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Thursday, 5 August 2010

Moody's sees continued negative outlook for Bahrain's banking system

The outlook for Bahrain's banking system remains negative, reflecting expectations that challenging credit and business conditions will continue over the medium term, notwithstanding the modest rebound in the economy in 2010, says Moody's Investors Service in its new Banking System Outlook on Bahrain.

These expectations are based on the continued weakness in Bahraini and regional real estate and the impact it is having on the rest of the economy.

The negative outlook is also driven by (i) ongoing franchise challenges at Bahraini-based wholesale lenders, as they try to refocus their business towards more profitable segments; and also by (ii) the more severe challenges at investment banks, which in many cases do not possess sufficient franchise depth to cope with the sharply lower private investment activity and depressed regional asset values.

Kuwait's Sovereign Rating Outlook Raised to Stable at Moody's on New Laws - Bloomberg

Kuwait’s sovereign ratings outlook was raised to stable at Moody’s Investors Service after the Persian Gulf country’s parliament approved “long-awaited” economic legislation and on its fiscal and trade performance.

“Since the formation of a new government” last year, “a number of important pieces of economic legislation have been passed,” Tristan Cooper, Moody’s head analyst for Middle East sovereigns, said in an e-mailed statement today. Moody’s previously had a negative outlook on the OPEC oil producer.

The new legislations include privatization, capital markets and labor laws as well as a four-year development plan, Moody’s said. These laws should help to develop the country’s limited private sector and attract foreign investment, according to the rating company.

Qatar Shares Advance to May 18 High on Earnings, Global Economic Outlook - Bloomberg

Qatar stocks rose to a more than two- month high, leading Gulf markets gains, as Industries Qatar said profit climbed and faster-than-estimated growth in U.S. service industries quelled concern the global economy is slowing.

Industries Qatar, the second-biggest petrochemicals maker in the Middle East, increased 1.7 percent. Qatar National Bank SAQ, the Persian Gulf nation’s largest bank by assets, climbed for a fourth day. The QE Index rose 0.7 percent to 7,133.41, the highest since May 18, at the 12:30 p.m. close in Doha. The gauge advanced 1.5 percent this week. The Bloomberg GCC 200 Index of Gulf stocks gained 0.2 percent.

“Market movements are being dictated by day traders, who rely on the direction of the global markets,” said Humam al- Shamaa, economic adviser at Al-Fajer Securities LLC, an Abu Dhabi-based brokerage. “The rise in Asia helped push up local shares.”

MGM Resorts’ Vegas venture slides - The National Newspaper

MGM Resorts International, one of the world’s biggest casino and hotel operators, said the value of its Las Vegas joint venture with Dubai World dropped for a third time, leading to US$883.5 million (Dh3.24 billion) in losses for the second quarter.

The company said the bigger than expected loss resulted from a $1.12bn reduction in its assessment of the CityCenter development in Las Vegas, which is yet to turn profitable since opening late last year amid a stagnant local property market and a fragile economic recovery in the US. The value of the complex on the Las Vegas strip, which includes residential units, hotels, retail space and a casino, is now about $2.65bn, said Dan D’Arrigo, the chief financial officer of MGM Resorts.

CityCenter cost about $8.5bn to build and is one of the largest privately financed construction projects ever in the US.

Bourses set for more famine than feast

The holy month of Ramadan, which begins next week, is a period of both quiet contemplation and festivities. The Gulf’s stock markets are likely to experience much more of the former, particularly Saudi Arabia’s Tadawul.

According to research by Jadwa Investment, Saudi Arabia’s Tadawul All Shares Index (Tasi) has dropped an average of 0.8 per cent during the holy month over the past 10 years, compared with an average monthly rise of 1.9 per cent over the remainder of the year.

Unsurprisingly, given that Saudis are either feasting, fasting or sleeping, trading volumes usually reach their annual nadir during Ramadan, which can lead to volatile prices.

Comment: Flexibility before currency union

In their different ways, China and the European Union have much to teach the Gulf Co-operation Council countries. But, when it comes to currencies, China is the example to follow and Europe the one to avoid.

While currency reform is not on the agenda, a gradual introduction of flexibility into GCC currency regimes is desirable since it would allow some control over monetary policy. Because of the dollar pegs adopted by five of the six GCC states, monetary policy is entirely dependent on the US.

What is on the agenda is currency union. But flexibility makes better economic sense.

Ajman’s towers leave legacy of despair

The dense banks of half-constructed towers in Ajman’s Emirates City loom over the horizon from miles away, testament to the distance travelled by Dubai’s property woes.

Envisioned as a community of about 90 towers, the dozen or so skeleton structures stand dormant. Ajman, one of the smaller members of the United Arab Emirates, followed Dubai’s lead and established itself as a budget version of the city-state’s deluxe real estate sector.

Emirates City, which lies about 50km from central Dubai, could have become another thriving dormitory for the booming Dubai economy. But it has fallen victim to the problems of its neighbour’s property sector: excessive speculation turning to despair as developers scrabble for cash amid a collapsing market.

Dead Kuwaiti Manager's Heirs Settle Claim Over Fake Harman, Textron Bids - Bloomberg

Kuwaiti asset manager Al-Raya Investment Co. and the estate of its former chief, who was found dead days after U.S. regulators accused him of profiting from bogus takeover offers, agreed to pay $3.2 million to resolve the case.

The Securities and Exchange Commission also will collect $3.3 million from accounts belonging to other unidentified investors who allegedly reaped gains on the fake offers for Textron Inc. and Harman International Industries Inc. last year, according to documents the SEC delivered yesterday to federal court in Manhattan. The accord requires a judge’s approval.

Hazem al-Braikan died in an apparent suicide in July of 2009, the Kuwaiti Interior Ministry said at the time, after the SEC linked him to “highly profitable and suspicious” trades before the appearance of Internet and media reports that investor groups planned to buy Textron and Harman. His estate and Al-Raya settled without admitting or denying misconduct, the documents show."

Wall St. WTF: “The Barazi Bruiser” encourages the "DIFCI Demon" to settle, or vice versa

When Muhammad Ali converted to Islam it was controversial. Ernie Terrell, an opponent, kept calling him Cassius. In 1967 Ali beat the hell out of the guy while yelling at him the whole time “What’s my name fool!?! What’s my name!?!” Ali, who won 2/3 of his fights by KO, never delivered a knock-out blow but rather won by decision. It’s been speculated that he did this in order to deliver a longer beating. As I read the Barazi response to the DIFIC counterclaim I imagine his attorney Imran Shafiq shouting “What’s my name fool!?! What’s my name!?!” at his computer while they delivering a solid beating to the DIFCI case all the while keeping his knock out blows in reserve.

The Barazi response opens with a description of Barazi’s background demonstrating that he is eminently qualified for the roles he held at DIFCA and DIFCI. It then goes into the detail of his compensation and his contract reaffirming what his salary was, its compensation, his entitlement to severance. Nothing too exciting. It begins to get interesting when it quotes the DIFIC Articles of Association to make the point that the Governor of the DIFC who is also the Chairman of DIFCI, that is to say Dr. Omar, who has the final say in the management of DIFCI and all other managers are appointed by and subject to his authority. This will be important later.

Next they use inconsistencies in the accounts of the DIFCI managers and the DIFCI counterclaim to shred the chronology and legality of DIFCIs actions in placing Barazi on the “investigative leave” and refusing to pay him. I highlighted some of this in an earlier post but the attack Shafiq launches is far more compelling and better researched. His alternate narrative is backed by quite a bit of documentation and a great many quotes from DIFC laws and DIFCI employee manuals. The core of the argument is that the claims of DIFCI are based on a manual that was not in force at the time of Barazi’s dismissal.