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Friday, 11 February 2011

FT Tilt - Three companies to watch in an anti-Mubarak era(Registration)

Egypt's political crisis, now well into its third week, shows no real sign of slowing down, and as of Friday afternoon, millions of protesters remained on the strees of Cairo, Alexandria, and smaller towns across Egypt. After a defiant speech from president Hosni Mubarak on Thursday night, protestors were moving to surround two key state buildings (and classic revolutionary targets), the presidential palace and the state television headquarters. Both are heavily guarded, making the likelihood of a showdown between protesters and the Egyptian armed forces much more likely.

While nobody knows how this crisis will end, or what kind of government will rule Egypt in its aftermath, the current ruling regime and its patronage network stretching across the business community and the armed forces, is undergoing its biggest stress test since the 1952 revolution that brought it to power. Cracks are beginning to appear between the army and the family of president Hosni Mubarak, as well as between Mubarak and the businessmen and polticians that surround him.

One clear trend is that business tycoons who rose to wealth under the Mubarak government are now being targeted: by protesters, by the government itself, and by public prosecutors. With that in mind, it is worth keeping an eye on public companies with ties to the regime.

Middle Eastern Banks Apply to Offer Islamic Financial Services in Uganda - Bloomberg

Uganda has received applications from three Islamic banks in the Middle East to offer Shariah- compliant financial services in the country.

“The Middle East investors can start operations either by acquiring a local bank or setting up a new Islamic bank in the country,” Grace Stuart Ndyareeba, deputy director of commercial banking at Bank of Uganda, said in an interview in Jakarta today, declining to name the banks.

The African nation is changing its banking rules to allow lenders to operate under Islamic law and representatives from its central bank are in Jakarta to learn from Indonesia’s experience. Southeast Asia’s largest economy, home to the world’s largest Muslim population, passed a law in 2008 to allow banks to offer services that comply with Islam’s ban on interest.

BRIEF-Moody's raises Tamweel's BCA to B1; Baa3/P-3 rtgs affirmed | Reuters

El-Erian: pricing in the unknown | beyondbrics –

Anger is building on the streets of Cairo as uncertainty reins. It’s the same mood in the markets. The cost of insuring against Egyptian default spiked on Friday while equities around the world reflected disappointment overHosni Mubarak’s Thursday night speech. Investors are gripped by events. Beyondbrics has just spoken to Mohamed El-Erian, chief executive of Pimco, about what’s happening.
El-Erian, who is himself of Egyptian origin, said as he left London after a tour of the Middle East: “There is a huge question mark over what happens next… People have great difficulty in pricing in the systemic effect of Egypt.”
Egypt, he says, gives investors none of their customary clues:
Markets are comfortable pricing the systemic impacts of one or more of three things: a large economy, which Egypt isn’t; an economy that controls a commodity price, which Egypt doesn’t; or an economy that owes a lot of money to somebody, which Egypt doesn’t.

Turkish banks announce high 2010 profits - Hurriyet Daily

Turkey's banking sector had a brilliant 2010, the high profits of Turkish banks reflect. Halkbank, Finansbank and TEB announced profits ranging between 41 percent and 21 percent while Akbank surprised economists with a profit slightly under estimations. Profit data on these four banks were added to Thursday's Garanti and TSKB profits
Four banks in Turkey announced high 2010 profits on Friday.

State-run lender HalkBank, National Bank of Greece-owned Finansbank, part-BNP Paribas SA-owned Türk Ekonomi Bankası, or TEB, and Citigroup-and-Sabancı Holding-owned Akbank released separate statements reporting their earnings.

Halkbank said its profits last year rose 23 percent, matching estimates, as interest expenses declined.

EA WorldView - Turkey Analysis: Ankara Expands Ties with Syria and Iran

Turkey's relations with its Eastern neighbours are continuing to develop. On Sunday, at the groundbreaking ceremony of Asi Friendship Dam in Hatay, Turkish Prime Minister Recep Tayyip Erdogan met with Syrian President Bashar Assad. Erdogan said:

Asi river is not a river separating us, drawing borders between us anymore; it is turning into a river bringing us together.

Eight years ago, when we formed the government, we said this: 'Turkey wants peace, Turkey wants calm in the region. Turkey wants stability in this geography, wants wealth all together.' We said 'zero problem with neighbours' eight years ago. Because we believe this with our hearts that the more Syria is in peace the more Turkey is in peace. The more Turkey is in wealth the more the more Syria is in wealth. Because we are nations that are rendered as brothers by history. Throughout the history, our fate has been the same, our hearts have beat together.

Turkish current account gap biggest in two decades - Hurriyet Daily

Turkey’s current-account deficit widened in December from a year earlier, posting a record shortfall for the second month in a row, the Central Bank said.

The deficit rose to $7.5 billion from $3.2 billion in the same month of 2009, the Central Bank in Ankara said on its website Friday. It was the widest gap since 1984 when the bank’s data series began and exceeded the median estimate of $7 billion in a Bloomberg survey of nine economists.

The shortfall is expanding as a growing economy pulls in imported goods, fuel and raw materials. At the same time, European demand for Turkish-made goods such as cars and washing machines is weak. The Central Bank has increased the money banks must set aside against consumer loans in the past two months to rein in demand and slow the widening of the deficit.

Egypt five-year CDS rise 39 bps to 380 bps: Markit | Reuters

The cost of insuring Egyptian sovereign debt against default or restructuring for five years rose 39 basis points on Friday, a day after President Hosni Mubarak told the country he would not resign.

Five-year credit defaults swaps for Egypt were quoted at 380 bps compared with 341 bps late Thursday, data monitor Markit said.

As a wary military looks on, Egyptian protestors enraged at Mubarak's refusal to step down are streaming into Cairo's Tahrir Square in what organisers bill as their biggest show of indignation.

Barclays wins DIFC jurisdiction case

Barclays has won its bid to prevent the court of Dubai International Financial Centre from hearing claims that it was involved in an alleged attempt to defraud a Greek company.

In a judgement issued Wednesday Sir Anthony Colman, DIFC Courts' Deputy Chief Justice, rejected arguments put forward by Corinth Pipeworks that the DIFC Courts held jurisdiction over the matter.

Lawyers on behalf of Corinth were attempting to sue Barclays at the DIFC Courts, arguing that as Barclays Bank PLC is registered at the DIFC, its Dubai branches - including the one claimed to have assisted in an alleged fraud - fell under the DIFC Courts' jurisdiction. Lord Colman said this argument was "fundamentally defective".

Egypt ETF Pares Gain on Mubarak Plan to Remain President, Delegate Power - Bloomberg

The Market Vectors Egypt Index ETF pared its advance after Egyptian President Hosni Mubarak said he will remain in office until elections in September.

The exchange-traded fund gained 0.5 percent to $17.80 at 4 p.m. New York time after climbing as much as 6.1 percent earlier today, the biggest intraday rally since Feb. 1. Mubarak, speaking in a televised address, refused to bow to the calls of protesters crammed into the center of Cairo demanding his immediate ouster. Later in the speech he delegated his powers to his deputy, Omar Suleiman.

“I decided to transfer powers of the presidency to the vice president according to constitutional guidelines,” Mubarak, 82, said at the presidential palace in Cairo, pledging to die on Egyptian soil.

Foreign firms warm to sukuk - The National

Islamic bonds are growing increasingly popular with foreign companies doing business in the region, the leader of Citigroup's regional operation says.

Sukuk are being considered as a way to diversify financing portfolios and sometimes to hedge risks, said Alberto Verme, the chief executive of Citigroup's Europe, Middle East and Africa operations.

"You need to have diversified funding sources so you are never surprised by market volatility and you have access to every window," Mr Verme said.

Gulf bourses 'risk being left behind' - The National

Stock markets in the region must move quickly to consolidate to avoid being left behind as a fast-moving trend of integration reshapes global markets, top officials said yesterday.

However, government ownership of most bourses remains a major obstacle and some exchange officials said the bourses themselves should float shares to encourage competition.

"The movement of money has become increasingly globalised and exchanges are being forced to catch up with this process," said Jeff Singer, the chief executive of Nasdaq Dubai, adding that "exchanges need to integrate more" at a business and regulatory level. The logic for consolidation behind international mergers "could also apply to the UAE's exchanges", Mr Singer said.

Middle East telecoms pulling ahead of pack - The National

When Wataniya Telecom debuted on the Palestine Exchange last month, investors cheered.

It was a red-letter day for regional telecommunications companies. Wataniya's popular listing helped to boost the sector, and at the end of its first trading day the company and the rival PalTel were the highest valued companies on the exchange.

Although the market capitalisations of Wataniya and PalTel are relatively small compared with those of their regional peers - about US$335 million (Dh1.23 billion) and $950m, respectively - the companies' performance is symbolic of the recent success the telecoms sector has had in the Middle East.

Economist: Investors expected Mubarak's ouster - BusinessWeek

An economist says Egyptian President Hosni Mubarak's decision to hand over authority to his vice president but not step down is likely to fuel the fears of international investors already panicked by protests against his regime.

John Sfakianakis, chief economist at the Riyadh, Saudi Arabia-based Banque Saudi Fransi, said late Thursday that international investors were looking for Mubarak's speech to provide a clear end to the crisis gripping Egypt.

Sfakianakis said Mubarak's decision not to step down as president, as demanded by the protesters, "was the worst message the international investor community could have expected to receive."

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."

Etisalat's Q4 profit beats forecasts | Reuters

Emirates Telecommunications (Etisalat) (ETEL.AD), the UAE firm bidding for a controlling stake in Kuwait's Zain (ZAIN.KW), posted a small but unexpected rise in fourth-quarter net profit on Thursday.

Etisalat's fourth-quarter net profit rose to 2.03 billion dirhams ($553 million), compared with 1.99 billion dirhams a year earlier, according to Reuters calculations.

Analysts polled by Reuters had forecast the Arab world's largest telecom operator by market value would report a quarterly net profit of 1.74 billion.

Emirates picks banks for bond issue - IFR | Alrroya

Emirates airline, one of the Arab world's largest carriers, is looking at financing options, its president said on Thursday, after reports the company had mandated banks for a bond issue.

Government-owned Emirates was understood to have picked Deutsche Bank, HSBC and Morgan Stanley for a bond sale, IFR Markets, a unit of Thomson Reuters, reported on Thursday, citing bankers away from the mentioned lenders. "We are testing the waters to see if something like this would work," Emirates president Tim Clark said.

"It is an ongoing process and we do it all the time. There is no certainty whether or not a bond will be issued this year."

Is Dubai the biggest beneficiary of the TMX, LSE deal? - Financial Post

While TMX and LSE officials basked in the merger limelight yesterday, far removed from all the events was the one man who may be the biggest beneficiary of the deal. Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, currently owns a 20.64% stake in the London Stock Exchange through his Borse Dubai investment entity.

If the deal is approved, Sheikh Mohammad will own 11.3% of the new entity, giving him a financial foothold in North America and helping raise Dubai’s profile in global financial circles. So it was no surprise that the emirate, which has never been coy about its ambitions to position itself as a global financial centre, has backed the deal.

Yesterday, a Dubai Borse statement gave the deal a big thumbs up: “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.” - Riyadh rethinks stance on ‘popular revolt’

Saudi Arabia’s unequivocal support for Hosni Mubarak, Egyptian president, has shown signs of moderating as the kingdom seeks to appear neutral and closer to the public mood in Egypt, according to Saudi analysts.

“Saudi Arabia has recently begun to keep its distance from the situation in Egypt,’’ said a Saudi observer close to the government. “They realised the revolution is genuinely popular, with an Egyptian agenda. It was not incited by radical elements. It is not about foreign policy, US flag burning, or Palestine. It is about Egypt and they do not want to be seen as against the people.

Since the eruption of the Egyptian revolt on January 25, Saudi Arabia’s King Abdullah has twice expressed his support for Mr Mubarak, attributing the violence in Egypt to “infiltrators” seeking to destabilise the Arab world’s most populous nation.

FT Alphaville » El-Erian on Mubarak’s defiance…

Mohamed El-Erian, the PIMCO chief executive and quite possibly the best known Egyptian in finance, has been in touch. He’s not impressed by Hosni Mubarak’s refusal to resign.

As he told FT Alphaville late on Thursday:

Things are extremely tense in Cairo after the speech by President Mubarak. It has greatly disappointed millions of Egyptians and made them extremely angry, and understandably so.

Egypt has now entered an extremely dangerous period. There will be massive street protests tomorrow (Friday).

Absent credible regime change, the country risks slipping into violence, exposing hundreds of thousands of citizens to harm and significantly aggravating geo-political risk.

Kuwait SE New Index to be Expedited « Alpha Dinar

News is circulating that the Kuwait SE will roll its new index five months ahead of its scheduled November 2011 debut. This would be great news if confirmed. As stated in an earlier post, the new index will consist of 15 blue-chip companies, in collaboration with NASDAQ. Those will be “carefully” chosen from across all sectors of the exchange and will be placed on a bi-annual review to aid in updating the constituents of the index. The move will be a vital one because the current main index is price-weighted and fails to provide a relaible reading.
Below are links to previous articles related to the issues with the current price index: