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Wednesday, 9 February 2011

Exchange bid poses awkward questions for Canada - Maktoob News

A bid by the London Stock Exchange for the TMX Group, the operator of the Toronto Stock Exchange, reopens a debate as to whether Canada is really open for global business, or if regulatory and political hurdles will wreck another high-profile deal.

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.

FT.com - Egypt faces bleak outlook on debt

Until recently, Egypt’s $80bn debt market of treasury bills and bonds was widely viewed in a positive light.

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.

FT Tilt - Anti-Mubarak blowback watch: Ezz Steel(Registration)

Egypt's Ezz Steel, the country's largest steel manufacturer, confirmed today that its chairman and founder, Ahmed Ezz, has been barred from leaving the country. Mr Ezz is one of a number of businessmen being investigated by Egypt's public prosecutor in an apparent crackdown on the corporate tycoons who rose to power in both politics and business under the government of president Hosni Mubarak

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.

Egypt: the economic ties that bind | beyondbrics – FT.com

When it comes to the economic impact of the Egyptian crisis, what do Saudi Arabia, India and the UK have in common?

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.

Borse Dubai supportive of LSE's 'initiatives to create shareholders value' - bi-me.com

Borse Dubai, the company that controls Dubai’s two stock exchanges and has a stake in London Stock Exchange (LSE.L) said today it is supportive of management initiatives to create shareholder value in the LSE.

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.

UPDATE 1-Qatar sees risks in mixing Islamic, conventional banks | Reuters

The Qatar central bank said it saw higher risks from conventional lenders operating Islamic units, clarifying a recent ruling which asked commercial banks in the Gulf state to close their sharia-compliant operations. Qatar's central bank earlier in the week asked conventional lenders to close down their Islamic operations amid worries of overlap between the two, in a surprise move that boosted shares of Islamic lenders in the country. [ID:nLDE71503A]

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.

MIDEAST STOCKS-Abu Dhabi's Aldar slides after record loss | Reuters

Shares in Abu Dhabi's Aldar Properties (ALDR.AD) slid on Wednesday after the indebted developer reported a record quarterly loss.

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.

MENA stock markets - February 9, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
6611.60.14%
DFM (Dubai Financial Market)
1602.83-0.22%
ADX (Abudhabi Securities Exchange)
2709.130.19%
KSE (Kuwait Stock Exchange)
6758.80.09%
BSE (Bahrain Stock Exchange)
1467.08-0.02%
MSM (Muscat Securities Market)
6936.050.18%
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)
4709.210.61%
CB (Casablanca Stock Exchange)
12856.5-0.98%
PSE (Palestine Securities Exchange)
487.5-1.61%

UAE's Aldar Properties may see more provisions, analysts | Reuters

A record write-off of assets may not end woes of indebted developer Aldar Properties (ALDR.AD), as the company may see further impairments, analysts said on Wednesday.

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.

Egypt pound stable, c.bank warns may step in again | Reuters

Egypt's central bank warned on Wednesday it was prepared to intervene directly in the currency market again after purchases on Tuesday strengthened the pound by more than one percent.

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.

Omantel Q4 profit climbs 50 pct, beats forecast | Reuters

Oman Telecommunications Co. OTL.OM posted a 50 percent jump in quarterly net profit on Wednesday, beating analysts average expectations.

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].

Here's Why You Don't Need Wikileaks To Know That Saudi Oil Reserves Are Overstated


Saudi Arabia tells us that they have lots of oil, but if we look at graphs of their historical production, there is nothing that looks like an upward trend. In fact, recent production is lower than it was in the late 1970s and early 1980s. This is a graph of Saudi oil production, consumption, and amount of net exports, from Energy Exports Databrowser.
chart
Exports, in green, are down because Saudi Arabia is consuming more and more of its own oil, so there is less available for others. This graph doesn't fit well with what we have been told.

Kuwait Investment Company to help Gulf Finance House capital raising | CPI Financial

Gulf Finance House BSC (GFH), the Bahrain based Islamic investment bank has appointed Kuwait Investment Company to assist the bank’s recapitalisation and planned $500 million convertible Murabaha.

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.

FT Tilt - Escape From Dubai: the Arabtec story(Registration)

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.

FT Alphaville » LSE/TMX – a defensive merger?

The London Stock Exchange does not have a great track record of consummating deals (remember the proposed Deutsche Borse transaction of the 2001?) or grabbing big strategic opportunities.

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 up as Saudi resumes rise - Stocks - ArabianBusiness.com

Saudi Basic Industries Corp (SABIC) led Saudi Arabia's index TASI higher in early trade as the kingdom's stocks braced for a possible inflow of funds when Egypt's bourse reopens on Sunday.

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.

Egypt state bank NBE sees few fund outflows | Reuters

Egypt's biggest bank, state-owned National Bank of Egypt (NBE), said on Tuesday it has seen little flight of funds abroad or conversions into U.S. dollars, despite the political unrest in Egypt.

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.

Britain's LSE in deal to buy Toronto exchange - Maktoob News

The London Stock Exchange is to buy the owner of the Toronto Stock Exchange in an all share deal to create a major center for trading in mining shares if likely political opposition in Canada can be overcome.

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).

FT Tilt - The GDR crystal ball predicts a soft landing for Egypt stocks(Registration)

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:

GDR Index - Beltone Financial

Source: Beltone Financial

Palestinian tycoon launches first private equity fund - Maktoob News

A leading Palestinian entrepreneur on Tuesday announced the launch of a $60 million private equity fund to support small and medium sized enterprises (SMEs), the first in the West Bank.

"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.

53,000 more investors start to trade on the İMKB

Thanks to the efforts of the Capital Markets Board (SPK), the number of investors on the İstanbul Stock Exchange (İMKB) increased by 53,000 in 2010, reaching 1,056,000 as of the beginning of this year.

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.

$3.4bn Aldar Properties loss casts a shadow over UAE real estate « ArabianMoney

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.

No shortage of liquidity in UAE

There is no shortage of liquidity in the UAE market, but the banks are “hoarding” their deposits by not injecting the cash back into the economy, according to Mohammed Qasim Al Ali, CEO of National Bonds Corporation.

“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.

gulfnews : UAE expects 71% increase in primary energy demand


Gulf investment in power by 2019
  • Image Credit: Megan Hirons/Gulf News
  •  
    The UAE is expecting a 71 per cent increase in primary energy demand by 2019, industry sources said in Dubai on Tuesday at the opening of Middle East Electricity, the region's largest trade show for the power and energy sectors.

The total spend on energy in the region is expected to be $2.2 trillion (Dh8.09 trillion), with the UAE at the top of the list with $926 billion.
The UAE will begin the construction of its first nuclear power plant in the first quarter of next year, with completion expected in 2017.

Qatari bank may set precedent - The National

Qatar's move to stop Sharia-compliant lending by conventional banks could trigger similar moves across the region as Gulf states jostle for position in a market estimated to be worth US$800 billion (Dh2.93 trillion).

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."

Jordan ‘Resilient’ as Moody’s Lowers Outlook, S&P Cuts to Junk - Bloomberg

Jordan’s economy is “resilient” and can withstand regional political turmoil and higher commodity prices, central bank Governor Faris Sharaf said after the country’s local-currency rating was cut to junk and its sovereign debt outlook was lowered.

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 US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

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.

US exports to Kingdom expected to top $26bn by 2013 - Arab News



US exports of goods and services to the Middle East and North Africa (MENA) region reached an all-time high of nearly $68 billion in 2010. According to the new research conducted by the National US-Arab Chamber of Commerce (NUSACC), the next three years hold even more promise. The total market demand in the Arab world is expected to exceed $1 trillion by 2013.
The US share of that growing import market is expected to reach $117 billion — an unprecedented level of US exports that bodes well for job creation in the United States. This is an increase in the US share of total market demand from 8.9 percent in 2009 to 11.2 percent by 2013.
US President Barack Obama's National Export Initiative (NEI), launched in March 2010, calls for doubling American exports to $3.14 trillion by 2015 in order to create an additional two million jobs. Applying NEI metrics, US goods and services to the Arab world are on track to sustain 340,000 direct and 683,000 indirect American jobs by 2013.

Egyptian Unrest Throws Deficit Goals Off Course as Yields Rise - Bloomberg

Egypt’s political crisis is throwing into disarray a pledge by Hosni Mubarak’s government to cut the budget deficit by more than a half by 2015, threatening to raise borrowing costs for the president’s successor.

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.”

UPDATE 1-Dubai lender Mashreq posts Q4 profit on income gain | Reuters

Quarterly profit at Dubai bank Mashreq (MASB.DU) swung to a profit in the latest quarter on higher interest income and lower loan losses as it recovers from the burst of Dubai's asset and real estate bubble.

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.

Dubai group offer for Ferre approved - CNBC

Government-appointed advisers have accepted an offer for the Gianfranco Ferre fashion group from the Dubai-based Paris Group.

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.

Egyptian tourism: the cost of crisis | beyondbrics – FT.com

More evidence of the economic impact Egypt’s crisis is having on the tourism industry emerged on Tuesday when Thomas Cook said it expected to lose £20m in revenue due to the crisis there and in Tunisia. It was following in the footsteps of Tui Travel, which that last week said it would take a £25m hit.

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.

FT Tilt - The Sudan debt relief trade

The government of south Sudan would like up to 75 per cent of its debt wiped off the slate before it becomes independent in July, and yield-hungry distressed debt buyers are mulling what opportunities this could bring.

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.