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Wednesday, 15 December 2010

Emaar Economic City May Receive State Loan for Red Sea Project - Bloomberg

Emaar Economic City, the developer of King Abdullah Economic City in Saudi Arabia, may receive a government loan to help pay for work on the Red Sea coast project.

The government is currently considering the loan, Yahya Hamidaddin, the Saudi Arabian General Investment Authority’s director of Smart Cities Development, said yesterday at a conference in Jeddah. The company asked the authority for assistance to arrange the loan, he said, without providing further details.

Emaar Economic City, owned by companies including Emaar Properties PJSC, the biggest developer in the United Arab Emirates, slowed the building of houses, apartments, shopping centers and office blocks in Saudi Arabia after banks curbed lending in the kingdom. The company terminated a 390 million- riyal ($104 million) contract this month it awarded to Freyssinet Saudi Arabia in 2008.

Investors look to Aramex shares to diversify portfolios

Aramex was a rare bright spot in an otherwise sluggish afternoon of trading, as most traders sold their positions in property and banking stocks and attempted to diversify their portfolios.

Shares in the logistics courier rose nearly 2 per cent to Dh2.04 on Dubai's main bourse. Earlier this week, it announced strategic acquisitions and partnerships in Turkey, Malaysia, Bangladesh and Vietnam.

"Everyone is buying into Aramex because of the acquisition news and [because] people are trying to diversify," said Samer Al Jaouni, general manager at Middle East Financial Broker. He said traders were looking at firms like Aramex to expand their portfolio.

Bahrain’s ABC takes 49% stake in Libyan bank - Banking & Finance - ArabianBusiness.com

Arab Banking Corporation (ABC), Bahrain's second largest bank, has agreed to buy a 49 percent stake in Libya’s Mediterranean Bank.

The deal is expected to close in the first quarter of 2011 subject to regulatory approval, the bank said Wednesday in a statement.

The Central Bank of Libya earlier this month became a majority shareholder in ABC with 59.37 percent of its stock, after buying Abu Dhabi Investment Authority’s 17.7 percent stake.

Lack of disclosure legislation biggest obstacle to greater transparency from GCC listed firms

A lack of clear legislation demanding greater disclosure is the biggest obstacle to greater transparency from publicly listed companies in the region, a seminar of investor relations professionals in Abu Dhabi has concluded.

While low levels of foreign share ownership in the GCC, management resistance and time were also cited as obstacles, regulation obligating companies to adopt greater disclosure policies would be the main driver for greater transparency from listed firms in the Gulf.

“In the aftermath of the financial crisis, investors are insisting on greater levels of disclosure and transparency before committing further funds to this region,” said Nicholas Lunt, Managing Director of M: Communications in Dubai and the organiser of the “Success in Digital Investor Relations” seminar held at Al Raha Beach Hotel on 13 December.

Dubai Aerospace Said to Weigh Canceling More Airbus, Boeing Orders in 2011 - Bloomberg

Dubai Aerospace Enterprise Ltd., the state-owned aviation services and leasing company, may cancel more aircraft orders with Airbus SAS and Boeing Co. next year as the emirate battles the impact of the global credit crisis, two people with knowledge of the matter said.

DAE plans to make adjustments to its order book with the manufacturers and the number of cancelations may be similar to those made this year, said one of the people, who asked not to be identified because the discussions are private.

The company, set up in 2006 with the aim of becoming one of the world’s biggest airplane lessors, in July dropped orders for seven Airbus wide-body planes and 18 narrow-body jets, according to figures released by Airbus. A contract for 15 787 Dreamliners was removed Aug. 5 from Boeing’s online backlog listing.

Kuwait Court Will Rule on Dec. 22 in Zain Stake Case - Bloomberg

Kuwait’s commercial court will rule on Dec. 22 in a lawsuit that seeks to stop due diligence for the sale of 46 percent of Kuwaiti mobile-phone operator Zain, as Mobile Telecommunications Co. is known, to Emirates Telecommunications Corp.

The lawsuit to halt the due diligence was filed by Al- Fawares Holding Co., a shareholder in Zain, against Al-Khair National for Stocks & Real Estate Co., National Investments Co. and Zain, according to the court.

The due diligence, which was approved by Zain’s board on Nov. 7, is already under way, Hussien al-Ghareeb, the attorney representing Zain, said in the hearing. “Accordingly, we request the rejection of the urgent part of this lawsuit on the grounds that the due diligence is a decision already executed,” he said in court.

Jordan banks pin hopes on Gulf recovery, Jordan Industries - Maktoob News

Jordanian banks are hoping for strong economic growth in Gulf Arab states next year to help turn around a struggling domestic economy and curb their vulnerability to non-performing loans.

The country's 23 banks, which hold $31 billion of deposits, saw their pre-tax profits fall 23 percent last year to 695.5 million dinars. Nine-month results for this year were mixed, suggesting the banks were unlikely to bounce back quickly.

Bankers say prospects for 2011 hinge on stepped-up economic growth in Gulf Arab states which are a main source of remittances and foreign direct investment, particularly into the real estate sector which has been hit hard by the slowdown.

Dubai's Emaar may raise stake in Amlak - chairman, UAE Industries - Maktoob News

Dubai developer Emaar Properties may raise its stake in troubled Islamic mortgage provider Amlak but has not decided by how much, Emaar's chairman said on al Arabiya television.

The United Arab Emirates' largest listed property firm may also take provisions related to Amlak in the first quarter of 2011, Mohammed Alabbar said in an interview on Wednesday.

"I believe if this is part of the solution (for Amlak) we will raise the stake," he said.

Jeezan, Kuwait Invest to merge with IFC

Jeezan Holding Co and Kuwait Invest Holding Co held a press conference at the Marriott Courtyard, Kuwait City, Monday to discuss their merger with the International Finance Company (IFC). President of the Board of Directors of Jeezan Holding Khaled Al-Mureikhi hoped the merger will prove successful and will add economic power to the companies involved as they head to the option of integration to cope with difficult global economic conditions, "and because many of the companies at the global and local level are burdened by debt. A merger is the best choice to preserve the interests of shareholders because the International Finance Company will have a large economic effect in Kuwait after the merger and will become financially stable, which will enable it to overcome the global financial crisis.

Al-Mureikhi also added that the new company will undertake a number of economic and investment activities that will enable it to invest in successful projects. From the point of view of Jeezan shareholders, the merger will prove beneficial to them because Jeezan shares are currently being traded at 60 fils and after the merger, the shares of the International Finance Company will increase in market value.

Following a meeting of the company's General Assembly, the minutes of the meeting were sent to the Ministry of Commerce and Industry to implement the integration process after three months from today and curb the trading of shares of both Jeezan and Kuwait Invest, he added.

Is Saudi Moving East? « Alpha Dinar- talking GCC finance

Saudi Arabia is increasingly looking towards the East to do Business, rather than the traditional Western partners. Ever since coming to the throng in 2005, Saudi King Abdulla has been strengthening Saudi ties with Eastern countries. He made official visits to China, India, and other Asian countries. China, last year, became the biggest importer of Saudi oil, edging the US. More and more Chinese companies have been coming to the US to build infrastracture projects, as well as petrochemical projects. The trade flow is not only one-sided, as Saudi Aramco has built two refineries in China. China is looking to increase its exports to Saudi, exporting such goods as food, hardware, textiles, and heavy industrial equipment. Saudi like the lack of political condition attached to the economic ties, unlike the US who keeps discussing Saudi’s human rights trackrecord, as well as the lack of democracy.

However, the picture is not all rosy, and Saudi has not fully shifted to the East. Saudi still relies on the US for its weapon technology, as well as military support. Saudi also relies on the West for educated labor (engineers, doctors, etc.). Some problems exist with China, as China as accused Saudi companies of dumping Petrochemicals into the Chinese markets. Also, China Railway Construction Company, the company that built the Mina-Arafat Railway is threatening to sue the Saudi government due to the large losses they accumilated from the project.

Ashok Leyland to open assembly plant in UAE - The Economic Times

The Hinduja Group flagship Ashok Leyland on Thursday will inaugurate a vehicle assembly plant in UAE's Ras al Khaimah Investment Authority (RAKIA).

The plant will be inaugurated by Sheikh Saud Bin Saqr Al Qasimi, UAE's Supreme Council Member and the Ruler of Ras Al Khaimah in the presence of Srichand P Hinduja, Chairman of Hinduja Group.

In October 2006, Ashok Leyland had signed a MoU with RAKIA for setting up the assembly unit, which eventually be upgraded to a vehicle assembly plant (for trucks and buses) in the second phase.

GCC Stock Index Volatility — Volatility — GCC Market Analytics

The charts below show the price performance of each GCC market index along with the corresponding 20-day volatility (blue shaded area) and the average 20-day volatility (dashed lined).

For those not familiar with volatility check out Google or see this: Volatility

As you can see, for all GCC equity markets the current 20-day volatility is well below the historical averages. In fact, for several markets the current volatility levels as low as they've been for some time.

Which begs the question: are we due for an increase in volatility in 2011? And if volatility does increase will it be accompanied by an upward or downwards move in stock markets?

In upcoming posts I'll be taking a closer look at volatility of GCC equity markets and whether it can tell us anything revealing about future price action.



Dubai - DFM General Index - Historical Volatility

Abu Dhabi - ADX Index - Historical Volatility

Saudi - Tadawul Index - Historical Volatility

Kuwait - Kuwait All Share Index - Historical Volatility

Qatar - QE Index - Historical Volatility

Bahrain - Bahrain All Share Index - Historical Volatility

Muscat - Muscat 30 Index - Historical Volatility

gulfnews : Time is not right for unified Gulf currency

The dirham's peg to the dollar will continue to serve the UAE economy well in terms of foreign investment inflows and other benefits, Dubai Economic Council Chairman Juma Al Majid said on Tuesday.

He also suggested that it is not yet the "right time or environment" to go ahead with a single currency for the six Gulf Cooperation Council countries.

One of the main factors responsible for making Dubai a hub for international investment, which led to the economic boom, is the dirham's peg to the US dollar, Al Majid said.

NASDAQ chief calls for unified exchanges

A merger of the Abu Dhabi and Dubai stock exchanges to create a unified UAE bourse would attract international investors and the volumes needed for a healthy market, says Jeff Singer, the chief executive of NASDAQ Dubai.

"All these international investors see the UAE as one place - it's not Dubai and Abu Dhabi," he said yesterday. "Competing interests are at play and we are not big enough to have competing interests."

Three bourses operate in the UAE — Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM) and NASDAQ Dubai.

South Africans keen on Dubai World's V&A

South African investors like the idea of a local company buying Cape Town's Victoria and Alfred Waterfront back from Dubai World.

Shares in Growthpoint Properties, South Africa's largest publicly listed development company, climbed more than 1 per cent in mid-afternoon trading in Johannesburg yesterday, the day after it confirmed it was involved in negotiations that could affect its share price.

The statement Growthpoint released did not mention the V&A, but many assumed the company was referring to the popular tourist attraction when it said it "recently entered into negotiations which, if successfully concluded, may have an impact on the price of Growthpoint's linked units". On Saturday, a source at Dubai World confirmed that Istithmar World, which has a 37.5 per cent stake in the development, had been in talks with companies including Growthpoint to sell the shopping and leisure attraction.

Qatar says won't issue bonds to fund World Cup | Reuters

Qatar does not plan to issue bonds to fund the 2022 soccer World Cup, Prime Minister Sheikh Hamad bin Jassim al-Thani said on Tuesday.

The Gulf Arab state is expected to spend $100 billion over the next five years on infrastructure projects including road and rail networks planned before it was chosen as host, as well air-conditioned stadiums.

Qatar, which has never qualified for the World Cup finals, will be the first Arab and Middle Eastern country to stage the tournament, and the smallest ever.

Oman’s oil production on track to hit one million bpd target

Oman’s oil output will reach 900,000 barrels per day (bpd) by the end of next year from 875,000bpd last month, Oil and Gas Minister Dr Mohammed bin Hamed Al Rumhy said, expressing hope that the figure would hit the one-million mark by 2015.

He also said the sultanate would announce a number of oil and gas discoveries shortly.

Speaking to reporters at a function here on Tuesday, he said the ideal international price for crude for both producers and consumers would be between $70 and $80 a barrel. He noted that prices were determined not just by supply and demand, but also by political and economic factors.

= UAE Public Debt Law Moves Closer As FNC Committee Set To Meet

A planned public debt management law for the United Arab Emirates--a key precursor to a first federal bond issue--will move closer to passing after the finance committee at the Federal National Council, the country's quasi-parliament, discusses it next week, the committee's chairman told Zawya Dow Jones Tuesday.

Abdulla Nasser Al Mansouri, chairman of the Federal National Council, or FNC, committee on finance and economic affairs, said the committee will meet on Dec. 21 to discuss an amended version of the draft law, an earlier version of which the FNC had approved last year.

"The government had their own additions to make to the law," Al Mansouri said on the sidelines of an FNC meeting. He didn't further explain what the additions are.

UAE budget includes a deficit

The Government budget under debate at the Federal National Council (FNC) contains a feature not seen in six years: a small deficit.

While the Federal Government tabled a Dh41 billion (US$11.16bn) spending plan early last month, it only yesterday revealed it was projecting revenues at Dh38bn for next year. That clashes with the balanced-budget philosophy that has prevailed between 2008 and this year. The Government ran surpluses between 2005 and 2007 and last ran a deficit in 2004.

Younis al Khouri, the UAE Finance Ministry under secretary and director general, said on the sidelines of an FNC gathering yesterday it was 'a very minor deficit'. The shortfall was 'not a concern as of yet and definitely we'll be looking for alternatives throughout the year', he said.

ANALYSIS - Dubai sends message with Dubai World reshuffle | Reuters

The ruler of Dubai's decision this week to put trusted players in charge of debt-ridden conglomerate Dubai World suggests new resolve to reestablish the tarnished brand name of the freewheeling emirate.

Sheikh Mohammed bin Rashid al-Maktoum, head of the local ruling dynasty and vice-president of the United Arab Emirates federation, appointed his uncle, Emirates Airlines chief Sheikh Ahmed bin Saeed al-Maktoum, to head Dubai World's board.

Emirates Airlines is one of Dubai's business success stories and Sheikh Ahmed comes to tackle Dubai World -- preparing to sell assets to repay $25 million in debt -- after he spearheaded Dubai's initial attempt to recover from last year's crippling debt crisis as head of Dubai's Supreme Fiscal Committee (SFC).

Shuffle gives Dubai World a chance to reassure markets

The board changes at Dubai World have resolved some of the issues still surrounding the conglomerate, but leave other questions unanswered.

The injection of Dubai's top business talent into the boardroom has been welcomed by international creditors and financial markets. The four new appointees really are the cream of the emirate's commercial and political elite, and their appointments demonstrate again that the company's problems are being tackled at the highest possible level.

Their presence should reassure stakeholders that Dubai World's financial problems will never again be allowed to threaten the emirate's international reputation.

Dubai Property Prices May Continue to Fall for Two More Years - Bloomberg

Dubai property prices may drop for the next two years, extending a decline in the Persian Gulf sheikhdom that’s already cut values by more than 60 percent since the 2008 peak.

Residential values may fall as much as 20 percent more by the end of 2012 if new homes are built as planned, according to broker Landmark Advisory in Dubai. Cluttons LLP, a London-based property consultant, and Jones Lang LaSalle Inc., the second- largest publicly traded commercial property broker, also forecast further declines.

About 48,000 homes will come on to the market in the next two years, or about 12 percent of existing supply, according to Jesse Downs, director of research at Landmark. An influx of foreign buyers sparked a construction boom as prices rose by 79 percent to mid-2008 from 2007 before the financial crisis caused lenders to tighten credit and speculators left the market.