Wednesday, 9 June 2010
At face value, building vast solar energy parks in the Arab Gulf seems like a slam-dunk. The region enjoys year-round sunshine, and temperatures routinely creep above 50 degrees centigrade during the scorching summer.
This may be excruciating for the Gulf’s inhabitants, but for solar power it is a boon. According to a report by Saudi investment bank NCB Capital - citing a study by Franz Trieb of the German Aerospace Centre - Arabia’s large desert regions annually receive the average solar energy equivalent to 1.5m barrels of oil per sq km.
But despite the region’s obvious advantages, does costly solar power make sense for Gulf states that have become used to cheap, subsidised electricity but need a lot more to power their ambitious projects?
Pension, insurance, and mutual funds are usually thought of as leading drivers of stock market development – and of professionalisation. During the 1990s, the economic prospects of countries such as Poland and Chile were transformed by the heightened role given to institutional investors.
Gulf exchanges, in contrast, are dominated by retail traders who tend to be short term and often driven by events – perhaps the publication of a company’s results or an impending initial public offering.
In April, retail investors accounted for 91 per cent of trading by value in Saudi Arabia, 80 per cent in Dubai and 71 per cent in Kuwait. Big institutions were noticeable by their absence. This is, however, slowly changing, says an NCB Capital report.
The financial crisis was a shock for the Gulf’s officials and business leaders, prompting unfamiliar debt restructurings and defaults. But for some it has been a time of opportunity.
Exotix, a boutique investment bank based in London and backed by Icap, the interdealer broker, is used to operating on the less-explored edges of the financial system. It has forged a name as a leading broker of esoteric securities such as North Korean bonds, and is now eyeing the Middle East for further growth.
The frontier-markets house, founded as a fixed-income specialist after the LTCM hedge fund imploded in 1998, has been involved in some of the region’s most troubled instruments. It now plans to open an office with six full-time staff in Dubai next month.
Since the credit crunch struck, Dubai’s financial district has emerged in relatively better shape than many other parts of the emirate’s economic infrastructure.
While a few restaurants and financial entities have folded, larger institutions continue to base their regional operations in the district, even if they have trimmed their workforces.
But as the government seeks to reduce costs, the Dubai International Financial Centre is set to unveil a series of internal restructuring’s, beginning with deep staff cuts.
Bahrain's Gulf Finance House GFHB.BH (GFHK.KW) has been badly hit by a regional real estate crash and has struggled to reduce its debt as the repayment of a $100 million loan looms in August.
Its troubles underscore how the financial crisis has challenged banks and regulators in the oil exporting economies of the Gulf, once thought immune from shocks due to energy income, and how far some must go before regaining solid ground.
Via headline are questions and answers on the risks to GFH, its financial partners and Bahrain's banking industry.
The oil market has "no room" for more crude supplies, OPEC said on Wednesday as it trimmed its forecast for world oil demand growth in 2010 and hiked its prediction for supplies from outside the group.
The monthly report from the Organization of the Petroleum Exporting Countries, which pumps more than one in every three barrels of oil, said world oil demand would rise by 940,000 barrels per day (bpd) in 2010, 10,000 bpd lower than previously forecast.
At the same time, the group said crude oil production from countries not in OPEC would jump by 640,000 bpd this year, raising its estimate from a previous forecast of a 530,000 bpd rise.
Kingdom Holding 4280.SE, owned by Saudi investor Prince Alwaleed bin Talal, and UAE-based Mubadala Development Co have discussed future potential business collaboration, the Saudi firm said on Wednesday.
Prince Alwaleed bin Talal has held a meeting with Khaldoon Al-Mubarak, CEO of Mubadala Development Co in Riyadh, their second meeting this year, Kingdom Holding said in a statement.
"The meeting was attended by a delegation from Kingdom Holding, Rotana and Mubadala Development Co ... The meeting touched upon local, regional and international economic and investment issues, and future potential business collaboration," Kingdom Holding said.
An ambitious $4 billion plan to build the world's longest marine causeway linking Qatar and Bahrain faces delays due to protracted negotiations over its cost and design.
"It's taking more time," Jaber Ali Al Mohannadi, general manager of the Qatar Bahrain Causeway Foundation, or QBCF, which is in charge of building the giant bridge, told Zawya Dow Jones in a phone interview Tuesday. "We are negotiating the price and there are some technical and financial issues."
Work on the causeway was originally slated to finish in 2015 and cost around $4 billion, according to Zawya.com data. The project is jointly funded by the Qatari and Bahraini governments.
The structure will connect the West coast of gas-rich Qatar with the East coast of the tiny Persian Gulf archipelago of Bahrain and eventually form part of the planned Gulf Cooperation Council, or GCC, rail network. It is aimed at improving transport and trade links between the two states.
Qatar and Bahrain, together with Saudi Arabia, the United Arab Emirates, Kuwait and Oman, form the GCC.
But the project, first announced in 2001, has been dogged by spiraling cost and delays partly due to the decision two years ago to add freight and passenger rail lines.
A consortium led by Vinci Construction Grands Projects in May 2008 signed the design-build contract for the causeway scheme but the main construction contract was never awarded.
The consortium also includes Germany's Hochtief AG, Consolidated Contractors International Co., or CCC, and Qatari Diar Real Estate. KBR Inc. (KBR) and U.K. engineering firm Halcrow also in 2008 won the two-phase contract for management planning and design oversight of the bridge.
"The planning contract was finished in 2008 but a construction contract was never awarded," a spokesman for Hochtief said.
Denmark-based COWI, the consultant on the giant bridge, also known as the Friendship Causeway, was ordered to "demobilize" by the contractors about a month ago but was not told why, a person familiar with the matter said.
Another person confirmed the team working on the project design was scaled down in the last few months but added this was because the design phase had been completed.
The delay comes amid rising political tensions between the two Gulf Arab neighbors in recent weeks after a Bahraini fisherman was wounded by Qatari coast guards in early May for allegedly straying into Qatari waters. Days later Qatar-owned broadcaster Al Jazeera's office was closed down in Bahrain.
"It's called the friendship bridge for a reason and it's supposed to be based on the idea of mutual friendship and respect and when that friendship and respect isn't going so well then obviously that affects the whole support for the idea," said Shadi Hamid, deputy director at think tank Brookings Doha Center, part of the Saban Center for Middle East Policy, a division of the Washington-based Brookings Institution.
Kuwait's central bank has tightened control on borrowing in the country's investment sector and given companies two years to comply, state news agency KUNA said on Wednesday.
The central bank governor, Sheik Salem Abdul-Aziz al-Sabah, told KUNA a revision of the regulator's policies showed the need for new controls on financial leverage, liquidity and international borrowing.
He said the global financial crisis uncovered weaknesses in risk and asset management in some of the country's investment companies.
Standard Chartered today announced the appointment of Christos
Papadopoulos as Regional CEO for the Middle East and North
Africa. Christos replaces Shayne Nelson, who moves to Singapore
as CEO of the Private Bank. The appointment will be effective
Christos will be responsible for the Middle East and North
Africa. He will be based in Dubai and report to V. Shankar, CEO
EMEA and Americas.
For the last 4 years, Christos has successfully led and
transformed the Financial Institutions practice within the
Wholesale Bank. Prior to joining Standard Chartered, Christos
was Senior Partner at KPMG in London where he specialised in the
Financial Sector for over 17 years. Christos has lived and
worked in the Middle East, having been on the Board of KPMG
Middle East, and Chairman of KPMG Kuwait and Saudi Arabia
Walking around Kuwaiti malls (Avenues in particular), you would see that many multinational retailers are represented in Kuwait. There was huge boom in terms of the number of retailers being represented in Kuwait, a boom that can be mainly attributed to Al Shaya Group. In the past year, we have seen the likes of P.F.Changs, American Eagle, Pottery Barn (soon), Pinkberry, among others arrive in Kuwait. The Kuwaiti consumer has a big appetite and a big spending power, making the Kuwaiti market an attractive one.
CB Richard Ellis published a report that discussed the retail business, and the destinations of retail giants’ expansions. The report pulled its data from 294 retail company in 69 countries. The result was that there has been a shift of focus from the developed markets (US, Europe) to emerging markets (Asia, Middle East), which is understandable as the countries are growing at much higher rates, and their population’s income is growing creating demand for retail outlets. Kuwait ranks as the 11th most important destination in the world, and Kuwait City ranks in the 18th spot in terms of cities. The rank is based on the percentage of the respondants that have presence in these countries/cities. What is notable as well is the jump in ranking among Middle Eastern cities, as Riyadh jumped from the 25th place to the 14th, Jeddah from the 26th to the 15th, and Kuwait City from the 28th to the 18th. The rankings of Kuwait City, Riyadh, and Jeddah all surpass that of Las Vegas, Barcelona, and Istanbul.
My question is are Middle Eastern cities more important than Las Vegas, Barcelona, and Istanbul (which attract millions of tourists annually) in the point of view of retailers, or do these cities have more domestic outlets and do not rely on big name retailers?
The United Arab Emirates is set to sign a deal on Wednesday with Total, the French energy group, and Abengoa Solar, the Spanish company, to build the world’s largest concentrating solar power plant.
The $600m Shams plant, located 120km south west of Abu Dhabi, the capital of the United Arab Emirates, will produce 100MW of energy – 10 times more than an existing solar park built by Enviromena Power Systems at the Gulf country’s ambitious Masdar alternative energy initiative.
For Total, the plant will be the manifestation of the company’s increasing presence in solar energy, an alternative fuel in which competitors such as BP and Shell have reduced their interest in favour of developing second generation biofuels, which produce more energy and have a less detrimental effect on food production than corn ethanol and other biofuels currently on the market.
The US banker at the centre of one of the Middle East’s biggest corporate scandals has told The National why he fled the region during investigations into the collapse of The International Banking Corporation (TIBC), a Bahraini bank.
Speaking from his home in California, Glenn Stewart, the former chief executive of TIBC, said: “I did not want any longer to be subject to the arbitrary actions and retaliations of the Bahrain legal system. The only way to fight this was to get out of the country.”
Mr Stewart left Bahrain last month, despite travel restrictions imposed on him while the Bahrain central bank and the public prosecutor examined evidence in the TIBC case.
Union Properties PJSC is close to selling its Ritz-Carlton hotel in Dubai and plans to dispose of other assets after the developer “got distracted” during the property boom and took on projects and businesses that were a poor fit, its chairman said.
The company “got involved in so many businesses that were not core,” said Khalid Bin Kalban, who took over when Chief Executive Officer Simon Azzam resigned a year ago after 23 years in charge. “I don’t understand the rationale.”
Union Properties, Dubai’s third-largest developer, halted projects after credit dried up in the financial crisis and an increasing number of customers defaulted. In 2009, the company reported its first full-year loss and suspended work on F1-X, a Formula One theme park in the MotorCity development at the Dubai Autodrome race track.
An Abu Dhabi-backed fund is expected to announce as early as today it has bought out the senior debt in a stalled Omani real estate project in a landmark regional distressed real estate deal.
People close to the matter say Essdar Capital has concluded a third-party tender offer on class A debt held by Blue City, which it says gives effective control of the assets and future direction of the tourism and residential project. The tender has been carried out with the consent of Blue City management.
The transaction marks a significant regional distressed real estate transaction widely expected in the Middle East where dozens of projects remain stranded after the property market corrected. It may also finally prompt some movement at the much-troubled Blue City development.
Eric Wang is a young man and this gives him the privilege to reach out for the stars. The sales manager in his twenties works for Shenzhen Hexie Mei'an Electronic, a Chinese technology firm.
At the 4th China Sourcing Fair in Dubai, the United Arab Emirates (UAE), Wang's products offered Islamic prayer times and verses of the Koran, the holy book for Muslims, not only as an alarm clock.
"We aim to serve 1.6 billion Muslims worldwide with our products," he told Xinhua. The main gadget he stunned visitors with was the real Koran on paper, read loudly with a light pen for 33 U.S. dollars.