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Thursday, 22 April 2010

Turkish Company Interested in Acquiring a Zain Stake?

Various reports suggest that a Turkish company is pondering buying a stake in Zain (the mother company) from Khorafi (major shareholders). It is unusual that this should arise while Zain and Bharti haven’t yet closed their deal yet. If rumors are true, then I believe that the Turkish company will most likely be Turk Telekomunikasyon (TTKOM) as locals are talking about an arab connection (TTKOM is 55% owned by Oger). It is worth mentioning that prior to the Zain Africa sale, Zain was going to sell a 46% stake in the mother company. Lets wait and see.




Dubai Shares Rise on Optimism Drop May Be Overdone on Earnings



Dubai’s benchmark index advanced the most in almost two weeks as investors bet corporate earnings will beat estimates.

Air Arabia rose the most in more than four months after the Middle East’s largest low-cost airline was raised to “overweight” at HSBC Holdings Plc. Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai, advanced to the highest level in a week. The DFM General Index gained 1.4 percent, the most since April 11, to 1,754.96. The gauge lost 3.4 percent this week.

Dubai’s measure has declined 4.8 percent since the end of March, giving the 32 listed companies price-earnings multiples of 6.11 times, according to data compiled by Bloomberg. That compares with a price-earnings ratio of 12.75 for the MSCI Emerging Markets Index.

State-owned Qatari fund set for more deals-analysts



Wealthy and seemingly unscathed by the global crisis, Qatari real estate firm Diar is expected to invest boldly and hunt for big stakes while other Gulf sovereign investors follow a more conservative approach.

Diar, the property arm of the Gulf state's sovereign wealth fund Qatar Investment Authority (QIA), recently embarked on an aggressive investment strategy, buying stakes in assets ranging from luxury hotels to global utility firms. [ID:nLDE63F08I]

Analysts and industry experts say the relative newcomer to the investment game will seek bigger stakes than other Gulf sovereign wealth funds, reaching beyond its core real estate remit to increasingly consider other international deals.

Dubai World Interest Rate Offer Likely to Hurt Local Banks



Dubai World’s offer to pay creditors interest of 1 percent on new loans as part of a plan to restructure $14.2 billion of debt, or a fifth of the market rate, will hurt local lenders more than foreign banks, analysts say.

“The cost of funds for local banks is higher because they pay a higher rate on deposits,” Germaine Benyamin, an analyst at Al-Futtaim HC Securities Co., said in a phone interview from Dubai today. The impact of the lower interest rates “would be lower on foreign banks than local banks.”

Dubai World, the state-owned holding company, is offering to pay creditors 1 percent interest on new loans as part of a restructuring plan, a banker familiar with the plan said April 15. Banks are reluctant to accept the new rate as it is lower than the market rate of about 5 percent and would force them to book impairment provisions, two bankers said that day.

Iraq’s Recovery Fuels Profits as Life Returns to City Streets



Customers heading for a Baghdad branch of Dar Es Salaam Investment Bank know the drill. You walk through the entrance and heavily armed guards stop you. You get body-searched at least twice. And your phone is taken away before you reach a teller. Mobile phones, of course, can trigger bombs or send a signal to armed accomplices.

Yet Dar Es Salaam, known as DES, is thriving as Iraq begins to show signs of life. Profits have grown from about $600,000 in 2004 to more than $16 million. HSBC Holdings Plc, the giant international bank that bought 70 percent of DES in 2005, feels so confident that it may put its own brand on the banks.

“We think the timing is right,” says James Hogan, HSBC’s country manager. “Iraqis are starting to reconnect to the outside world.”

Oman fund buys 12.6 pct stake in Petrovietnam unit



Oman Investment Fund has acquired a 12.6 percent stake in Petrovietnam Insurance Co PVI.HN, the insurance arm of Vietnam's state oil and gas group, for $42.4 million, a statement said on Thursday.

The deal makes the fund, run by the government of Oman, a strategic investor in the Hanoi-based insurance firm, the joint statement sent to Reuters said.

The deal allows PVI, Vietnam's second-largest non-life insurance firm in terms of direct insurance premiums, and Oman Investment Fund "to co-invest in Vietnam and globally leveraging respective strengths", it said.

Abdullahs face legal challenge



A legal case filed against the Abdullah brothers, who own the majority of the troubled jewellery company Damas International, will proceed after a judge threw out a motion to dismiss it on jurisdictional grounds.

Amwal AlKhaleej, a Saudi private equity company, sued the Abdullah brothers and a company they own, Damas Investments, in December for more than US$22 million (Dh80.79m) after the brothers allegedly did not pay for shares they agreed to buy two years ago.

The Riyadh-based firm alleges that the brothers agreed to buy more than 22 million of its shares at $1 a share in an agreement dated June 16, 2008, just two weeks before Damas was scheduled to make a public offering of 25 per cent of its stock.

MGM Mirage seeks to rebrand as MGM Resorts Int'l



MGM Mirage is asking shareholders to approve changing its name to MGM Resorts International, as the company looks to emphasize the scope of its brand.

The company, known mostly for its Las Vegas casinos, said Wednesday that the new name better represents its global presence. MGM and its joint venture partner in Macau expect to launch an IPO on the Hong Kong market later this year, and the company is developing Bellagio, MGM Grand and Skylofts hotels in Dubai that are expected to open in 2013.

"We believe this change will positively impact how customers, investors and the public perceive our collective strengths and abilities," Chairman and CEO Jim Murren said in a statement.

Middle East ETFs Head-To-Head: GULF vs. MES



After the Dubai debt crisis late last year, many investors feared that the Gulf boom was quickly coming to an end. But obituaries written for the Gulf economy turned out to be premature, as Gulf States such as the UAE, Qatar, and Bahrain have bounced back from that scare to post solid returns in 2010. Although Dubai continues to struggle as it flushes out the excesses of its property boom, neighbor Abu Dhabi is expected to grow its GDP by 3.8% this year, while Qatar is expected to have a world best 19.2% GDP growth in 2010. These forecasts have been boosted by increased oil prices, which have more than doubled from their lows last April. The soaring price of oil has helped to fuel the economies of the Gulf region while Qatar looks to benefit from expanded production of its vast natural gas reserves which could stimulate the region for years to come. But the improved economic outlook is also attributable to strength in domestic demand and non-energy sectors of the economy.Currently, there are two primary ETF options available to investors seeking exposure to this area of the world: the Market Vectors Gulf States Index ETF (MES) and the WisdomTree Middle East Dividend ETF (GULF). Below we highlight the main differences between these two ETFs, including comparisons of country exposure, expenses, and risk profile. While MES and GULF are similar in many ways, there are some nuances that may make one more appropriate for certain investors than the other (see more head-to-head ETF comparisons here).

IMF forecasts 4.5% growth in Middle East



The International Monetary Fund has forecast that economic growth in the Middle East and North Africa region will reach 4.5 per cent this year, driven by higher commodity prices and government spending.

But the IMF warned on Wednesday that there was “substantial uncertainty about this outlook”, including the risk of fallout from debt problems of Dubai Word, the emirate’s government-owned conglomerate that is seeking to restructure debts of about $23bn.

The fund said the economic impact of Dubai World had been relatively limited so far but cautioned that its “full impact may not be felt for some time”.

Mixed outlook for Gulf property



The Cityscape real estate conference held earlier this week in Abu Dhabi was a far cry from the whirlwind of mega-development launches and off-plan investments that used to be the norm at previous such events in the Gulf.

Even Abu Dhabi, which for several years has been plagued by shortages in both commercial and residential real estate, has been knocked somewhat off course, and attendees at Cityscape Abu Dhabi said the subdued mood showed little sign of lifting.

“I don’t think Abu Dhabi expected to be hit as hard as it was,” says Ian Albert, regional director of Colliers International, the consultancy. “The proximity of Dubai is pressing down prices and rents, and there looks like there will be an office oversupply soon.”

Role of sharia boards needs modernisation



It is an extraordinary sight. A sharia-compliant finance company is arguing in an English court that it should not have to make good on one of its financial obligations because the obligation was never Islamic.

Yet that is exactly what Kuwait’s The Investment Dar company is arguing as it tries to avoid paying Lebanon’s Blom Bank a return on deposits placed with it.

TID’s argument is that, since its articles of association permit it to engage only in business that is sharia-compliant, if the way in which it calculated the returns to Blom breached sharia law, the contract with Blom is void. As the lawyers say, TID would have acted ultra vires – beyond its powers – in entering the transaction.