Hamad bin Jassim bin Jabor al Thani - often known colloquially as HBJ among investment bankers queuing up around the corner in the country’s capital of Doha, eager to secure M&A financing.

Monday, 18 October 2010

Kuwait's Wataniya 9-month net drops 44.8 pct | Reuters

Kuwait's National Mobile Telecoms Co (Wataniya) (NMTC.KW) reported on Monday a net profit of 53.7 million dinars ($190.4 million) for the first nine months, versus 97.4 million dinars in the same period a year ago.

Third-quarter net profit stood at 17.9 million dinars compared to 18.5 million dinars in the same period in 2009, the company said in a statement"

Saudi Shares Advance Second Day as Earnings Beat Estimates; Sabic Gains - Bloomberg

Saudi Arabia’s stocks rose a second day, driven by gains in Saudi Basic Industries Corp. after the world’s biggest petrochemicals maker said third-quarter profit surged 46 percent, beating expectations.

Sabic advanced to the highest intraday level in a week after net income soared to 5.33 billion riyals ($1.4 billion). Etihad Etisalat Co., Saudi Arabia’s second-largest mobile-phone company known as Mobily, gained a third day after quarterly profit rose 41 percent. The Tadawul All Share Index rose 0.4 percent to 6,286.13, the highest level since Oct. 16, at 1:47 p.m. in Riyadh. The Bloomberg GCC 200 Index of Gulf region stocks rose 0.5 percent.

“Excellent results from Sabic and Mobily” are driving stocks higher, said Ahmed Talhaoui, Abu Dhabi-based head of investment at Royal Capital. The earnings are in “sharp contrast with the poor results from banks released a week ago.”

Nakheel bond may see price dip at start, says Arabtec

Developer Nakheel's proposed bond sale to trade creditors may see its price fall initially as smaller contractors could sell to shore up their cash position, a top executive at Dubai builder Arabtec said.

Nakheel plans to issue a AED6 billion (US$1.63 billion) Islamic bond as part of its debt repayment plan.

"My view is the smaller bondholders... will probably sell it as it will make a big difference to the cash flow and this will force the price probably initially to dip," Arabtec's Chief Financial Officer Ziad Makhzoumi said at the Reuters Middle East Investment Summit in Dubai on Monday.

Santander Brazil to Sell $2.7 Billion Convertible Bonds to Qatar Holding - Bloomberg

Banco Santander SA agreed to sell $2.7 billion of bonds convertible into stock of its Brazilian unit to Qatar Holding.

UAE bourse merger unlikely before 2011: Arabtec | Reuters

A potential merger between the United Arab Emirates' two main bourses is unlikely before 2011 but would be good for traded UAE companies, the chief financial officer of the region's largest listed builder said on Monday.

'I don't think you will see any progress before next year because the process takes time,' Ziad Makhzoumi, CFO at Arabtec (ARTC.DU) said at the Reuters Middle East Investment Summit in Dubai.

The Gulf Arab emirate has three bourses -- the Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM.DU) (DFM), and Nasdaq Dubai -- each fighting to draw liquidity. DFM and Nasdaq Dubai are merging some operations."

Abu Dhabi Islamic Plans Investor Meetings in Asia, Europe Before Bond Sale - Bloomberg

Abu Dhabi Islamic Bank PJSC, the United Arab Emirates’ second-biggest lender complying with Shariah principles, will start meeting overseas investors this week before a possible sale of Islamic bonds.

The bank will hold “non-equity” meetings in Asia, Europe and the Middle East from Oct. 20, the lender said in a statement to the Abu Dhabi bourse today. Abu Dhabi Islamic hired HSBC Holdings Plc, Standard Chartered Plc and Barclays Plc to help sell bonds, two bankers familiar with the plan said last week.

Bond sales from the Persian Gulf have picked up since Dubai World in September reached an agreement with 99 percent of its creditors to alter the terms on $24.9 billion of debt. Qatar Islamic Bank SAQ issued $750 million of five-year Islamic bonds on Sept. 30. The Dubai government last month raised $1.25 billion in its first bond sale since the Dubai World debt crisis.

Sukuk Entice Canada Issuing $2 Billion to Spread Funding: Islamic Finance - Bloomberg

The growing demand for securities that meet Islamic religious principles may lead Canadian governments and companies to start issuing Shariah bonds.

HSBC Bank Canada may offer $500 million and three government-related borrowers from one Canadian province may issue $1.5 billion of sukuk, Omar Kalair, chief executive officer of Toronto-based UM Financial, said in an Oct. 14 interview. A “handful” of Canadian companies may sell C$1 billion ($980 million) of Islamic debt by 2013, said Daud Vicary Abdullah, global Islamic finance leader at Deloitte Corporate Advisory Services Sdn. in Kuala Lumpur.

Egypt, Nigeria, the Philippines and Thailand have announced plans to sell their first sukuk in the past three months, partly to tap Persian Gulf oil wealth. The combined wealth of the Middle East’s more than 400,000 millionaires grew 5.1 percent in 2009 to $1.5 trillion, Cap Gemini SA and Bank of America Corp.’s Merrill Lynch unit said in June.

Sukuk Entice Canada Issuing $2 Billion to Spread Funding: Islamic Finance - Bloomberg

The growing demand for securities that meet Islamic religious principles may lead Canadian governments and companies to start issuing Shariah bonds.

HSBC Bank Canada may offer $500 million and three government-related borrowers from one Canadian province may issue $1.5 billion of sukuk, Omar Kalair, chief executive officer of Toronto-based UM Financial, said in an Oct. 14 interview. A “handful” of Canadian companies may sell C$1 billion ($980 million) of Islamic debt by 2013, said Daud Vicary Abdullah, global Islamic finance leader at Deloitte Corporate Advisory Services Sdn. in Kuala Lumpur.

Egypt, Nigeria, the Philippines and Thailand have announced plans to sell their first sukuk in the past three months, partly to tap Persian Gulf oil wealth. The combined wealth of the Middle East’s more than 400,000 millionaires grew 5.1 percent in 2009 to $1.5 trillion, Cap Gemini SA and Bank of America Corp.’s Merrill Lynch unit said in June.

Invest AD Plans to Complete $150 Million in Deals in Turkey, U.A.E., Egypt - Bloomberg

Invest AD, an Abu Dhabi government- owned money manager, is completing three transactions valued at about $150 million in Turkey, Egypt and the United Arab Emirates.

“The deals have a range of sectors - one is consumer goods, the other is light-to-medium manufacturing business,” the company’s head of private equity, Samir Assaad, said in Abu Dhabi today. Invest AD may close one deal by year end, he said.

Abu Dhabi’s government has pursued investments in real estate, tourism and infrastructure as it seeks to diversify away from an oil-based economy. The emirate’s non-oil businesses will contribute 50 percent of its gross domestic product by 2015, adding about $167 billion a year, as projected in its 22-year economic plan.

Dubai International Capital Seeks to Restructure Its Business by Year-End - Bloomberg

Dubai International Capital LLC, an investment company owned by Dubai’s ruler, plans to restructure its business by the end of the year, Chief Investment Officer David Smoot said.

“Our goal is to be out of the restructuring business by the end of the year and back into the growth phase,” Smoot told reporters in Abu Dhabi today.

Dubai’s state-owned companies are struggling to repay loans as the worst financial crisis since the 1930s froze credit markets and prevented them from raising new debt. Dubai World, one of the emirate’s three state-owned holding companies, announced last month that it had reached a deal with 99 percent of its creditors to alter the terms on $24.9 billion of loans.

Dubai Seeks $500 Million Loan Commitment in Return for Bond Sale, FT Says - Bloomberg

Dubai asked lenders seeking to manage its recent sovereign bond sale to offer the government a $500 million loan over three years at 300 basis points over the London interbank offered rate, the Financial Times reported, citing two senior bankers with knowledge of the matter.

One regional banker who was asked to participate described the process as “pay to play,” the FT said.

It’s not known whether mandated banks Deutsche Bank AG, HSBC Holdings Plc and Standard Chartered Plc, have given commitments to make additional loans to Dubai, the newspaper said.

NBAD looks Down Under to help prop up funds

National Bank of Abu Dhabi (NBAD) is considering raising funds in Australian or New Zealand dollars in a new bond sale.

NBAD said in a statement to the Abu Dhabi Securities Exchange yesterday that it would discuss issuing medium-term notes denominated in either Australian or New Zealand dollars at a board meeting this month. The bank refused to comment on the size or details of the proposed issuance.

Last week, the Australian dollar hit parity with the US dollar, which trades at a fixed rate with the UAE dirham, for the first time in 28 years.

Boeing defends regional airlines

Boeing, the world's largest aircraft maker, has come to the defence of Gulf airlines, saying European carriers have "overdramatised" the issue of export credits.

Western airlines have called for their governments to limit the amount of financing available to their rivals in the Middle East after a deep recession for the global airline industry.

"I think the whole US Ex-Im [Export-Import] Bank issue has been overdramatised by some of the carriers," Marty Bentrott, the regional vice president of sales at Boeing, said during a visit to Dubai yesterday.

King's Battle With Clerics Dictates Fate of Saudi's Oil Economy - Bloomberg

When Saudi King Abdullah appeared in a newspaper photo with 40 veiled women in April, he broke a taboo by mixing with the opposite sex in public.

Since then, the 86-year-old monarch has crimped the power of conservative Muslim clerics more than any of his five predecessors since the foundation of the kingdom in 1932. He prohibited unauthorized religious edicts, or fatwas, and shut some of the websites where they’re issued. In the past month, he backed supermarkets employing females for the first time.

“This is really a part of the struggle over who controls Saudi Arabia,” Robert Lacey, author of 2009 book ‘Inside the Kingdom,’ said in a telephone interview from the Saudi city of Jeddah. “Ten to 15 years ago, it would have been very difficult for a Saudi king to discipline the clergy.”