Wednesday, 9 February 2011
In any case, the initial signs are that the proposed merger will not be approved quickly.
The minority Conservative government dented its reputation among foreign investors last year by blocking BHP Billiton's $39 billion bid for Potash Corp. Ottawa said the deal would not be of "net benefit" to Canada but critics noted that BHP's proposed takeover was very unpopular in the West, where the Conservatives enjoy most support.
Factors at play included a low debt burden, buoyant domestic economy, a government committed to cutting the budget deficit, liquid local banks that in effect supported the market, an unofficial currency link to the dollar and high interest rates that made Egyptian debt a popular investment for “carry traders”.
This pushed down borrowing costs for the government. At one point last year, the “zero volatility spread” of an Egyptian bond maturing in 2020 was lower than that of a similar-maturity Qatari Diar bond that was guaranteed by the wealthy emirate.
Other well-known figures including Rachid Mohamed Rachid, the former minister of trade, and Zoheir Garannah, the former tourism minister, have been named in the investigations. But Mr Ezz is by far the most prominent member of Egypt's corporate elite, and his name is the most frequently cited by protesters and opposition figures when slamming the culture of corruption that pervades the Mubarak government.
Ezz Steel, which constitutes about 3.6 per cent of the benchmark EGX30 index, controls around 60 per cent of the Egyptian steel market. The company and its subsidiary, Al Ezz Dekheila, have a combined market cap of almost $3bn.
They are all particularly dependent on exports to Egypt, taking the top three places among Egypt’s trade partners. Admittedly, the level of dependency isn’t great, at around 2-2.5 per cent of their GDPs. But the numbers show that even though Egypt is a poor country, its international commercial links reach far and wide.
According to a BarCap report this week, other countries in which exports to Egypt are significant in terms of their own economies are Italy, Kuwait, Russia and South Korea.
It was reported earlier that the London Stock Exchange is to buy the owner of the Toronto Stock Exchange (X.TO) in an all share deal to create a major centre for trading.
“We have been following these developments with interest. Borse Dubai has always been supportive of management initiatives to create shareholder value in the London Stock Exchange. We continue to support the management in their efforts to create both a stronger platform and a more valuable enterprise for stakeholders,” Borse Dubai said in a statement.
The central bank issued a circular over the weekend providing few specifics on the move and had conventional banks such as HSBC (HSBA.L) saying it would seek clarification on the ruling.
"The directives issued recently ... are based on issues related to supervision and monitoring as well as monetary policy," the central bank said in a statement carried by state news agency QNA.
Trading in Middle East markets slumped, with little reason for traders to open new positions as the weekend neared and regional benchmarks almost unchanged.
Aldar dropped 3.2 percent to 1.82 dirhams after it made a fourth-quarter loss of 11.14 billion dirhams ($3 billion), having taken writedowns of 11.3 billion dirhams in 2010, most of which were booked in the final quarter.
|TASI (Saudi Stock Market)||6611.6||0.14%|
|DFM (Dubai Financial Market)||1602.83||-0.22%|
|ADX (Abudhabi Securities Exchange)||2709.13||0.19%|
|KSE (Kuwait Stock Exchange)||6758.8||0.09%|
|BSE (Bahrain Stock Exchange)||1467.08||-0.02%|
|MSM (Muscat Securities Market)||6936.05||0.18%|
|QE (Qatar Exchange)||8917.29||-0.26%|
|LSE (Beirut Stock Exchange)||1462.33||-0.15%|
|EGX 30 (Egypt Exchange)||5646.5||-10.52%|
|ASE (Amman Stock Exchange)||2383.09||-0.81%|
|TUNINDEX (Tunisia Stock Exchange)||4709.21||0.61%|
|CB (Casablanca Stock Exchange)||12856.5||-0.98%|
|PSE (Palestine Securities Exchange)||487.5||-1.61%|
Aldar, which booked 11.3 billion dirhams ($3.1 billion) in impairments and fair value losses last year, may still have assets that are overvalued while some unsold property could also see losses in the coming years.
"We do not rule out further impairment charges on Aldar's balance sheet," said Jad Abbas, real estate analyst at EFG-Hermes.
The Egyptian pound has been falling steadily since the eruption of political protests on Jan 25, and traders and strategists expect more losses. UBS analysts put the potential decline at as much as 25 percent within a month.
"We will intervene when we see the market is not orderly. If it is not, we will use our tools," Deputy Governor Hisham Ramez said by telephone, adding the market so far on Wednesday was quiet and orderly.
The telecoms operator made a profit of 29 million rials in the three months ending Dec. 31, according to Reuters calculations, compared with 19.3 million rials in the comparable period one year earlier.
Analysts polled by Reuters had estimated an average fourth quarter profit of 22.4 million rials [ID:nLDE70C0E0].
Kuwait Investment Company’s appointment opens up an opportunity to individual, private investors who will now – through KIC – be able to participate in the capital increase. The funds raised will be used by GFH to re-capitalise the bank and to transform GFH in to an institution focused solely on the creation, development and management of Islamic financial institutions offering a range of financial products and services to corporate and retail clients. The aim of the restructuring is to create a more stable business model of recurring revenues.
GFH is listed on the Kuwait Stock Exchange, the Bahraini Stock Exchange, the Dubai Financial Market and the London Stock Exchange in the form of a GDR. It has been responsible for the creation of various institutions such as First Energy Bank, QInvest, Syria Finance House, Inovest, Khaleeji Commercial Bank and Arab Finance House.
The UAE's biggest publicly-listed construction company, Arabtec, made its name during Dubai's 30 year construction-fuelled rise to the top, building many of the city's best-known developments. When the bubble burst, Arabtec - owed an estimated $550m in receivables from Dubai government developers - looked seriously shaky, at one point agreeing to be taken over by an Abu Dhabi government investment fund at a big discount to its share price at the time.
That takeover didn't materialise, and Arabtec has spent the last two years emphasising its diversification across the region, and away from high-end residential developments into more reliable infrastructure projects.
This year alone, the company has won four big contracts - all outside of Dubai - worth a total of $630m. And as Shuaa Capital explained in a note on Wednesday, while an estimated 44 per cent of its active projects were in Dubai at the end of 2010:
Dubai backlog contribution continues to diminish, 72% of the current effective backlog is now outside the emirate. Saudi Arabia makes up the largest share at 31% followed by Dubai at 28% and Abu Dhabi with 19%. Qatar and Kuwait add around 9% each, leaving the balance of 4% distributed among Egypt, Bahrain and the Levant countries.
So will its’s proposed merger with TMX Group, Canada’s largest exchange company, go the way of Northern Foods/Greencore or British Airways/Iberia?
The first thing to say about this deal is it’s not about growth – it looks very defensive. Perhaps an admission on the part of LSE boss Xavier Rolet that he hasn’t been able to deal with the issues left by the previous management team, or with the fast pace of change in the exchanges world.
SABIC, Saudi Arabia's largest listed firm, climbed 0.4 percent, while Saudi Kayan Petrochemicals and Kingdom Holding each added 0.5 percent.
The index edged up 0.1 percent to 6,610 points, rebounding slightly after falling on Tuesday, its first decline in six sessions.
Economists have warned the Egyptian pound may drop sharply over coming weeks as foreign investors frightened by Egypt's political impasse pull out. UBS analysts put the potential decline at as much as 25 percent within a month.
"In terms of currency, I don't see any issues of major concern," NBE Chairman Tarek Amer told Reuters in an interview.
LSE shareholders will end up owning 55 percent of the combined group, the companies said on Wednesday.
Shareholders in TMX Group will receive 2.9963 LSE shares for each TMX share, creating a group that based on their current share prices will have a combined market capitalization of 4.3 billion pounds ($6.9 billion).
Cairo's Beltone Financial has made a new index tracking the prices of the liquid GDRs of Egyptian companies traded in London, as a proxy for the EGX30 benchmark index that has seen no movement since the Egyptian stock exchange was closed on Jan 26.
Traders in New York have already pushed up the price of an Egypt ETF, and with the Egyptian exchange set to reopen Feb 13, the GDR index suggests either that London has got it wrong, or Cairo has some catching up to do:
Source: Beltone Financial
"Palestine's private sector is thirsty for an infusion of cash and managed expansion," said Bashar Masri, whose Ramallah-based holding company Massar International invests in real estate and financial and investment services.
The Siraj Palestine Fund would unleash "the latent potential of Palestinian SMEs by promoting technological advancement, job creation and addressing the acute shortage of equity capital", a statement said.
Speaking to Today’s Zaman on Tuesday, Professor Üstün Dikeç from Ankara’s Çankaya University said these figures support the positive developments in the Turkish economy. “When we compare the stock markets in other countries to that in Turkey, we can see there are backdrops and uncertainties in foreign countries, while Turkey, BRIC countries [Brazil, Russia, India and China], Indonesia and Malaysia show a developing economic trend,” Dikeç said.
Despite some fluctuations in global markets, the İMKB managed to keep the number of its investors above the 1 million level. Experts point out the rise in the number of investors on the İMKB is because of the increasing number of IPOs. There were 22 companies offered to the public in 2010, and five more companies started to trade on the İstanbul bourse in the first five weeks of this year, while there are 20 more companies waiting to be offered. A spokesman from the SPK noted that seminars on investing on the bourse that it had organized for youths and housewives was also a reason behind the increasing number of investors.
Aldar Properties has posted a $3.4 billion loss for 2010 after massive write-downs on its asset values. The leading Abu Dhabi property developer has $5.2 billion in projects under construction.
Last month Abu Dhabi Government came to the rescue of the otherwise insolvent company acquiring $3 billion in infrastructure on Yas Island, $1.5 billion of residential units and issuing a $760 million bond to a sovereign wealth fund.
“I am not a believer that there is a shortage of liquidity in the market. The banks are full of cash, but they are not injecting this cash back into the economy because they are shrunk in terms of financing, and lending it to people or to companies,” the CEO of the leading Shariah-compliant saving scheme in the UAE, told Khalej Times.
He was being interviewed after National Bonds Corporation announced a profit of 3.78 per cent for its bondholders “despite a challenging year in 2010.” Qasim said that statistics from the Central Bank of UAE indicate that deposits in general in the UAE have increased. It means that cash is there.
Qatar's central bank this week ordered conventional banks to shut down their Islamic operations by the end of the year amid worries about an overlap between the two forms of banking.
Industry experts say this action will prompt other Gulf countries to follow suit. Separating Islamic and conventional banking is "almost an infectious thing", said Ghanem Nuseibeh, a partner at Cornerstone Global Associates. "Now Qatar has done it, others in the Gulf might have to do it."
Protests that have unseated Tunisia’s ruler and threatened Egypt’s President Hosni Mubarak aren’t a comparable problem for Jordan because “there is very clearly a reform momentum both politically and economically,” Sharaf said today in a phone interview from Jordan.
Standard & Poor’s Ratings Services cut Jordan’s long-term local-currency rating to BB+ while Moody’s Investors Service changed the outlook on Jordan’s Ba2 foreign-currency government bond rating to negative from stable. King Abdullah last week dismissed his government in response to demonstrations organized by opposition groups demanding improvements in living standards.
WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices | Business | The Guardian
The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.
The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.
Unprecedented protests seeking the end of Mubarak’s 30-year rule have already pushed the yields on Egypt’s Treasury bills to the highest level in two years. Yields on the government’s 5.75 percent bond due in April 2020 reached a record of 7.2 percent on Jan. 31 before easing to 6.3 percent yesterday.
“Everything that has happened in the current political crisis is going to make it more difficult to reach the target,” said Ann Wyman, the London-based head of emerging markets research for Europe at Nomura Holding Inc., in an e-mail. “Tax revenues will likely decline, subsidies are increasing, public sector wages are going up and interest costs are rising.”
Mashreq made a profit of 155.6 million dirhams ($42.4 million) in the three months to Dec. 31, Reuters calculated, compared with a net loss of 119 million dirhams a year earlier.
It reported a full year net profit of 803 million dirhams in an emailed statement.
A statement confirming the sale by the bankrupt holding company that controls Ferre did not cite terms or the price of the transaction. IT Holding said Tuesday that the offer needs approval of the Economic Development Ministry and unions.
Media reports have put the price at €100 million ($136.35 million) over three years.
Those two companies will bounce back because they can send their clients elsewhere. But the same cannot be said of Egypt’s domestic tourism industry, which is one of the country’s main sources of foreign revenue and accounts for over 11 per cent of gross domestic profit.
Thomas Cook and Tui Travel are also incurring costs from repatriating customers and cancelling planned packages for travellers from countries where governments have issued travel warnings over Egypt.
The conflict-ridden administration of president Omar al-Bashir wants creditors to cut the country's $38 billion foreign debt, Bloomberg reported on Tuesday.
Without debt relief, the northern and southern regions would have to split the debt load, an unwelcome birthday present for Africa's soon-to-be newest country. Given its high debt to exports ratio, Sudan is eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. It is not expected to achieve a sustainable external debt position without generous debt forgiveness on at least HIPC terms, which has historically seen countries given about 90 per cent relief.