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Monday, 17 January 2011

Lebanon: easy does it | beyondbrics –

With attention focused on another corner of the Arab world, it is easy to forget the political crisis in the Lebanon.

So a reminder from Moody’s on Monday that last week’s government collapse would hit the local economy is salutory. Moody’s warned economic growth may slow and bring losses at the country’s banks.

But investors aren’t panicking. Years of conflict has produced a remarkably resilient economy. And prudent policies have helped accumulate $30bn of foreign currency reserves – among the world’s largest on a per capita basis.

Political chaos casts doubt on Tunisie Telecom IPO | Reuters

Tunisian state-owned Tunisie Telecom may not be able to go ahead with an investor roadshow for its planned listing in Paris and Tunis due to the political situation, investment and banking sources said on Monday.

Tunisia was expected to announce a new government on Monday after President Zine al-Abidine Ben Ali was forced from power following weeks of violent street protests.

Tunisie Telecom was due to hold investor meetings in London, Paris and Switzerland in the next week, the sources added.

Tunisia unrest hits Egypt stocks, currency, debt | Reuters

Egyptian stocks posted their biggest drop in seven months and the pound dipped to its weakest against the dollar in almost six years on Monday as investors grew concerned that political turmoil in Tunisia could spread to Egypt.

Traders had been awaiting the reaction of foreign investors to events in Tunisia when European markets opened on Monday. Egypt's weekend is Friday and Saturday and its currency market and stock exchange had been relatively subdued on Sunday.

An Egyptian man set himself alight near parliament on Monday morning in an apparent protest against poor living standards, a witness and officials said, echoing a self-immolation that spurred the wave of demonstrations in Tunisia.

Tunisia: economic implications | beyondbrics | News and views on emerging markets from the Financial Times –

The ousting of Tunisian president Zine al-Abidine Ben Ali has captivated the Arab world, but spooked investors in one of North Africa’s better performing economies, sending the local stock market plunging and bond yields climbing.

Analysts are now starting to eye other countries that could be ripe for revolution, and there is no shortage of candidates. Tunisia’s toxic mix of rampant youth unemployment, cronyism, autocracy and inflation is mirrored to varying degrees across the Middle East.

As Barclays Capital noted in a report published today, the spill-over risks to the rest of the Middle East and North Africa are “not negligible”.

FT Tilt - The Call: Buy Etihad Etisalat(Registration)

Looking for a MENA stock with a dividend yield of over 5 per cent and rampant growth in profit, revenue and margins? Shuaa Capital's Simon Simonian says Etihad Etisalat, the Saudi subsidiary of the UAE national telco, Etisalat, is the region's best telecom stock.
On the back of strong Q4 headline figures announced Sunday, Simonian says his fair value target for the stock is "under revision", and thinks others will also lift their outlook. Money quotes:
We expect Mobily to start paying dividends on a semi-annual basis. We forecast a semi-annual dividend for H1 2011 of SAR 1.00/share. Hence between now and August 2011, shareholders should receive a total of SAR 3.00/share in dividends for a yield of 5.4% based on the last closing price of SAR 55.50. Net debt decreased to SAR 5.86bn [$1.56bn] at year-end 2010, down from SAR 7.06bn a year ago and SAR 6.53bn at the end of Sep. 2010. The balance sheet is strong with a net debt to EBITDA below 1.0x.

Gazprombank to tie-up with Quatar firm for $500m real estate fund

Russia's Gazprombank and Qatar's investment firm Barwa Real Estate plan to set up a $500m fund to invest in housing and commercial real estate in Russia, according to Vedomosti.

The paper quoted a joint statement by BREC and Gazprombank as saying the companies had established Barwa Gazprombank Russia Real Estate Fund to which they had contributed $75 million each.

The companies plan to expand the fund to $500 million and raise loans for the construction projects.

New fund raising for Russia's real estate sector has been largely dormant since the financial crisis hit in late 2008. Investors have taken large hits but there have been green shoots of life in the sector in the past year.

Qatar Sells $13.7 Billion in Bonds to Local Banks, Central Bank Chief Says - Bloomberg

Qatar’s government sold 50 billion riyals ($13.7 billion) of Islamic and conventional bonds to local banks to help them manage liquidity.

The bonds mature in three years and the conventional bond pays interest of 5 percent, Central Bank Governor Sheikh Abdullah bin Saud Al Thani said in a telephone interview today.

The Persian Gulf country, the world’s biggest exporter of liquefied natural gas, sold a 2 billion-riyal, five-year bond in June to refinance existing debt. Qatar, which won the bid to host the 2022 soccer World Cup, is spending $100 billion to improve infrastructure and raise its annual LNG export capacity.

Gulf Stocks: Arabtec, Etihad Etisalat, National Shipping, Safco - Bloomberg

The DFM General Index gained 0.5 percent, the most since Jan. 6, to 1,608.97 at the 2 p.m. close in Dubai. Abu Dhabi’s ADX General Index lost 0.9 percent. Saudi Arabia’s Tadawul All Share Index slipped 0.1 percent at 1:30 p.m. in Riyadh.

Equities tumble in China, India, Dubai, Egypt as emerging markets correct « ArabianMoney

One of the New Year’s predictions from the ArabianMoney newsletter (click here to sign-up) seems to be coming right with the start of a big correction in emerging market equities, totally at odds with many optimistic forecasts a few weeks ago which we took as a contrarian indicator.

Rising property prices in China are sounding alarm bells about monetary tightening and the smart money is leaving stocks that fell two per cent yesterday in Shanghai. Property stocks are the focus of selling as the ‘Dubai x1000 property boom’ cited by hedge fund legend Jim Chanos (who shorted US sub prime brilliantly, click here) will inevitably come to a sticky end.

$1.3bn debt plan nears agreement for Tabreed - The National

Tabreed, a district cooling company based in Abu Dhabi, is nearing an agreement with creditors on a restructuring plan worth more than Dh5 billion (US$1.36bn).

Sources say Tabreed, which was unable to keep up debt payments last year after the property market declined and developers scaled back, is just weeks away from a possible restructuring pact.

The company spent billions of dollars building cooling plants, but amid the downturn, revenue from many of its projects did not materialise as expected. Tabreed lost about Dh1.2bn in 2009 as the result of a fourth-quarter write-down before returning to profitability last year.

Dubai World $24.9 Billion Debt Deal Is a `Template,' Moelis Says - Bloomberg

Dubai World’s $24.9 billion debt restructuring completed in September serves as a model for other companies in the region to follow, the chief executive officer of Moelis & Co., one of the advisors on the deal, said.

It is "a template for how to get a complicated consensual restructuring done," Kenneth Moelis said in an interview in Dubai yesterday. "We are not involved in Dubai Holding but we understand that they are following a similar model."

Dubai World, one of the emirate’s three main state-owned holding companies, reached an agreement with more than 70 creditor banks to delay loan payments after property prices slumped in the emirate and frozen credit markets prevented it from raising new loans to repay older ones. Moelis advised the Dubai government on the Dubai World restructuring.

Gulf Bank: End of a Rally? « Alpha Dinar- talking GCC finance

Gulf Bank has performed magnificently well in 2010, adding 97% to its’ price. It has by far exceeded the returns of both the KSE Price index and the banking index. Moreover it has surpassed all its peers.
Today Al Qabas listed some reasons that justify this rally:
1) Although the bank suffered from a massive erosion in book value, it maintained its market share within the banking arena in Kuwait and continued to compete with them.
2) Huge growth in the bank’s earnings as Q1 they recorded a profit of KD 524 thousand, Q2 they recorded a profit of KD1.4 million and in Q3 they announced a profit of 8.9 million.
3) The bank is tightly held from its shareholders as they hold 56.7% cumulatively.
4) Shareholders who suffered from the bank’s losses and had to recapitalize the bank were also buying the stock to average down their losses.
5) The presence of the KIA
6) The change in strategy and management and the enforcement of corporate governance. In addition, the cleaning of the balance sheet helped in restoring investor’s confidence.
7) The old shareholders are confident in the bank and they maintained their ownerships.
Looking at the basic relative valuation, one might assume that the stock might be overbought as it is now trading above peers with the exception of Boubyan bank. However, the bank has taken considerable provisions although they have just cleaned up their balance sheet. The bank might still be conservative and not reverse the provisions in the next few quarters, however I do believe that it has some hidden value into it.