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Monday, 27 December 2010

11 for 2011: Are investors too bullish on emerging markets? | beyondbrics

We are pretty optimistic that emerging market equity returns will be positive over 2011, but we expect them to underperform developed market equities. The attractions of global equity markets next year are underpinned by a relatively high risk premium against fixed income instruments and by the improving prospects for the US economy, driven by QE2 and by the ongoing improvements in productivity.

Look specifically at emerging markets and they are also cheap against fixed income, but they are valued at close to parity with their developed market peers, having traded at a discount for much of the previous decade. We feel that they should trade at a discount again, for three reasons.

First, whilst corporate governance has improved over recent years, minority shareholders still lack any real influence in most emerging markets, albeit with some exceptions such as South Africa.

How Did Kuwait SE Perfrom in 2010? « Alpha Dinar- talking GCC finance

Well there is no one answer to the question above, as it depends on the index you are looking at. By looking at the price index (the most popular index in Kuwait), you will find that the returns for the year, including dividends is a mere 0.2%. But if you look at the weighted index (my preference), you would find that the mark returned a hefty 25.7%, including dividends, beating global markets (US 12.7% , UK 11%, France -2.3%, Germany 16.7%, Japan -1.8%, and Hong Kong 4.4% among others) as well as regional peers (Saudi Arabia 7.5%, Qatar 25.3%, Dubai -11%, and Abu Dhabi -1.8%).
Again the difference between the two indices is that the price index gives smaller companies a bigger weight in the index versus the weighted index, which takes into account the market cap of the company. I also included the MSCI Kuwait, which returned 33.4% so far this year. This index takes into account the stock’s market cap as well as liquidity (i.e. what percentage of the share is free floating and not held by cornerstone investors).
The key lesson here is that this year, the price index was dragged down by small cap companies that have been hit badly by the financial crisis and haven’t recovered yet. If you had invested in blue chip stocks (NBK, KFH, Zain, etc.) would would have been better off.

Dubai's Emaar, Saudi's Jadawel settle dispute - Bloomberg

The Dubai developer of the world's tallest tower Emaar Properties and Saudi real estate firm Jadawel International say they have agreed to settle their long-running legal dispute.

The companies said in a joint statement posted on Monday by Emaar on the Dubai Financial Market stock exchange that neither firm had any outstanding claims against the other following what they say was an "amicable settlement."

The statement did not provide details.

Iraq's Oil Production Reaches Highest in 20 Years to 2.6 Million Barrels - Bloomberg

Iraq’s oil production exceeded 2.6 million barrels a day for the first time in 20 years, newly appointed Oil Minister Abdul Kareem al-Luaibi said at a press conference in Baghdad.

The rising output will boost Iraq’s oil exports by 5 percent to 2 million barrels a day next month,Falah al-Amri, head of the country’s State Oil Marketing Organization, said today in an interview in Baghdad. The nation sells about 60 percent of supplies to India, China and other Asian countries where demand is increasing, he said

Iraq, holder of the world’s fifth-largest crude reserves, is seeking foreign investors to help boost oil and gas production, which was affected by insurgent attacks and a lack of spending. Oil output hovered around 2.4 million barrels a day since the 2003 U.S.-led attack that ousted the regime of President Saddam Hussein. The government awarded 12 oil and three gas development contracts to since the invasion.

Dubai Shares Drop to 3-Month Low on Saudi Provisioning Concern, DIB Falls - Bloomberg

Dubai shares fell to the lowest in more than three months, led by Emirates NBD PJSC, as Al Khaleej said the United Arab Emirates Central Bank asked lenders to increase provisions toward Saad and Algosaibi groups.

Emirates NBD, the country’s biggest bank, slid the most in more than seven months and Dubai Islamic Bank PJSC lost for a second day. Dubai’s DFM General Index retreated 1 percent to 1,603.38, the lowest since Sept. 13, at 1:07 p.m. in the emirate. The measure has lost 11 percent this year, headed for its worst performance since 2008. The Bloomberg GCC 200 Index of companies in the region dropped 0.3 percent.

"The interesting topic today is the increase in provisions to 80 percent for Saad debt. This impacts all the banks negatively," said Ahmed Talhaoui, Abu Dhabi-based head of investment at Royal Capital. “It is almost a total write-off.”

Bombay Exchange Hopes to Score With Shariah Index - India Real Time - WSJ

The Bombay Stock Exchange, Asia’s oldest trading floor, along with the Mumbai-based Taqwaa Advisory and Shariah Investment Solutions on Monday launched an index comprising shares, of India’s top 50 companies that meet the legal code of Islam.

The BSE TASIS Shariah 50 index was formed using the guidelines of an Indian Shariah advisory board. The barometer consists of the 50 largest and most liquid Shariah-compliant stocks within the BSE 500 Index. The new index was last trading up 0.5% at 1,233.49 outpacing the benchmark Sensex’s 0.4% rise this morning.

Islamic law doesn’t permit Muslims to invest in companies that derive significant benefits from interest, since usury is considered sinful.
50 largest and most liquid Shariah-compliant stocks within the BSE 500 Index. The new index was last trading up 0.5% at 1,233.49 outpacing the benchmark Sensex’s 0.4% rise this morning.

Islamic law doesn’t permit Muslims to invest in companies that derive significant benefits from interest, since usury is considered sinful in the Islamic faith, or from the sale of goods and services that are deemed sinful within the Islamic faith, like alcohol, tobacco and weapons.

gulfnews : Doha Bank to issue $500m bonds as profit rises despite recession

The third largest bank in Qatar, Doha Bank, yesterday said it plans to issue senior debt bonds of $500 million (Dh1.83 billion) through its fully-owned Bermuda-based subsidiary in the first quarter of 2011.

In a statement following an ordinary general meeting (OGM) held recently, the bank said despite the uncertain economic climate following the global financial crisis, it has been able to make headway in profits and increased returns on assets and equity in the first nine months of 2010.

The OGM was held to discuss the issue of the senior debt bonds, among others.

Libya cementing ties with UAE - The National

Libya, one of the UAE's oldest Arab investment partners, wants to build on a 40-year relationship, as was shown only last week when the two nations signed a US$11 billion (Dh40.4bn) joint investment deal.

Libya is seeking investment from the UAE and other Arab countries as it works to position itself as an economic hub linking African resources to European markets.

To further its goal, two years ago the North African country embarked on a multi-year, $240bn infrastructure development programme, to include the construction of roads, airports, seaports, railways, schools and hospitals, Jamal Ellamushe, the Libyan minister of privatisation and investment, told a forum in Abu Dhabi yesterday.

Al Maskari Holding in $3bn Libya energy plan - The National

Abu Dhabi's Al Maskari Holding is behind a US$3 billion (Dh11.01bn) project to build an integrated "energy hub" in Libya and to develop an undersea cable for exporting electricity to Europe.

The project will include solar power and conventional electricity generation from fuels such as natural gas, and a high-voltage undersea transmission line from Libya to southern Italy.

An agreement for the project was signed in Tripoli on December 12, said Sirajeldean Elbadri, an official with the chairman's office of the Libyan general board of privatisation and investment.

An eventful year for Dubai - The National

Multibillion-dollar debt restructurings, loan defaults and woe for the country's lenders dominated an eventful year for the UAE's financial and banking sectors.

But there were at least a few hints of a nascent recovery. The completion of Dubai World's US$24.9 billion (Dh91.45bn) restructuring in September gave a much-needed boost to stagnant local markets, and numerous companies and governments successfully sold bonds to international investors to help refinance their borrowings.