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Wednesday, 2 February 2011

Dubai's Stocks Rally Most in 10 Months as Egypt Mubarak Says to Step Down - Bloomberg

Persian Gulf shares rose, sending Dubai’s gauge up the most in almost ten months, on optimism Egyptian President Hosni Mubarak’s pledge to step down will help quell protests that entered a ninth day.

Emaar Properties PJSC, the builder with investments in the North African country, gained the most since June. Dubai Islamic Bank PJSC advanced 3.7 percent after Fitch Ratings assigned the lender a long-term foreign currency issuer rating of A. The DFM General Index surged 3.3 percent, the most since April 11, to 1,594.87 at the 2 p.m. close in Dubai. The measure extended gains after Yemen’s president said he won’t seek another term. The Bloomberg GCC 200 Index climbed 1.5 percent, the most since Dec. 5, at 1:20 p.m. in Riyadh.

Mubarak’s speech offered a “clearer picture in terms of the political reading regionally; the markets had overreacted before,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments in Dubai. “We expect minimal impact on the micro level. It’s a matter of days before the dust settles.”

Cheapest Saudi Shares Signal Gains as Egypt Pummels Mideast - Bloomberg

The selloff in Persian Gulf stocks triggered by protests in Egypt is “completely unjustifiable” as government spending and rising oil prices underpin economic growth in the region, Schroder Investment Management Ltd. said.

Saudi Arabia’s Tadawul All Share Index fell 5.2 percent from Jan. 24 through yesterday and fetches 1.9 times net assets, the cheapest level relative to the MSCI Emerging Markets Index since Bloomberg began compiling the monthly data in April 2006. Qatar’s QE Index trades at 2 times book value, a 29 percent discount to the average level since June 2005, the data show.

“Any contagion into the Gulf Cooperation Council markets is completely unjustifiable, putting aside company specifics with exposure to Egypt,” said Rami Sidani, the Dubai-based head of Middle East and North Africa investment at Schroder, which oversees about $230 billion of investments worldwide. The crisis “is a good entry point in stocks we like,” he said.

HSBC recommends nine Turkish stocks on upgrade prospects - Hurriyet

Halkbank, a Turkish state-run bank, and steelmaker Erdemir are among nine stocks recommended by HSBC Holdings on expectations Turkey will be lifted to investment grade by credit rating agencies.

The stocks, which included lender ─░┼čbank, were also selected based on their dividend potential, growing exposure to emerging markets and relative value compared with the Istanbul Stock Exchange’s main ISE-100 index, HSBC said in an e-mailed report Wednesday.

“Within the next three years, the investment grade case could be one of the major factors to shape equity expectations and stock picks,” HSBC said.

Egypt: markets calm despite army/protestor tensions | beyondbrics – FT.com

Supporters of Hosni Mubarak, the embattled Egyptian president, rally
Egyptian equities and bonds traded offshore were largely unchanged on Wednesday as investors tried to make sense of president Hosni Mubarak’s pledge to step down, and moves by the army to persuade protestors to clear the streets.

Investors in the Gulf had fewer doubts, with equities rising sharply in Dubai and elsewhere.

In London, GDRs in Orascom Construction, Egypt’s largest company by market capitalisation, slipped slightly from $39.84 on Tuesday’s close to $39.12. Orascom Telecom was fractionally higher art $3.40 ($3.37). Egypt’s 10 year bond was a touch lower at 95.90 (96.00). The country’s credit default spread, a risk measure, narrowed a bit by 1o points to 355, following an 85-point gain on Tuesday.

Turkey: Egypt a mixed blessing? | beyondbrics – FT.com

The flow of protestors in Cairo’s Tahrir Square have unsettled markets across the region. In Turkey, investors already had doubts over the central bank’s unorthodox policy initiatives. Egypt’s intensifying political crisis swung sentiment against emerging markets, hitting the lira and prompting a sharp sell-off in Turkish equities and bonds.

“There’s a general feeling that the CBT [Turkish central bank] could not have picked a worse time to experiment,” said Nicholas Spiro, at the consultancy Spiro Sovereign Strategy, while analysts at the brokerage EFG Istanbul Securities said the “safe-haven credentials” of Turkish assets had “no doubt taken a bit hit”.

Yet asset prices are already rebounding, and analysts speculate that a period of prolonged instability in the Middle East could boost Turkey’s weight in regional affairs – and its attractions for international investors.

Saudi telcos talk $2.5 bln tower merger - Maktoob News

Saudi Telecom Co and competitor Mobily could sell a large stake in a combined $2.5 billion merged towers business, three people familiar with the matter said on Wednesday.

"Talks for the merger are on, but this is subject to negotiations and terms and conditions put forth by both companies," one of the people said.

The person said the Saudi firms would look at offloading a 51 percent stake if a joint business with 15,000 towers was created.

UPDATE 1-Kuwait's Gulf Bank swings to Q4, yearly profit | Reuters

Kuwait's Gulf Bank (GBKK.KW), which was rescued by the Kuwaiti central bank two years ago during the financial crisis, swung to fourth quarter and full year profit, it said on Wednesday.

Gulf Bank had net profit of 8.66 million dinars in the fourth quarter, according to Reuters calculations, reversing a net loss of 21.05 million dinars in the prior-year period.

The bank earned 2010 net profit of 19.06 million dinars against a net loss of 28.07 million dinars in 2009, according to a statement to the bourse on Wednesday.

UAE c.bank plans new rules to regulate bank fees | Reuters

The United Arab Emirates central bank will come up with new rules to prevent the Gulf Arab country's banks from charging excessive fees, its governor was quoted as saying by a news website on Wednesday.

"I agree that banks have increased their fees and commission rates and not interest rates," Sultan Nasser al-Suweidi was quoted as saying on www.emirates247.com website.

"There is a new set of regulations that are coming, and the central bank will intervene because matters are getting out of control," he said.

Egypt debt insurance costs fall sharply - Markit | Reuters

The cost of insuring Egyptian debt against default fell sharply on Wednesday on ebbing concerns about political unrest, which had led to a spike in CDS prices in recent days.

Expectations of a smooth transfer of power in Egypt rose after President Hosni Mubarak said he would stand down later this year.

Egyptian five-year credit default swaps fell 69 basis points from Tuesday's closing levels to 364 bps, according to Markit, and are down nearly 100 bps from April 2009 peaks hit in recent days.

Unrest in Egypt Risks Spreading Into Algeria, Standard and Poors Forecasts - Bloomberg

Egypt’s unrest may spread to other countries, including Algeria and Jordan, that have high unemployment and less leeway to boost public spending because of high debt and budget deficits, Standard & Poor’s said today.

The rating agency is “relatively confident” that Egypt will pay its debt obligations, Kai Stukenbrock, director for sovereign and international public finance ratings, said in an interview in Dubai today.

There is a 50 percent chance that S&P will cut Egypt’s credit rating further, he said.

Kuwait Central Bank Queries Bank's Egypt, Tunisia Liabilities After Unrest - Bloomberg

Kuwait’s Central Bank asked local banks to reveal their liabilities in Egypt and Tunisia following recent political unrest in the two countries, Al-Rai reported, citing people familiar with the matter.

Lenders are also to provide the central bank with details of the natures of the liabilities, and risks that each bank may face, according to the newspaper.

Kharafi set for Dh1bn in fees from Etisalat deal - The National

Kharafi Group's brokerage unit stands to earn more than Dh1 billion (US$272 million) in commission if Etisalat succeeds in its bid to buy a stake in its Kuwaiti rival Zain.

Kharafi owns 12.4 per cent of Zain and is being targeted by Etisalat as it pursues of a 46 per cent stake in the operator in a deal worth Dh44.1bn or 1.70 dinars a share.

Nasser al Kharafi, the billionaire chairman of Kharafi Group, confirmed that the National Investments Company, a brokerage in Kuwait, would receive 50 fils per share in the deal for its "role in collecting the 46 per cent ownership needed".

DP World and NBAD high on new S&P index - The National

The ports operator DP World and National Bank of Abu Dhabi ranked among the top companies in Standard & Poor's new pan-Arab index that aims to boost transparency and corporate governance across the markets.

The S&P-Hawkamah Pan Arab ESG Index ranks the Middle East's top 50 companies using a set of environmental, social and corporate governance standards. It is a joint venture between the ratings agency and Hawkamah, an institute for enhancing corporate governance in the region.

"We're raising the bar as far as [financial and governance] reporting is concerned and putting these issues on the corporate agenda," said Dr Nasser Saidi, the executive director of Hawkamah.

Qatar budget swings into $5bn surplus - Arab News

Qatar's state budget swung into a surplus of 17.5 percent of annual economic output in July-September last year as government revenue doubled from a year earlier, data showed on Tuesday.

The surplus reached 19.4 billion riyals ($5.3 billion) in the second quarter of Qatar's 2010/11 fiscal year as revenue was partly boosted by higher gas output, the central bank's preliminary estimates showed.

Qatar, one of the world's top investors through its sovereign wealth fund, ran a deficit of 23.2 percent of gross domestic product in April-June, which analysts said was due to common budgetary adjustments.

Syria grants licence to Kuwait's NBK bank | Reuters

The National Bank of Kuwait (NBKK.KW) has been granted a licence to operate in Syria, an official Syrian statement said on Tuesday, making it the sixth Gulf bank to enter the nascent market.

The government also granted a licence to Isbank (ISCTR.IS), Turkey's largest bank, to open a representative office, the statement said.

The state relinquished its monopoly on the banking sector eight years ago, and 14 privately owned banks -- all subsidiaries of Arab banks -- now operate in the country of 20 million people.

UPDATE 2-Profit up at top UAE bank NBAD, sees 'tricky' 2011 | Reuters

National Bank of Abu Dhabi (NBAD.AD) (NBAD), the United Arab Emirates' largest lender by market value, forecast a "tricky" year ahead after posting a 71 percent rise in quarterly profit.

The bank, which has exposure of about $400 million to Egyptian entities, said provisions would weigh on earnings growth.

NBAD booked net impairment charges of 1.20 billion dirhams ($326.7 million) last year while non-performing loans stood at 3.2 billion dirhams, or 2.3 percent of NBAD's loan book.

Cheapest Saudi Shares Signal Gains as Egypt Pummels Mideast - Bloomberg

The selloff in Persian Gulf stocks triggered by protests in Egypt is “completely unjustifiable” as government spending and rising oil prices underpin economic growth in the region, Schroders Investment Management Ltd. said.

Saudi Arabia’s Tadawul All Share Index has fallen 5.2 percent since Jan. 24 and now fetches 1.9 times net assets, the cheapest level relative to the MSCI Emerging Markets Index since Bloomberg began compiling the monthly data in April 2006. Qatar’s QE Index trades at 2 times book value, a 29 percent discount to the average level, according to Bloomberg data that begins in June 2005.

“Any contagion into the Gulf Cooperation Council markets is completely unjustifiable, putting aside company specifics with exposure to Egypt,” said Rami Sidani, the Dubai-based head of Middle East and North Africa investment at Schroders, which oversees about $230 billion of investments worldwide. The crisis “is a good entry point in stocks we like,” he said.

gulfnews : Outlook for jobs still major concern for UAE residents

Job security remains one of the major concerns of UAE residents. According to the latest Global Consumer Confidence survey conducted by Nielsen, perceptions of job prospects declined this quarter to 50 per cent of survey respondents who thought job prospects were good or excellent compared to 54 per cent in the third quarter of 2010.

"Having weathered the worst of the storm with the Dubai debt [restructuring] in the last quarter of 2009, which was followed by a quick resurgence in optimism, UAE consumers are now holding their breath for a significant positive indicator," said Sevil Ermin, managing director of Nielsen in the UAE.

However, according to Christo Daniels, managing director of IQ Selection, a recruitment agency, their company has seen a rise in vacancies and hiring.

ANALYSIS-Gulf Arabs warily eye Tunisia, Egypt revolts | News by Country | Reuters

The question being whispered in some Gulf Arab states that have long thought themselves immune from the type of popular uprising now convulsing Egypt is, "Could it ever happen here?"

As Egypt's political revolt unfolds and threatens to upend the Arab world's political status quo, it seems to be business as usual from Kuwait to Saudi Arabia: People commute to work on dusty roads, shop and eat at posh malls. But at home, they are glued to television images of chaos on the streets of Cairo.

Now, after eight days of relentless protests threatening to break the 30-year rule of Egyptian President Hosni Mubarak, Gulf states cannot help but wonder how far unrest will spread and how that might impact their own rule.

Bahrain Has No Plans at Present to Change Rates, Maraj Says - Bloomberg

Bahrain’s Central Bank has no plans at present to change interest rates, Governor Rasheed al-Maraj said. He spoke today in Manama.

“I don’t expect we’ll change our monetary policy in the near term.

“It’s very early to judge what’s going to happen and the impact on the cost of borrowing. Everyone is concerned because there’s a lot of uncertainty but let’s not jump to conclusions at this stage.

FT.com - Banks weigh risk of capital flight

Egypt faces the risk of renewed capital flight out of the country once the banking sector reopens in what would present further strains to its financial system, analysts have warned.

The closure of the domestic stock market and banking sector last week has temporarily halted the outflow of capital, but not before the bourse plunged 20 per cent and an estimated $1.5bn of foreign money placed in Treasury bills left the country, according to one senior analyst in Cairo.

This caused the exchange rate to the dollar to drop by almost 1 per cent over the past week to a fresh six-year low of E£5.85, with the fall moderated by discreet central bank intervention, some analysts said.



Egypt: buying under fire | beyondbrics – FT.com

cannon fireAn old adage, reputedly coined by Nathan Rothschild during the Napoleonic Wars, urges investors to be contrary, and “buy at the sound of cannons, and sell at the sound of trumpets”.

Some intrepid fund managers seem to be heeding the advice, and bought Egyptian shares today.

Cairo’s stock exchange, the oldest and largest in North Africa, remains shuttered, after shedding a fifth of its value last month. Yet four large Egyptian companies have listed global depositary receipts in London, which have continued to trade throughout the country’s political upheaval.

Time for a new Arab stock index? Yes | beyondbrics – FT.com

The shares of companies listed across the Middle East and North Africa are taking a hit on international concerns over unrest in Egypt and regional stability. So it would not seem the most auspicious time to launch a new stock market index.

But that is what Standard & Poor’s did with a couple of partners on Tuesday, unveiling a new index of 50 equities designed help investors identify companies that do well in terms of environmental and social policy as well as governance. And that last word, governance, does give the index a certain resonance.

The S&P/Hawkamah Pan Arab ESG Index ranks companies with the best records of disclosure on environmental, social and governance (ESG) issues, as well as their record in policy implementation, as measured by independent reports.