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Saturday, 29 January 2011

WAM | Etisalat updates investors on its proposal to acquire shares in Zain

Etisalat said it is making good progress on its proposal to acquire 51 per cent of the total issued share capital and voting rights (excluding shares held in treasury but including all shares which may be issued pursuant to the exercise of any options) in Mobile Telecommunications Company LLC ("Zain") ("Proposed Transaction").

It added in a statement that Etisalat's due diligence effort has recently accelerated, and Etisalat values the continuous and positive cooperation of Zain. In addition, Etisalat's discussions with eighteen international and regional banks regarding the financing required to complete the Proposed Transaction continue, and it remains highly confident that it will be able to secure the necessary financing.

"Etisalat is delighted with the recent progress in the due diligence process and wishes to reach a final agreement as soon as practically possible" Etisalat Chairman Mohammed Omran said.

The final progress and the results on the Proposed Transaction are to be presented after the due diligence completion review to Etisalat Board of Directors by the end of February 2011. Etisalat will keep its stakeholders posted about the progress.

Unrest in Egypt Spooks Saudi Market — Saudi Analysis — GCC Market Analytics

Clearly, the situation in Egypt has made investors in Saudi very nervous. The Tadawul Index dropped 6.43% today with volume spiking to levels not seen in well over six months.

Saudi Tadawul Index Falls 6.43%

With such a decisive fall you'd expect the other GCC markets to follow Saudi's lead when they open tomorrow.

Unsurprisingly, the countries in the eye of the storm have seen their stock prices sell-off considerably. The Egypt 30 Index fell by more than 10% on Thursday alone.

Also, oil futures rose by nearly 5% on Friday. That's the biggest one day rise since September 2009.

In short, the financial markets are nervous about the situation in Middle East and the possibility of further contagion in the region. Things are moving quickly and no one is sure what will happen next. And as everyone is fond of saying, markets hate uncertainty.

Saudi Arabian Stocks Tumble Most in Eight Months as Egyptians Defy Curfew - Bloomberg

Saudi Arabian shares retreated the most since May on concern political unrest could spread in the Middle East after Egyptian protesters clashed with police and the North African country’s president refused to resign.

The Tadawul All Share Index tumbled 5.1 percent, the most since May 25, to 6,354.10 at 2:37 p.m. in Riyadh. All but one of the 146 shares fell. Saudi Basic Industries Corp., the world’s largest petrochemical maker, slumped as much as 5.9 percent. Al Rajhi Bank, Saudi Arabia’s largest publicly traded lender, dropped as much as 4 percent. The cost of protecting Saudi Arabian debt against default for five years soared the most in more than two years yesterday.

“There is a lot of worry looming among investors that we’re going to see a domino effect across the region,” said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. “That is pushing investors away from equities and straight into cash. It is panic selling across the board.”

Etisalat sees Zain due diligence done by end Feb | Reuters

Etisalat, which is bidding to buy a 46-percent stake in Kuwaiti telco Zain, expects to present the results of its due diligence to its board by the end of February, the UAE telecoms firm said in a statement on Saturday.

Etisalat also said talks with 18 regional and international banks on financing continued and it was "highly confident" it will secure the necessary financing.

UAE's NMC group sells 40 percent stake to Centurion for S$1.3 bil

United Arab Emirates' private healthcare firm New Medical Centre (NMC) has sold a 40 percent stake to Centurion Investment to expand in overseas markets as demand for medical care surges, its CEO said on Saturday.

NMC, a 36-year-old company with hospitals across the UAE and a pharmaceutical manufacturing facility in Abu Dhabi, has sold the stake for 4 billion dirhams (S$1.39 billion). Centurion is a new UAE healthcare entity with plans to go into other businesses in the future.

"The deal has been signed. It will help us expand and grow further in the UAE and internationally," Bavaguthu Raghuram Shetty told Reuters.

‘Turkey as important as BRIC countries for UK’

Right Honorable Lord Mayor of London Michael Bear has said Turkey is equally important as Brazil, Russia, India and China -- also known as the BRIC countries – for the UK.

In the last of his three-day visit to Turkey, Bear -- who heads the British capital’s local authority City of London Corporation -- made the opening speech at the panel “İstanbul International Finance Center: What does the London experience say about İstanbul?” held at the İstanbul Stock Exchange (İMKB) on Friday.

During his speech, he lauded Turkey’s economic performance and said, “The scale of opportunities in İstanbul is immense.” Speaking about Turkish-British relations, Bear reminded those present that the trade volume between the two countries was at $9 billion in 2009 and that they aim to double that figure by 2015. He also noted that 2,000 British companies are operating in Turkey.

Marshall Auerback Speaks on BNN About Implications of Unrest in the Middle East « naked capitalism

Portfolio strategist, hedge fund manager, and sometime Naked Capitalism guest blogger Marshall Auerback spoke on BNN about the implications of unrest in the Middle East for the economy and investors. Enjoy!

Screen shot 2011-01-28 at 10.55.19 PM

You can view the clip here.

An economic crisis is not force majeure - The National

Donald Trump made news after defaulting on payments to the financiers of a 92-storey building in Chicago as the global financial crisis hit in 2008. Claiming Deutsche Bank had undermined the project, Mr Trump defended his failure to pay by invoking the loan's "force majeure" clause, alleging that "the world financial crisis is an extraordinary event". It was a valiant but desperate effort that ultimately failed. That hasn't stopped others from trying it, including some developers here in the UAE.

As The National reported this week, the builder of a delayed luxury development in Dubai has invoked the so-called "act of God" clause to refuse refunds to buyers. Shaikh Holdings last week informed owners in Sanctuary Falls, a collection of 96 villas under construction in Jumeirah Golf Estates, that the company was not liable for penalties for delays due to "force majeure", or unforeseen circumstances.

"Events have occurred that are outside our control and therefore we are not liable for any penalties in these circumstances," the developer said in a letter to owners. Shaikh Holdings is not alone. Michael Lunjevich, a partner with law firm Hadef & Partners, says the clause has become "the mechanism of choice for developers to justify a project on hold".

Gulf frontier markets robust despite Egypt: Qatar | Reuters

Investors should not lump Egypt and other Middle Eastern markets together in one group as strong fundamentals especially in the Gulf argue for a favorable investment climate, a top Qatar regulator said.

Emerging stocks fell and debt insurance costs across the Middle East and North Africa -- both categorized as a frontier market -- surged on Friday as jitters over political unrest in Egypt spilled into the broader region.

Even in Saudi Arabia, dollar/Saudi one-year forwards hit their highest in two years, reflecting expectations of a fall in the Saudi riyal currency in 12 months' time."

Vacancies rise in Dubai's shopping centres - The National

Shoppers in Dubai this week will find an abundance of empty space and closed stores in addition to the Dubai Shopping Festival.

Vacancy rates in Dubai's shopping centres are at their highest levels in recent years, up to 30 per cent, according to new data from Jones Lang LaSalle, the property consultants.

Malls in Dubai typically average closer to 5 per cent to 10 per cent of vacancy, said Craig Plumb, Jones Lang LaSalle's head of research. / Emerging Markets - Getting back into Egypt is all a matter of timing

Investors’ flight from financial markets in Egypt and the wider region could yet lead to opportunities for re-entry, assuming stability eventually returns. The challenge, though, will be in the timing.

The Egyptian government’s strong grip on the military makes its hold on power appear more secure than that of the recently-deposed Tunisian president, Zein al-Abidine Ben Ali.

Yet the speed of events in Tunisia surprised many, and the investment climate in the region will be affected not only by seismic political shifts but by growing deficits and inflation as worried governments increase subsidies for basic goods. - Oil near $100 level as Mideast tensions grow

Oil prices closed the week nearing the $100-a-barrel mark amid tension in the Middle East and stronger economic growth in the US.

But Abdalla El-Badri, secretary-general of the Opec oil cartel, said the market was well supplied and dismissed calls for a boost in the group’s output in spite of rising prices and mounting worries about the impact on global economic growth and inflation.

ICE March Brent, the global benchmark, rose on Friday to a peak of $99.63 a barrel, up 2.1 per cent on the week and the highest level since late-2008.

Egyptian Protests Sink Frontier ETFs. |

Frontier market ETFs, some of the hottest instruments in ETF Land, have taken a big hit on the violence in Tunisia and Egypt. Frontier markets are the markets too small to be considered emerging markets. They’re still tiny economies with markets that are highly risky and not very transparent. One of the biggest risks is political risk. Of course, most of these are in Africa.

On the heels of the overthrow of the Tunisian government last week, Egypt is now in turmoil. The Egyptian military have been ordered into the streets to help the police after a day of violent protest against President, and accused dictator, Hosni Mubarak. Fighting continues on the streets of Cairo, despite a nationwide curfew. The New York Times reports “the ruling party’s building was in flames at nightfall.” The tensions moved around the Arab world as protestors took to the streets of Yemen.

Egypt’s stock market fell 10% on Thursday and was closed Friday for the sabbath day, according to Jon Ogg at 24/7 Wall Street. The pure play Market Vectors Egypt Index ETF (EGPT) tumbled 14% this week. Of course, it’s a tiny fund, with just $8.5 million in assets under management. Liquidity might be a problem in this fund as Friday’s volume was 938,000 shares trading hands vs. average daily volume of 28,211. Meanwhile, with 21% of its portfolio in Egypt as of September 30, the Market Vectors Africa Index ETF (AFK), is down 8.5% this week to $32.27.