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Tuesday, 20 April 2010

Q-tel, Vodafone Qatar to Join Qatar’s Rebranded Index

Qatar Telecom QSC, the country’s biggest phone-service provider, and Vodafone Qatar QSC, will be included in Qatar’s rebranded benchmark index starting May 6 as the bourse seeks to boost volumes.

Qatar’s DSM20 Index will be renamed the QE Index following the rebranding of the Qatar Exchange in June, the exchange said in a statement on its Web site today. The QE Index will be calculated based on free-float market value and the average daily traded value.

“The overall enhancements to the current index are beneficial to public investors in Qatar and will contribute to the development of the liquidity of the Market,” Andre Went, chief executive officer of the Qatar Exchange said in a statement posted on the local bourse.

Islamic banks caught between two worlds

Corporate restructurings were until recently relatively rare in the oil-rich Arab Gulf, but the experience is particularly novel for investment companies and banks that adhere to Islamic, or sharia, law.

The Islamic finance industry grew exponentially in the years preceding the financial crisis – particularly in the Middle East – boosted by increasing religious awareness and an inflow of billions of dollars of oil revenue into the Gulf. The industry now holds total assets of about $950bn, according to Moody’s.

Yet it has been hit by the economic downturn, which caused several high-profile Islamic investment banks to default and restructure their operations and debt.

Restructurings in the Gulf are already complicated by underdeveloped legal frameworks, a lack of transparency, inexperienced commercial courts and a “head in the sand” approach, bankers and lawyers say. Adherence to sharia adds another layer of complexity to the process.

Dewa Pricing Pressures Dubai World Debt Talks

Pricing of a benchmark bond by Dubai Electricity & Water Authority is putting Dubai World's negotiations to reschedule almost $24 billion of debt under pressure, bankers familiar with the matter said.

The utility, or Dewa, earlier this month sold a $1 billion bond to yield 1.05 percentage point over comparable Dubai sovereign debt. The company will pay a semiannual coupon at a rate of 8.5% to bond holders until the instrument reaches maturity in 2015.

The interest rate for the Dewa bond is much better than Dubai World's recent offer to creditors of the conglomerate and of Nakheel, its property subsidiary. Dubai World had offered a 1% interest rate on some of its outstanding debt in a restructuring proposal to 97 creditors now being considered by banks, according to bankers aware of the talks.

Qatar Shares Rise, End 4 Days of Drops, as Banks Beat Estimates

Qatar shares advanced for the first time in a week after quarterly earnings at Commercial Bank of Qatar QSC and Doha Bank QSC beat analyst estimates. Kuwait’s measure dropped for a second day.

Commercial Bank of Qatar, the country’s second-largest bank, rose the most since April 12, while Doha Bank gained the most in almost a month. Qatar National Bank SAQ, the company with the highest weighting on the nation’s benchmark index, advanced for the first time in four days. The DSM 20 Index increased rose 0.7 percent to close at 7,549.55.

“Commercial Bank of Qatar and Doha Bank in particular had good earnings,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “They are the market’s most liquid names and tend to determine a direction for the market.”

Saudis Tighten China Energy Ties to Reduce U.S. Dependence

Li Wei, a Chinese diplomat in Riyadh, had only just seen off a Ministry of Commerce delegation to Saudi Arabia this month when he started preparing for another Chinese governmental visit in two weeks.

“Every month we have delegations coming to Saudi Arabia,” said Li, who works in the Chinese Embassy’s commercial section in the Saudi capital. “We are too busy.”

China, the world’s second-largest oil consumer, and Saudi Arabia, holder of about a fifth of global crude reserves, are forging ever closer ties as the Persian Gulf kingdom responds to a Chinese drive to feed its rising energy needs. China in November overtook the U.S. as the main buyer of Saudi oil, and Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are investing in refinery and petrochemicals projects in China.

Damas Appoints Nine New Board Members After Probe

Damas International Ltd., a Dubai- based jewelry retailer, named nine new board members after its previous board resigned on orders from the market regulator for failing to prevent the unauthorized withdrawal of funds.

Damas was fined as much as 2.57 million dirhams ($700,000) on March 21 by the Dubai Financial Services Authority and its board asked to resign after an inquiry found its owners, the Abdullah brothers, withdrew about 365 million dirhams without board approval.

Abbas Ameeri, Abdulla Almazroei, Anan Fakherddin, Ehsan Abbas, Ibrahim Belselah, Nicholas Hegarty, Simon Copleston, T N Pratap and Tariq Ali were appointed to the board after getting shareholder approval, the company said in a statement to Nasdaq Dubai today. Damas may also list shares in dirhams, U.S. dollars or both, according to the statement.

Dubai’s Economy Contracted 2.5% in 2009, Preliminary Data Show

Dubai’s economy contracted 2.5 percent last year after expanding 5.7 percent in 2008, according to preliminary government estimates in a document obtained by Bloomberg News.

The Dubai Statistics Centre declined to comment on the data as economic growth rates for 2009 have not been made public yet.

Dubai and its state-owned entities, which borrowed more than $100 billion to transform the city into a global tourism, trading and services hub, suffered as international credit dried up and real estate prices plummeted by 50 percent from their peak. A slowdown in global trade also led to the contraction in the economy.

Swiss bank asks DIFC Court to reject claim for investment loss

A subsidiary of Switzerland’s Bank Sarasin yesterday asked a Dubai court to strike down a US$225 million (Dh826.4m) claim that it misrepresented investments to three members of a prominent Kuwaiti family.

The request came during the first hearing of a case lodged in the Dubai International Financial Centre (DIFC) Courts late last year.

Rafed al Khorafi, the chairman of AM Al-Khorafi Establishment in Kuwait, along with his wife and mother, claimed investments made in 2007 were presented as ones that could “never lose money”, but resulted in $75m of losses, court documents show.

Oaktree, Highland Said to Object to Mauser Profit Calculations

Oaktree Capital Management LLC and Highland Capital Management LP demanded a German packaging company owned by Dubai’s ruler stop using debt buybacks to boost profit, two people familiar with the matter said.

The funds and two other investors that own more than 66 percent of the company’s 700 million euros ($943 million) of senior debt also demanded Mauser Group restate past financial figures to remove gains that helped it meet the terms of its debt agreements, said the people, who didn’t want to be identified because the talks are private. Mauser is owned by Dubai International Capital LLC.

Lenders are insisting that companies meet debt covenants rather than grant waivers like they did in the past as the economy recovers. Creditors last year forgave 7 billion euros of senior loans as part of restructurings to keep speculative-grade borrowers afloat, according to Fitch Ratings.

Gas Cartel Too Soon in the Making

Proponents of an OPEC-style cartel for gas would kill the very market they aim to control.

The Gas Exporting Countries Forum met Monday in Algeria. The latter's energy minister says he wants gas to price at parity to oil. In the U.S., that would mean gas costing as much as $13.50 per million British thermal units, triple today's price and close to previous hurricane-inspired spikes. Gas exporters are hurting because liquefied natural gas, which allows cargoes to be shipped independently of pipelines, now accounts for 10% of global supply. That enables greater competition. Also, America's "shale gas" revolution, coinciding with recession, has left the market oversupplied.

Yet OPEC's experience carries three lessons for any budding gas cartel. First, there is the cost of coordination. OPEC works because Saudi Arabia is prepared to invest in, and carry the opportunity cost of, spare capacity. Who would do this for gas is unclear. Russia's record of investment wouldn't foster much confidence. Qatar, meanwhile, can withstand lower gas prices anyway

Higher prices, meanwhile, encourage competing supplies. The 1970s oil shocks made Alaska, Mexico and the North Sea viable oil provinces. OPEC's market share, then two-thirds, is 40% today. And higher prices earlier this decade made U.S. shale gas viable.

Perhaps the biggest problem, though, is that you can't influence global prices by controlling marginal supply without a truly global gas market. The latter, facilitated by LNG cargoes, remains some way off.

Imposing a cartel now would be a big setback to that trend. It would also undermine gas's role as a "bridge" between fossil fuels and renewable energy. Trying to establish a cartel now would kill the opportunity for forming one in the future, when it might indeed be viable.END

Prince Alwaleed:Citigroup CEO Has His 'Firm Backing'

Saudi Arabian billionaire Prince Alwaleed Bin Talal, Citigroup Inc.'s (C) biggest individual shareholder, said Monday that Chief Executive Vikram Pandit has his "firm backing," and congratulated the company on posting a first-quarter net profit of $4.4 billion.

"Citigroup has demonstrated its ability to overcome the recent economic obstacles," Alwaleed said in an e-mailed statement.

"I commend Citigroup's performance and the management of Citigroup under the leadership of Pandit who has my firm backing," he said.

Russia, Qatar agree on Yamal gas joint project

Russia and Qatar have agreed to work together to develop the gas reserves of Russia’s Arctic Yamal peninsula, the two sides said in a joint statement yesterday.

“The parties have reached an agreement to further develop their cooperation through joint implementation of oil and gas projects in Qatar and Russia, including the integrated project of development of natural gas reserves of the Yamal peninsula, in third countries, as well as through scientific research”, said the statement, issued at a meeting of major gas producers.

The Deputy Prime Minister and Minister of Energy and Industry, H E Abdullah bin Hamad Al Attiyah, and Russian Energy Minister Sergey Shmatko signed the statement.END

Gulf states run the risk of duplicating strategies

What is the best business to be in in the Gulf? “Artists’ impressions,” quipped an analyst as we discussed the pros and cons of the region’s swathe of mega-projects.

With an eye on the future, Abu Dhabi, Bahrain and Qatar have developed their 2030 visions, all intended to diversify economies and create jobs for growing, young populations. Kuwait, which lags the pack, has gone for 2035, while Saudi Arabia has its economic cities and a five-year $400bn infrastructure plan.

And where there is a mega-project, there is the artist’s impression of what the future holds – sketches of towering office blocks, villas, marinas and ports. Often, the images are accompanied by statistics highlighting the benefits the developments are intended to bring.

Qatari flagship moves into unique space

In February, Qatar Financial Centre, one of the gas-rich state’s flagship projects, shocked regional banking circles by culling staff in a strategic overhaul.

For many observers, the move, which saw a third of the QFC’s about 100 staff made redundant, was counterintuitive. Many saw the financial troubles in the wider region as providing an opportunity for the Qatar centre, which enjoys the backing of one of the region’s most cash-rich government and is supported by a doubling in gas exports.

From mergers and acquisitions to debt issuance, Doha has provided a steady set of fees for investment bankers in Dubai, where a real estate crash and debt problems continue to hamper business prospects.