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Friday, 10 September 2010

FT.com / Financials - Dubai World agrees terms with creditors

Dubai World, the troubled conglomerate, has announced that it had reached agreement with nearly all it remaining creditors on restructuring $25bn of liabilities.

The group said on Friday that the formal agreement to restructure a total of $24.9bn, which includes $10bn owed to the government of the United Arab Emirates, means that it is “well-positioned to close restructuring over the coming weeks”.

In May Dubai World reached a deal with a core group of seven leading creditor banks representing 60 per cent by value of $14.4bn owed by the conglomerate’s holding company. This offers to pay back principle over five to eight years on sub-commercial interest rates.

Dubai World Says 99% of Lenders Agree to Restructure $24.9 Billion of Debt - Bloomberg

Dubai World, the state-owned holding company seeking to alter the terms on $14.4 billion of bank debt, said creditors representing about 99 percent of the loans agreed to the restructuring proposal made in May.

“This overwhelming support means that the company is well positioned to close the restructuring in the coming weeks,” the company said in an e-mailed statement today. “The proposal puts the company on a sound financial footing, enabling it to realize value for the benefit of all stakeholders.”

The company set up a special tribunal in December to help Dubai World’s reorganization that requires the approval of lenders representing two-thirds of the value of the loans for a restructuring proposal to hold.

GCC Market Analytics: Saudi Stocks: Relative Strength

Most of the analysis I've posted so far has concentrated on the market or index level. Knowing what the broad market is doing is important but I also want to provide sector and stock level analysis as well. Now that I have my historical share price database in working order I can start doing this.

In this post I'm going look at Saudi stocks and introduce a simple relative strength study that can be used to quickly evaluate the how strong or weak recent price action has been for a particular stock. It can also be used to compare the relative strength/weakness between stocks.

The study compares the current price of a stock to the previous 20, 50 and 100 days price action. Specifically, the current price is ranked between 0 and 100 according to the 20, 50 and 100 day price ranges. For example, if the current price of a stock was $47 and this was the highest price for that stock over the last 20 trading days the resulting ranking value would be 100. However, if $47 represented the lowest price over the last 20 trading days the ranking would be 0. A ranking value of 50 would signify that the current stock price was in the middle of the price range over the last 20 trading days.

The chart below shows the last 100 trading days for Saudi Hollandi Bank. The three yellow triangles mark the stock price 20, 50 and 100 trading days ago. The red circle highlights the current price of the stock. The 50 day price range is also show on the chart.



As can be seen, the current price is the highest price during the last 50 trading days. The same goes for the current price versus the 100 and 20 day price ranges. Is this example the ranking of the current versus all three historical price ranges would be 100.

And below is how the same information is presented in the relative strength study:


The three red-to-green spectrum bars correspond to the three time periods; 20, 50 and 100 days. The dark blue diamonds mark the ranking of the current price versus the historical ranges. For Saudi Hollandi Bank all three diamonds are positioned to the far right indicating that the current price is in the highest portion of the historical ranges.

This is a stock that has clearly demonstrated significant price strength over the past 20, 50 and 100 trading days. This strength is captured in the "Rank" column above. The highest ranked stocks are those that have achieved the highest combined relative strength across the three trading ranges compared to other Saudi stocks. That Saudi Hollandi Bank has a ranking of 1 tells us it is currently the strongest performing Saudi stock.

Here's another example for The National Shipping Company:


In this case the diamond is in the middle of the bar for the 20 day price range indicating that the current price is in the middle of that range. For the 50 and 100 day ranges the diamonds are positioned towards the left end of the bar indicating that the current price is in the lower portions of those ranges.

The National Shipping Company has a ranking of 98. Given that there are about 150 Saudi stocks (in my database, that is) this ranking suggests that The National Shipping Company is one of the weaker performing stocks.

So, this study shows the relative strength of a stock (how the current price of a stock compares to its historical price action) and how that relative strength compares to other stocks. At the end of this post is a complete list of relative strength data for all Saudi stocks. Below, however, are the ten current highest and lowest ranked relative strength Saudi stocks:


Of course, knowing the stocks with the highest and lowest relative strength is one thing but how do we use this information? Do the highest ranked stocks continue to perform strongly? Or is it best to buy the weakest stocks in anticipation of a rebound? In future posts I'm going to cover stock rotation strategies which will be aimed at answering these types of questions.

That's all for now though.

Enjoy.

[ Click to enlarge ]

OPEC Report Trims 2011 Demand for OPEC Crude Because of External Supply - Bloomberg

The Organization of Petroleum Exporting Countries trimmed the outlook for demand for its members’ crude in 2011 as production from outside the group grows.

OPEC, responsible for about 40 percent of global supplies, predicted in a monthly report today that the world will need 28.8 million barrels of oil a day from its 12 members next year. That’s about 100,000 barrels a day less than in last month’s report. The organization left its forecast for global oil demand in 2011 unchanged at 86.56 million barrels a day.

“Mexico, Oman and Equatorial Guinea encountered minor upward revisions,” OPEC’s Vienna-based secretariat said in the report. Global consumption may weaken during the rest of this year because of “the severity of the economic crisis and its prolonged impact on the world economy.”

World Economic Forum: Qatar most competitive country in the Arab world | Economics

Qatar ranks 17th globally, followed by Saudi Arabia in 21st place and the U.A.E. in 26th, ahead of countries such as China, Spain and India, the World Economic Forum, or WEF, said in its Global Competitiveness Report 2010-2011, released Thursday by the World Economic Forum ahead of its Annual Meeting of the New Champions 2010 in Tianjin, which covers a total 139 countries.

Oman, Kuwait and Bahrain rank 34th, 35th and 37th respectively in the WEF's Global Competitiveness Index, or GCI, placing all Gulf Cooperation Council states among the world's 40 most competitive countries, the report said.

Qatar's "strong competitiveness rests on solid foundations made up of a high-quality institutional framework, ranked 10th overall, a stable macroeconomic environment (8th), and an efficient goods market (12th)," the report said, adding Qatar was relatively unharmed by the global economic crisis and projected to post economic growth to the tune of 18.5% this year.

The Gulf: IPOs back on the launch pad | beyondbrics | FT.com

Before the financial crisis, equity share sales were the biggest craze in the Gulf since the discovery of oil, with governments forcing companies to shower citizens with cut-price stocks.

The IPO wave crashed when markets plummeted and banks stopped financing share purchases. But now there are signs of recovery with bankers hoping a smattering of share sales in Saudi Arabia and Oman this year could signal that the IPO market is re-emerging from the financial wreckage.

Yet Gulf investors should not count on a return to the supercharged share sales of the pre-crisis years. Then governments wanted to distribute wealth to citizens and business owners were required to offer stock to the public at cheap rates, ensuring blockbuster oversubscriptions and eye-watering returns of up to around 500 per cent following flotation.