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Tuesday, 4 January 2011

Kuwait has a long way to go to rival Gulf states on FDI - Politics & Economics - ArabianBusiness.com

Political instability is deterring investors from putting as much money into Kuwait as they do into its GCC neighbours, an economist has said.

“It has a long way to go,” Dr John Sfakianakis, chief economist at Banque Saudi Fransi, said in an interview with Arabian Business. “It will take a lot of political stability for Kuwait to attract the same amount of money that the UAE and Saudi have been attracting for the past five years. It [will take] consistency and political resolve to make Kuwait a more business-friendly environment.”

A long-running feud between Kuwait’s elected parliament and royal-family led government has taken its toll on the state’s economic growth, leaving foreign investors wary.

Morgan Stanley Favors Saudi Arabia, Qatar Among MENA Markets - Bloomberg

Morgan Stanley favors equities in Saudi Arabia, the Persian Gulf’s biggest stock exchange, and Qatar among Middle East and North African markets.

"With risk appetite improving on strong momentum for a global recovery, a robust outlook for oil, reasonable valuation and fund inflows slowly picking up, we are constructive on MENA markets," Morgan Stanley said in a note to clients e-mailed today. "We are most constructive on Saudi Arabia and Qatar," the report said, citing spending plans of the governments.

The bank recommended investors buy shares of Saudi Arabia’s Samba Financial Group, Saudi Pharmaceutical Industries & Medical Appliances Corp., Saudi Arabian Mining Co., Saudi Basic Industries Corp., National Industrialization Co. and Etihad Etisalat Co. Qatar Electricity & Water Co., Emaar Properties PJSC and Kuwait’s National Mobile Telecommunications Co. are also among the bank’s top picks for the region.

The American Dream – Viva Las Vegas Style : NOVAKEO.COM

With every New Year’s resolution, optimism and even the expectation that the future will get better has long been a staple within the popular culture. By nature, people want to believe in a better society. The American Dream means different things to diverse people, but it always had a vision for great achievements and daring exploits. America was great because she dared to forge an independent and freedom loving country.

Las Vegas is the kind of region that evokes strong and varied reactions. Many people see Vegas as freedom and a state of mind, while others curse it as a Sodom and Gomorrah, den of iniquity. Yet when you strip away the glitz, glamour and gambling, you get down to the real guts of the metropolis – MONEY.

The casinos may have a license to coin chips that translate into cash, but the overarching experience of the facade generates a broad base economy that has little respect for the fiat paper notes that pass for legal tender. The saying “What happens in Vegas, stays in Vegas” really applies to the money you bring when you visit. Lately this huge cash cow machine moos not because it is content, but because the feed supply doesn’t meet the obligations and indebtedness of this dreamscape.

Qatar Leads Gain in Gulf Shares on Global Growth, Higher Oil - Bloomberg

Gulf stocks advanced, sending Qatar’s benchmark index to the highest level since 2008, after growth in U.S. and European manufacturing boosted confidence in the global economic recovery. Crude traded near a 27-month high.

Qatar Industrial Manufacturing, a producer of building materials, surged to the highest in five years after it allocated 150 million riyals ($41 million) for investment projects in 2011. Kuwait’s Aref Investment Group soared 7.9 percent after Al-Anba reported it reached an accord to restructure $35 million of debt. Qatar’s QE Index increased 1.1 percent to 8,972.94, the highest since Sept. 29, 2008, at the 12:30 p.m. close in Doha. The Bloomberg GCC 200 Index climbed 0.4 percent at 2:19 p.m. in Dubai.

Local gains are being driven by “positive movements in global markets and on strong oil prices,” said Sebastien Henin, portfolio manager at The National Investor in Abu Dhabi.

Kuwait International Signs Aref Restructuring Deal, Anba Reports - Bloomberg

Kuwait International Bank reached an agreement with Aref Investment Group to restructure $35 million of Aref Investment’s debt, Al-Anba reported, citing a statement from the bank.

Kuwait International joins others lenders who already agreed to restructure Aref Investment debt, the newspaper said.

Aref Investment signed a five-year agreement with creditors to restructure about 280 million dinars ($996 million) of debt, giving the Kuwaiti investment company an 18-month grace period, Kuwait Finance House said in November. Kuwait Finance, the country’s largest Islamic bank, is leading the plan.

What to expect in 2011? Interesting GCC Investment Themes at play

“For the GCC, the challenge is to consolidate gains made in the past and
address vulnerabilities uncovered by the crisis. While high prior capital buffers
and overall financial health contributed to the resilience of these systems,
there is still ample room for improvement in both the regulatory and
supervisory arenas.”
- Regional Economic Outlook, IMF, Oct-10

2010 simply lacked any triggers.

As a result, GCC stock markets started dancing to global tunes more than
local ones. After severely underperforming Emerging Market peers in 2009,
GCC markets performed more on par with the same in 2010; the S&P GCC
index has gained 14% YTD versus about 14% for MSCI EM. Performance
within the GCC has been disparate, from highs of about 25% for Qatar to
lows of -11% in Dubai.




Sharjah's Dana Gas keeping Egypt ventures after success - The National

Dana Gas is not going through with plans to sell off concessions to explore for natural gas in Egypt's Nile Delta region, the company said in a statement today.

The Middle East's largest private gas company is chosing to retain its 100 per cent stake partly because of a 20 per cent boost in reserves in 2010, largely from seven new field discoveries.

Last year the Sharjah-based firm said it could decrease its concessions in the Nile Delta by as much as 30 per cent.

Kuwait economy to grow 4.5 pct in 2011 on high oil prices

After severely underperforming Emerging Market peers in 2009, GCC markets performed more on par with the same in 2010; the S&P GCC index has gained 11% YTD versus about 13% for MSCI EM (MSCI BRIC remains an underperformer with a gain of just 3%). A recent report released by Kuwait Financial Centre “Markaz”, “What to expect in 2011”, points out that there was no perceptible difference in the scale and magnitude of issues that haunted the market post financial crisis. Companies are still busy repairing their balance sheets and image, while governments are busy spending with nothing specific to write home about regarding regulatory reforms.

The report notes that while oil prices did not spring any negative surprise in 2010, it was not enough to propel the market. In the wake of mounting pressures in the form of weak earnings, ultra weak liquidity and ever present volatility, stable oil price alone is not sufficient to lift the markets to heights that investors are used to in the past.

One possible reason for the ultra poor liquidity is that retail investors (constituting the backbone) are still busy putting their house in order while sources of traditional funding for stock market (bank lending) has come to a complete halt. Earnings destruction in certain cyclical sectors like the investment sector has been too severe to stage a meaningful comeback. Even the elephant among the sectors i.e., banking, continued to surprise investors with high levels of provisioning. Given firmer oil prices and a better global economic environment, the GCC is set to show stronger growth going forward despite slower private investment/credit growth continuing to be a drag on economic growth. Private demand is expected to remain weak in the intermediate term until investor confidence returns more fully and bank balance sheets return to a healthier state

Appearances can be worryingly deceptive - The National

In theory, setting aside part of a bank's earnings in case a borrower defaults on a loan is no bad thing. It does not mean that the loan will be not repaid, but that the bank is being prudent.

In many of the financial centres of the world at the end of 2008, lenders as diverse as Citibank, Barclays and Societe Generale raced to raise their levels of provisioning.

In the UAE, most banks did something similar, although executives were quick to claim that the impact was not what the levels of provisioning might suggest.

gulfnews : UAE bank provisions up 48.3%

General provisions taken by banks in the United Arab Emirates increased by 48.3 per cent in November, compared with the same month a year ago, UAE central bank monthly data showed yesterday.

General provisions in November reached Dh13.8 billion, according to data posted on UAE's central bank website.

The central bank said that loans and advances made by banks increased by 0.3 per cent during November, and rose by 2.3 per cent during the first 11 months of 2010.

DHCOG debt instruments downgraded by Moody's - The National

Moody's Investors Services, the ratings agency, has downgraded US$2.14 billion (Dh7.86bn) of debt instruments issued by Dubai Holding Commercial Operations Group (DHCOG).

DHCOG, which has property, hotel and free zone businesses in the emirate, is part of Dubai Holdings, the conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. It includes the Dubai Property development business, as well as Jumeirah hotel and leisure operations and TECOM business parks.

The downgrade affects DHCOG's medium-term note (MTN) facility, with the rating reduced from "B2" to "B3". Moody's probability of default rating (PDR) is left unchanged at "B3", but the agency is maintaining its review for possible downgrade of the PDR, as well as the overall corporate family rating (CFR) and further downgrade of the MTN. Last week, DHCOG announced it had reached agreement with its principal bankers to restructure a $555 million revolving credit facility, which will now be repayable over a five-year period on commercial terms.

New rules on bad loans to hit bank earnings - The National

Banks are facing a bleak start to the year, with increased provisions for bad loans and restructurings predicted to take a toll on earnings for the final three months of last year.

Analysts expressed concern that the extent of provisions for debts held by Dubai World, Dubai Holding and other government-related entities - still undeclared by many banks - could have a big impact on profitability and creditworthiness.

In November, provisions increased by 4.04 per cent from the previous month to Dh41.2 billion (US$11.21bn), a record high for the year, according to data released by the Central Bank.

Oil's Top Forecasters See Third Year of Gains as China Leads 2011 Recovery - Bloomberg

Oil demand increasing at almost twice the pace of supply is spurring the most-accurate forecasters to predict the second-highest price on record in 2011.

Sanford C. Bernstein & Co., whose estimate last January was within 1 percent of 2010’s mean price of $79.60 a barrel, says crude will average $90 this year. Natixis Bleichroeder Inc., which tied with Bernstein, sees $100 a barrel, 26 percent higher than in 2010. Global oil use will increase 1.7 percent to a record 87.8 million barrels a day this year, and output will rise 0.9 percent, according to the U.S. Energy Department.

While economic growth in China, the world’s biggest energy consumer, will slow to 9 percent this year from 10 percent, that would still be three times the rate in the U.S. and six times Europe’s, according to the median estimate in Bloomberg surveys of economists. As oil prices rise, spare production capacity may drop the most since 2003 as exporters including the 12 members of OPEC boost supply, according to Bernstein.

Sharp rise in the number of tourists in UAE | TopNews Arab Emirates

A senior official working with the Ministry of Interior has said that there has been a sharp rise in the number of tourists coming to UAE. This, he said, has happened since of late the place has developed as a favorite destination for visitors.

While talking to the Gulf News, Major General Mohammad Al Merri, Director General, Directorate of Residency and Foreigners Affairs (GDRFA) Department in Dubai said that his department is trying hard to take care of the situation and that they are providing all kinds of necessary facilities to the travel agencies.

He also added that the online service of GDRFA is working 24*7 and an efficient line of staff and officers has been drawn to look after the smooth functioning of the existing system."

Gulf Daily News BAHRAIN BOURSE PLAN ON TRACK

The Finance Ministry has finalised the legal and administrative procedures of registering Bahrain Bourse as a Bahraini shareholding closed company with an authorised capital of BD10 million ($26.5m) and paid-up capital of BD2m.

These steps were taken following the issuance of Decree Law No 60, 2010, which was published in the official gazette No 2980, issued on December 30, and according to the Commercial Companies Decree Law No 21 of 2001 and its executive regulations issued by Decree Law No 6 for 2002.

Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa clarified that the new company will be fully-owned by the Bahrain government and will be legally supervised and regulated by the Central Bank of Bahrain (CBB) according to the new CBB law stating that the central bank is the regulator for financial institutions.

FT.com / Middle East - Alcohol producers see cheer in region

From Saudi Arabia’s zero tolerance to Beirut’s buzzing nightlife, the Middle East poses challenges and opportunities for alcohol producers. And as the region realigns itself after the global financial crisis, the trends in drinks consumption also paint a picture of a region in flux.

Dubai may still be the party capital of the Arabian Peninsula, as witnessed by the string of events over the new year period, but it is only just starting to reverse a steep drop in alcohol consumption that saw the recession of 2009 shave off up to 30 per cent of sales for Diageo, the world’s biggest producer of spirits.

“The UAE was growing at 26 per cent a year between the boom years of 2006-08; it was hard just to keep up with the demand,” says Hugo Mills, Diageo’s regional general manager.