Friday, 11 February 2011
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.
“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.
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.
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.
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.
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.
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.
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".
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.
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.
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.
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.
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."
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 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.
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."
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.”
“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.
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.