Sunday, 27 June 2010
Abu Dhabi's Aabar Investments (AABAR.AD: Quote) tumbled on Sunday after setting the date for a shareholder meeting to discuss de-listing the firm.
Middle East markets fell as an end-of-week surge in oil prices failed to outweigh gloom over declines in world equities following fresh doubts about a global economic recovery.
Aabar lost 7.1 percent. The world's only listed sovereign wealth fund has called a July 26 shareholder meeting to debate plans to convert into a joint stock company.
Kuwait stocks lost the most in two weeks, leading a decline in Middle East markets, on concern Europe’s debt crisis will slow the global economic recovery and speculation Gulf earnings may disappoint. Israel shares fell. The Kuwait SE Price Index slid 0.8 percent, the most since June 14, to 6,571. Agility led the drop, slumping to the lowest since 2003, after U.S. federal prosecutors said the logistics company may still be overbilling the American government. Saudi Arabia’s benchmark lost 0.6 percent. The TA-25 Index declined 0.7 percent to 1,086.49, the lowest close since June 8, as Israel’s largest communications company, Bezeq Israeli Telecommunication Corp., retreated.
Global sentiment worsened last week as disappointing U.S. housing data and a surge in the cost to protect from a Greek default reignited concern about the economic recovery. The Stoxx Europe 600 Index had its first weekly drop in more than a month and the Standard & Poor’s 500 Index fell 3.7 percent. Crude rose the most in two weeks, while gold gained on speculation a weakening dollar will boost its appeal as an alternative asset.
“Europe’s problems appear to be ongoing and investors are losing interest, turning to commodities such as gold and petrol,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi. In the Gulf, “there is some concern over second-quarter earnings.” Companies will start announcing second-quarter earnings next month.
Saudi Arabia does not plan to buy European government bonds, the Gulf oil producer's central bank governor Muhammad al-Jasser was quoted as saying on Sunday.
"There are no plans to buy European sovereign debt," Jasser was quoted as saying by Saudi al-Watan daily on the sidelines of the G20 summit in Toronto.
Leaders of the world's 20 leading nations meeting in Toronto this weekend are seeking ways for countries to cut public debt without undermining a fragile global economic recovery.
Egypt and Kuwait stocks retreated, leading a drop in Middle East markets, on concern Europe’s debt crisis will slow the global economic recovery and on speculation second-quarter earnings in the Gulf may disappoint.
Egypt’s EGX 30 Index lost 0.8 percent to 6,255.46, the lowest intraday level since June 15, as of 12:18 p.m. in Cairo, as Commercial International Bank Egypt SAE declined. Kuwait’s gauge slid 1.2 percent, the most in almost two weeks, and Israel’s TA-25 Index declined 0.8 percent. Gulf Bank KSC lost 5.6 percent as Al-Qabas said the Kuwaiti lender may allot 35 million dinars ($120 million) for second-quarter provisions.
Global sentiment worsened last week as disappointing U.S. housing data and a surge in the cost to protect from a Greek default reignited concern about the economic recovery. The Stoxx Europe 600 Index had its first weekly drop in more than a month and the Standard & Poor’s 500 Index fell 3.7 percent. Crude rose the most in two weeks and gold gained on speculation a weakening dollar will boost its appeal as an alternative asset.
Dubai house prices are not seen recovering before 2011 at the earliest while oversupply in commercial property will boost vacancy rates to more than 50 percent next year Jones Lang LaSalle said on Sunday.
A total of 26,000 homes are expected to be completed in 2010 and 25,000 in 2011, bringing total residential stock to 320,000 homes by the end of 2011, up from 287,000 at the end of the second quarter, the property consultancy said in a report.
"Despite the recent stabilisation in pricing levels, Dubai's residential market will experience a situation of oversupply and prices are not expected to recover before 2011 at the earliest," the report said.
Gulf Arab investors will increasingly look for opportunities outside the region, with deals in emerging markets and real estate helping to diversify holdings, an official at Credit Suisse Group AG said.
After 2001, Middle East investors began looking at their home markets, including Saudi Arabia and the United Arab Emirates, “and as a result outbound investments went from about 65 percent to less than 40 percent today,” Bassam Yammine, a managing director and joint chief executive officer for the Middle East at Credit Suisse, said in an interview in Dubai. That ratio “will eventually balance out,” he said.
Investors in the region “need to diversify” and are also more interested now in some emerging markets of Asia and Latin America, where growth and wealth creation has been “robust” and investors “want to participate in that shift,” Yammine said.
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit at zero cost.Wikipedia.
In our GCC markets we have some arbitrage opportunities in some stocks with dual listings. Some might have a marginal profit opportunity; others might almost make you double your investment. Global Investment House, which is listed both in the KSE and the DFM is traded at KD0.058 and KD0.103 respectively, indicating an arbitrage opportunity of almost 77% whereby you can buy Global stock in the KSE and sell it in the DFM. GFH, which is listed in the KSE, DFM and BSE can also provide you with a risk-free return. The difference between GFH’s price in KSE (KD0.039) and DFM (KD 0.040) is 2%, however, in the BSE it’s priced at KD0.108, thus potentially tripling your money.
The graph below shows the mispricing in Global’s stock in the KSE and DFM.
Mobile Telecommunications Co., the Kuwaiti phone company known as Zain, is in talks with Emirates Telecommunications Corp. to sell a majority stake in Zain Group, Al-Seyassah reported, without saying where it got the information.
A Zain delegation met last week with officials at the United Arab Emirates phone company, according to the newspaper.
Zain Chief Executive Officer Nabil bin Salama said June 8 the company completed a $9 billion sale of most of its African operations to Bharti Airtel Ltd. Zain is not in talks to sell a stake, bin Salama told a news conference at the time.
The UAE Offset group said yesterday it had signed an agreement with arms producer Denel to attract capital from the South African company into the country's economy under weapons offset transactions.
The Offset Programme Bureau (OPB) said it inked the deal after its "successful" participation in Eurosatory 2010, the world's largest gathering of land and air defences, which was held in Paris during June 14-18.
Matar Ali Al Romaithi, Director of the Offset Unit at the OPB, and Talib Sadik, the Group Chief Executive Officer of Denel, signed the agreement, the first of its kind between the UAE's Offset group and a major South African arms maker.
The deep pockets of Gulf sovereign wealth funds (SWFs) could be an increasingly important source of funding for western economies facing spending cuts in the new era of austerity.
Projects in Europe may become more financially attractive for the region’s government investment vehicles as austerity measures by EU governments depress market valuations, said Dr Alexander Mirtchev, the founder and chairman of the US economic consultancy Krull.
“These SWFs are starting to look increasingly as the premier source of available financing for a cash-starved international financial system,” said Dr Mirtchev, who is also an independent director of the Kazakhstan SWF Samruk-Kazyna.
The al Gosaibi family of Saudi Arabia is prepared to sell much of its 70-year-old business empire to help pay its creditors, informed sources say.
The family behind Ahmad Hamad Al Gosaibi and Brothers is offering creditors 20 cents on the dollar on US$9 billion (Dh33.05bn) of liabilities, funded by a disposal of assets, plus any proceeds of the family’s lawsuits against Maan al Sanea, a businessman and relative by marriage whom they accuse of defrauding the Al Gosaibi business. Mr al Sanea, the head of the Saad Group, has denied the allegations.
The Al Gosaibi conglomerate has extensive interests in construction and property, shipping, paint manufacture and beverage bottling.
A top British architecture company is suing Dubai Properties Group for more than Dh27 million (US$7.3m) of allegedly unpaid fees and costs over a stalled pair of towers in Dubai’s financial centre.
Hopkins Architects, an architectural and engineering company, has lodged its claim in the Dubai International Financial Centre (DIFC) Courts. Disputes between developers and contractors have arisen across the Emirates after the sudden decline of the property market in late 2008 began to affect sales of units in new projects. More disputes have also arisen between developers and buyers.
Central Park 08 was to be twin buildings, of about 50 storeys each, close to the Gate building in the DIFC. Hopkins was hired in May 2005 by Dubai Properties with a contract worth Dh50.8m.Hopkins also designed the Gate Village next to the DIFC, a set of buildings that includes offices and the Capital Club. Hopkins alleges it is owed Dh27m, including overtime, loss of profit, costs incurred from changes to plans and other expenses.
Dubai builder Arabtec expects payment in cash from troubled developer Nakheel to be made soon while payment in the form of a bond will take a few months, it chief financial officer said on Saturday.
The largest builder in the United Arab Emirates by market value has bid for enough work to achieve 7.4 billion dirhams ($2.02 billion) worth of orders in 2010, Ziad Makhzoumi told Dubai One TV in an interview on Saturday.
"We're still hopeful that we will get that soon, as they have announced that it will be some time in June," he said, referring to the outstanding cash owed by Nakheel, a unit of state-owned conglomerate Dubai World which agreed with its core creditor banks on a proposal to restructure $23.5 billion in debt.
Nakheel has embarked on a fresh round of job cuts as the Palm islands developer seeks to reduce costs and nears a deal with hundreds of creditors after a cash injection of US$8 billion (Dh29.38bn).
Just over 1,000 employees now work for the Dubai World-owned property developer after a series of redundancies that began at the end of 2008, a senior official said.
At least 50 people across all functions of the company have been laid off in recent weeks, bringing the company’s total workforce down to less than a third of its 2008 peak, he said.
Bahrain Mumtalakat Holding Co., the Persian Gulf country’s sovereign wealth fund, said its loss for 2009 more than doubled from a year earlier due to “the truly global effects of the economic crisis.”
The net loss widened to 183 million dinars ($485 million) from 69 million dinars in 2008. Revenue fell 28 percent to 1.04 billion dinars from 1.45 billion dinars a year earlier, the company said in an e-mailed statement today.
“I would characterise 2009 as a year in which we took an inward looking approach to prepare for the future,” Talal al Zain, chief executive officer of Mumtalakat, said in the statement. The company sees an opportunity to this year “potentially start the process of rebalancing our portfolio through measured steps which fit in with our role of investing for Bahrain,” he added.