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Saturday, 1 January 2011

Saudi Shares Reach Eight-Month High, Buoyed by Crude Oil Gains, Earnings - Bloomberg

Saudi Arabian shares rose to the highest level in almost eight months, led by petrochemicals and builders, as oil surged to its highest year-end price since 2007 and investors start the year with expectations companies will post encouraging quarterly earnings.

Saudi Basic Industries Corp., the world’s largest petrochemical maker, Saudi Industrial Investment Group and Arabian Pipes Co. paced the rally. The 146-company Tadawul All Share Index rose 0.3 percent to 6,640.45, the highest since May 15, at 1:57 p.m. in Riyadh.

“The price of oil shifted into high gear this past quarter and that has pushed investors to bet big on fattened oil company profits,” said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. “People are pinning in their hopes on growth in corporate earnings as it is starting to look more and more entrenched.”

Is Improving Market Breadth Signalling New Year Advances for Dubai and Abu Dhabi Stocks? — GCC Market Analytics

The August to October stock rally in the UAE saw the DFM General Index rise +22% and the ADX Index rise by +15%.

Since the end of October, however, both markets have given back some of those gains with the Dubai market 10% off its highs and the Abu Dhabi market off 5%.

Dubai and Abu Dhabi Stock Market Performance

The question now is does this current decline represent a mere pull-back before the market continues to move upwards or is it the beginning of a larger downwards move, the kind of which traders and investors in the UAE markets have become so used too over the past several years?

Well, trying to pick significant stock market bottoms can be a perilous endeavour. Especially for the UAE or other GCC markets whose price action is highly persistent (when prices start moving in a certain direction, up or down, they have a strong tendency to continue moving in that direction).

That said, it's a good idea to at least be on the lookout for potential market turning points. In this week's market analysis the trend outlook for the UAE markets is still mildly bearish. However, the breadth measures for the Dubai and Abu Dhabi markets (as measured by the 20-day advance/decline indicator) have both turned positive this week:

Now, any sizable market decline next week will see market breadth turn negative again. But if UAE stocks manage to hold up this coming week and breadth remains positive it could signify a larger upwards move is in the offing.

For a refresher on market breadth and how UAE stocks have performed under positive and negative breadth please see these previous posts: Market Breadth I, Market Breadth II & Market Breadth III.

Arbitration will be our last resort: Smart City Dubai

The deadlock between the Kerala government and Smart City Dubai continued over the fate of the proposed Rs.1,500 crore Smart City Kochi project, with the latter making it clear that arbitration would be their last resort.

As expected, the 23rd board meeting of Smart City Kochi held here Friday, ended in 20 minutes only with no decision taken on the contentious issue of giving 12 percent free hold rights to Smart City Dubai - the builders of the project.

In the post-meeting press conference, the two parties continued to stick to their respective stands.

Middle East Equity Markets: The Last Frontier of Investing - Seeking Alpha

Case for Portfolio Exposure to the Middle East – The Last Frontier: As global fund managers allocate assets for 2011, there is a case forMiddle East to be treated as a separate asset class. Asian countries included in the frontier markets like Vietnam and Indonesia have higher correlations to the China and East Asian markets. Gulf Cooperation Council (GCC) / Middle Eastern markets have heavier reliance on crude oil prices, a different place in economic development, cycle-distinct cultures, the distinct nature of retail investors, index investability and float.

This is even more true, due to the fact that GCC Is the world’s largest producer of crude oil. The value of ME crude oil resources is at
$18.3 trillion, with a present value of $11.2 trillion, assuming a 3% rate of return (and discount rate) and a price of $50 per barrel; GCC natural gas reserves would be $5.1 trillion, assuming a discount rate of 3% and a price of $5 per million BTU -- which, combined, is higher than U.S. GDP.

The value of oil reserves increases to $37 trillion, assuming a crude oil price at $80 / barrel with a 3% discount rate, and a value of natural gas reserves at $7.8 trillion at a natural gas price of $7 / MMBTU and 3% discount rate -- which is higher than total global private wealth, at $38 trillion. If oil prices were to average $100 per barrel and gas $10, the present value of GCC energy reserves would be $60.7 trillion, equal to the world's total stock market capitalization.

This energy commodity wealth is sufficient to finance the transformation of GCC countries into diversified economies through investments in infrastructure and education. The chart below gives an estimated share of GCC in global oil reserves.

[Click all to enlarge]

A year defined by Dubai's financial management - The National

For Dubai, 2010 will go down as a year of steady recovery from the financial storm unleashed in November of the previous year when Dubai World told creditors it could not repay its debts, at least not on the then-existing terms.

If that was a high-water mark in the emirate's financial problems, the rest of the year saw the tide of indebtedness slowly receding. The two most important events were the announcement of proposals to creditors in March, and their acceptance by the conglomerate's core lenders in May.

After that, there was still plenty of work to be done herding creditors into acceptance and getting all the paperwork done. In fact, the final part of that process is still not complete - there are still some formalities to be observed before a deal is finally signed, sealed and delivered.

Weekly Market Analysis (Week 1) — GCC Index Analysis , Weekly Index Review — GCC Market Analytics

The weekly market analysis pages have been updated for trading week 1 (January 2nd - January 6th). Use the links below to view the individual market analysis pages:

The table below shows the market outlook based on each study.
Stock Market Outlook: Dubai, Abu Dhabi, Saudi, Kuwait, Qatar, Bahrain, Muscat
Visit the links above to view the full analysis reports for all GCC markets.

UAE Stocks: 2010 Winners & Losers — Abu Dhabi Analysis , Dubai Analysis , UAE Analysis — GCC Market Analytics

The average stock in the UAE declined by about 9% in 2010 with falling stocks outnumbering rising stocks by two to one.

The table below (click to enlarge) shows the 2010 percentage returns for UAE stocks.

Dubai and Abu Dhabi Stocks Performance in 2010

Morocco's foreign debt at $19.8 bln in Q3/2010 | Reuters

Morocco's public foreign debt stood at $19.8 billion at the end of the third quarter of 2010, up from $19.4 billion at the end of 2009 and at its highest since at least 2005, the finance ministry said on Friday.

Morocco plans to disburse $2.1 billion to service foreign debt in 2011, $2.2 billion in 2012, about $2 billion annually in 2013 and 2014, $1.9 billion in 2015, $1.8 billion in 2016 and $2.3 billion in 2017, the data published by the ministry showed.

A total $549 million will be paid to service the foreign debt in the fourth quarter, it added.

UAE Community Blog: Happy New Year