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Tuesday, 1 March 2011

Saudi Arabia: Shia arrest spooks stocks | beyondbrics – FT.com

SAudi children greet King Abdullah on his return to Riyadh from medical treatment abroad feb 2011The arrest of a prominent Shia cleric and the prospect of demonstrations in Saudi Arabia, the world’s largest oil exporter, has spooked the local Tadawul stock exchange.

The Tadawul, the largest stock market in the Arab world by capitalisation, plunged 6.78 per cent to 5,538.72 on Tuesday, bringing its decline for the year to date to 16.34 per cent.

Reassurances from the finance ministry that a $35bn welfare spending boost announced last week by King Abdullah did nothing to calm investors’ nerves. The fear of political contagion, it seems, have gripped the kingdom.

FT Tilt - Political risk premia for frontier bond markets revealed(Registration)


The unexpected onslaught of successive MENA crises this year has shown that political forecasting is a dismal science. What's more, when a crisis does erupt, governance risk premia is nigh-impossible for markets to price since it's based on subjective assessments of the investment risk in a conflict-ravaged economy.
But Exotix have boldly plunged into the debate. On Tuesday, the investment house had a stab on pricing the 'autocracy premia' investors are demanding for holding sovereign bonds in frontier markets, the Middle East and North Africa region, especially.
According to their country-by-country model, which focuses purely on political and economic indicators, democratic credentials -- or lack of -- have been a key driver in determining the relative performance of frontier market bonds so far this year.
Okay, that conclusion is not in-of-itself especially surprising. But what's interesting is that Exotix's model is timely, covering the period between 31 December and 24 February, and incorporates the whole universe of sovereign issuers in frontier markets. What's more, Exotix use the model as a springboard to highlight the divergence between their own investment recommendations and the index's findings.
Here's their conclusion:
Frontier market bonds' model - Exotix
The full document is attached here. Exotix said:
In responding to the direct action of protestors, investors (indirectly) may never before have attached so much weight to democratic credentials, and we suspect there have been few such moments in history when a small number of institutional characteristics can explain so much variation in bond prices. Of course, they cannot explain everything; numerous country-specific factors (and plain old volatility) are not captured: for example the model could not be expected to explain the recent rallies in Ecuador or Serbia.
Here are some takeaways:
  • Some 29 per cent of cross-country differences in frontier bond prices since the start of the year is down to the fact that democracy, economic rigidities, labour market participation and inflation in a given economy are now key investor concerns.
  • The model correctly predicts the 3 per cent, or greater, jump in bond yields in Egypt, Jordan, Tunisia, Morocco, Iraq and Saudi Arabia this year.
  • Some sovereigns with relatively strong democracies have underperformed in 2011, namely Argentina, Costa Rica and Panama, according to the model.
  • Conversely, the model identifies other sovereigns with relatively weak democracies as having overperformed so far in 2011. Within MENA, these include Kuwait and Dubai, and outside the region, Kazakhstan, Venezuela, Vietnam, Georgia and Ecuador.
  • Exotix conclude that investors should hold Egyptian sovereign debt, since prices are currently 11 per cent below levels seen at the end of last year, while economic and political reform is gathering pace. As FT Tilt has reported, although the government faces a tight repayment schedule and higher borrowing costs, no real solvency or liquidity risks are imminent thanks to strong domestic liquidity. (And remember, before the violence raged, the finance ministry was even considering a 100-year bond in October, hot on the heels of Mexico.)
  • Tunisia's short-term economic and political risks are, in many respects, similar to Egypt and according to the model, its sovereign debt is undervalued.
But here a couple of monsters in the closet:
  • Although there are many frontier-market sovereigns in the international capital markets, bond markets can herald false dawns since sovereign yield curves are under-developed and typically illiquid. For these reasons, market technicals, rather than economic and political fundamentals, often drive the price performance of a given bond. For example, one might expect Bahraini or Jordanian sovereign notes to widen more given the regional shift away from autocracy. However, bonds from such sovereigns are often in the hands of domestic banks -- seeking an outlet for excess dollar liquidity -- and buy-and-hold real money EM investors in the US and UK. Given the composition of the investor base then, frontier bond markets are typically illiquid, which makes price moves difficult to predict and analyse.
  • Perversely, political risks might boost sovereign creditworthiness in the sense that commodity prices shoot up during bouts of instability in commodity-rich nations, as investors price in supply disruption risks. These developments often create fiscal windfalls in such frontier economies. In sum, there is often no direct correlation between political risk and a sovereign bond market slump.
  • Finally, political risk is often seen as a low- to medium-probability, high-cost event. And the compensation investors demand for holding assets in potentially vulnerable economies falls during periods of ample liquidity. So when the Fed liquidity tap dries up, political risk fears in frontier economies could rock bond markets more than you expect.
Average sovereign bond yields - Exotix



Egypt bourse sorting out compensation steps: official | Reuters

Egypt's stock exchange said it delayed its planned reopening until Sunday so it can refine measures to support thousands of small investors caught out by collapsing shares prices during the country's political unrest.

The market, closed for a month, had been due to open on Tuesday, but exchange officials and the regulator were unable to agree with brokerage firms over how money from a compensation fund would be distributed, a bourse official said on Tuesday.

Angry investors hooted the exchange's chairman at a press conference on Monday, demanding that trading remain suspended and accusing him of turning a blind to what they said was market manipulation in the last two days of trade in January.

GCC Index Performance: February — Monthly Index Review — GCC Market Analytics

Given the political situation in the MENA region at the moment it's not surprising that February was a bad month for GCC stock markets.

The Muscat 30 Index was the worst performer, dropping by 10.18% with the Qatar market not far behind with a 9.29% fall. Dubai, Saudi and Kuwait all fell by over 5%.

Despite Bahrain's problems the country's stock index dropped by just 1.25% in February. However, but for the complete lack of liquidity in the Bahrain market at the moment (many stocks did not trade at all during February) I think the index falls would be a lot, lot worse.

Abu Dhabi was the best performer, managing to eek out a small gain (0.08%) on the month.



On a year-to-date basis the picture doesn't get any better. All stock indexes are down for the year with the Dubai market having already lost over 13% in 2011.




MENA stock markets close - March 1, 2011


Exchange
Status IndexChange
TASI (Saudi Stock Market)
5538.72-6.78%
DFM (Dubai Financial Market)
1424.761.00%
ADX (Abudhabi Securities Exchange)
2574.32-0.56%
KSE (Kuwait Stock Exchange)
6321.4-2.46%
BSE (Bahrain Stock Exchange)
1424.33-0.45%
MSM (Muscat Securities Market)
6401.484.22%
QE (Qatar Exchange)
7940.90.10%
LSE (Beirut Stock Exchange)
1422.810.16%
EGX 30 (Egypt Exchange)
5646.5-10.52%
ASE (Amman Stock Exchange)
2264.340.56%
TUNINDEX (Tunisia Stock Exchange)
-
4058.530.00%
CB (Casablanca Stock Exchange)
12812.80.05%
PSE (Palestine Securities Exchange)
483.680.32%


Libyan Residents Have $62 Billion Deposited in Overseas Banks, BIS Says - Bloomberg

Libyan residents had $62.1 billion deposited in overseas bank accounts at the end of September, according to the Bank for International Settlements.

Most deposits were from banks in Libya, including branches of foreign institutions, while $8.2 billion was from non-bank Libyan residents, according to quarterly banking statistics compiled by the BIS and last released on Jan. 28.

The BIS statistics are based on reports from 43 countries, including most developed nations and offshore centers such as the Cayman Islands, the Netherlands Antilles and the British Channel Islands. The figures don’t cover direct investments by Libyans in assets overseas.

The Associated Press: Saudi exchange leads drop in Mideast markets

Saudi Arabia's main benchmark stock index has plummeted by over 7 percent Tuesday, in a drop fueled by mounting unrest in neighboring Gulf Arab nations and reports of the arrest of a prominent Shiite cleric in the Sunni Muslim nation.

The Saudi All Shares Index was down 7.73 percent, to 5,482 points, by 3:15 p.m., building on an almost 6 percent decline over the past two days.

Other Gulf exchanges that take their cues from the Saudi market had closed by the time the market in Riyadh had changed course and shifted deep into the red. Whatever moderate gains they posted on Tuesday were likely to be erased on Wednesday, analysts said.

UPDATE: Etisalat, Zain Deal In Jeopardy As NIC Says Not Committed To It - Zawya

(ZAIN.KW) was dealt a blow Tuesday after National Investments Co., or NIC, a company owned by Kharafi Group, a major Zain shareholder, said it was no longer committed to helping broker the near $12 billion transaction.

"Due to the expiration of the deadline given to the Emirates Telecommunications Corp., or Etisalat, for the completion of its due diligence of the Mobile Telecommunications Co., or Zain, which was set by the end of February, we declare an end to our commitment towards Etisalat for the sale of a 46% stake of Zain," NIC said in a statement on the Kuwaiti bourse website.

Etisalat launched its original bid for a 46% stake in Zain, worth about $11.7 billion, in September. It missed a self imposed Jan 15. due diligence deadline due to what it said at the time was a "lack of information".

Oil prices push Saudi foreign assets to all-time high in January - Commodities - ArabianBusiness.com

Saudi Arabia’s foreign assets hit a record high and private bank lending expanded at its fastest rate in 19 months in January as political and economic instability shook parts of the Arab world, including neighbouring ally Bahrain.

In addition, strong oil prices, bolstered by the political crisis in Libya, which produces millions of barrels per day, lifted the Kingdom’s foreign assets to a record level for the month, at SR1.67 trillion.

But a SR135bn welfare benefits scheme for citizens, unveiled last week by King Abdullah, could slow the growth pace as the year progresses.

FT Alphaville » Saudi contagion shivers


This is Saudi Arabia’s benchmark stock index on Tuesday:
It’s down some 6.6 per cent — its lowest since September 2009 — on ongoing rumours that Saudi Arabia is sending tanks to Bahrain to support its ruling regime.
The story originated on Press TV — a television network owned by Iran, the Saudi kingdom’s great rival, so caveat emptor.
Others voices in the market though contend the tanks may be in the region due to a joint military exercise.
Either way, the disruption is beginning to weigh on EURUSD rates, according to CitiFX Wire — last seen at 1.3819.

UAE to invest 150 mln euros in Spanish savings bank | Reuters

The United Arab Emirates will invest 150 million euros ($207 million) in a Spanish savings bank, a Spanish government spokesman said on Tuesday, the second Middle Eastern country to back Spain's regional banks.

The government official did not name the bank. The Spanish savings bank association, CECA, declined to comment.

Qatar said on Monday it would invest 300 million euros in Spanish banks, during the visit of Spanish Prime Minister Jose Luis Rodriguez Zapatero to the Gulf state. Zapatero is visiting Tunisia, Qatar and the UAE as part of a Middle East tour. [ID:nLDE71R15R]

Volkswagen buys Porsche sales unit - Maktoob News

Europe's biggest carmaker, Volkswagen, said Tuesday it has finalised the purchase of Porsche Holding Salzburg (PHS) a lucrative automobile distributor, for 3.3 billion euros ($4.55 billion).

The acquisition, part of a global agreement between the two companies, is the "next major step towards the creation of the integrated automotive group of Volkswagen and Porsche," a statement said.

PHS controls the distribution and sale of Porsche sportscars in large parts of Europe and China, and was described by VW chairman Martin Winterkorn as "one of the world’s most efficient and profitable automobile trading companies."

[snap] Saudi stocks plunge 7% | beyondbrics – FT.com


Saudi Arabia’s benchmark stock index fell 7 per cent, plunging to the lowest since September 2009, on concern that political unrest in the Middle East may spread to the kingdom.
The Tadawul All Share Index was down at 5527.93 at 3pm local time and has lost 17.7 per cent since Tunisia’s ex-president Zine El Abidine Ben Ali fled the country amid protests that spurred similar uprisings in nations across the region.
Nomura said in a note:
As contagion spreads in the [region], we acknowledge that the region appears to be experiencing a “1989 moment”, while judging that, as with the former Soviet empire, transition could be uneven and protracted.
Libya aside, we currently see no direct threat to oil and gas production in the Middle east and north Africa.
However, we acknowledge that potential disruption to output in countries already experiencing protests, and/or contagion to as yet untroubled major oil producers, cannot be ruled out.


FT Alphaville » Gaddafi’s sovereign fund — FROZEN


No stock dividend for Colonel Gaddafi — and a stunning precedent for sovereign wealth funds — from Pearson, publishers of the FT and FT Alphaville, on Tuesday.From a statement:
Pearson plc announced on 7 June 2010 that it had received notification that the Libyan Investment Authority (LIA) had acquired 24,431,000 ordinary shares in the company. On further investigation, Pearson has reasonable cause to believe that the LIA may have acquired an additional 2,141,179 shares resulting in a total interest in 26,572,179 shares. This represents 3.27% of the company’s issued share capital.
Pearson has reviewed the United Nations Security Council Resolution 1970 (2011), and The Libya (Financial Sanctions) Order 2011 (SI 2011 No. 548) in the United Kingdom (the “Order”).
Having taken legal advice regarding its obligations under the Order, Pearson considers that the ordinary shares in the company which are held by or on behalf of the LIA are subject to the Order and are therefore effectively frozen. As a result, Pearson has today informed the LIA and its nominees that Pearson will not register any transfer or pay any dividend in respect of the shares until further notice.
Pearson had moved quickly to take legal advice after the UK froze assets controlled by the Gaddafi family at the weekend.
And it’s very interesting to see the lawyers advising that the LIA should be counted among those controlled assets — for a number of reasons. (We suspected the LIA would come under the asset freeze before the order was given, late last week.)
First — we can’t think of any previous instance of a sovereign wealth fund coming under an asset freeze. Given the increasing number of SWFs — their increasing number in many risky political regions in particular — and their increasing role as providers of liquidity to financial markets, that’s something.
Second — it doesn’t say a lot for SWF transparency that the Gaddafi family are clearly seen to be in effective control of Libya’s fund. (The situation with the LIA and its board of trustees is unique, even so; the board includes Gaddafi political appointees swept up by the country’s unrest.)
Third — Libya’s SWF has $32bn in total liquid assets. If others now follow Pearson’s lead, that’s going to cause some gyrations.
Fourth — and most important — asset-freezing is one step towards taking the LIA out of the Gaddafis’ control and returning it to making investments on behalf of Libya’s people.
Who, we’d argue, should have been its priority all along.

HSBC Sees Opportunity in U.A.E., Qatar Shares Amid Unrest - Bloomberg

United Arab Emirates and Qatari shares have been “overly punished” by political turmoil spreading throughout the Middle East and North Africa, according to HSBC Global Asset Management (UK) Ltd.

The U.A.E. and Qatar “are arguably the two most stable economies in the region and the only ones that haven’t had any sort of unrest so far,” Andrea Nannini, a senior fund manager at HSBC Global, said in an interview in Hong Kong today. “For us, that gives an opportunity because there’s a disconnect between what the market is pricing in, in terms of risk, and what the actual risk is.”

Political turmoil from Libya to Oman have deterred investors and the Bloomberg GCC 200 Index of Gulf shares has declined 11 percent since the ouster of former Tunisian President Zine El Abidine Ben Ali on Jan. 14. That compares with a 12 percent drop in Dubai’s measure in the same period and a 6 percent drop in Abu Dhabi’s ADX General Index.

The Arab Spring: Growing Entrepreneurs, Canceling Dynasties - Elmira Bayrasli - Entreventures - Forbes

Arab world map

Image via Wikipedia

The Arab spring that has shaken up Tunisia, Egypt, Bahrain and now Libya may not, some say, blossom flowers anytime soon. That’s the position economist Arvind Subramanian took last week in an op-ed in The Financial Times. In it he warned about the “immovable object” that the Arab world’s “seemingly unstoppable” young people will “quickly run up against” in toppling their autocrats: “economic rents.”

Economic rents are “easy money” from oil or aid that the region has been flush with for decades. Easy money, as Subramanian notes, that has been a curse. It has stymied democratic governance in the Middle East and has trapped the economies of the region in a negative cycle of low growth and under development. Why, after all, bother to create, build or produce when you can live off the dole? Turns out because that’s exactly what young Arabs want and are most certainly prepared to move any object to do so. Economic rents, like dictators, stand little chance. Politicians and their generals have taken note. The private sector would be wise to do the same.

Though countries like Egypt, Bahrain and Libya have benefited from economic rents, the majority of their people have not. That is not new. Hundreds of millions of Arabs have lived under the poverty line and struggled with unemployment for decades.[1] The reason this is a problem now is this:




FT Tilt - The Call: Buy TAQAUH, Qatari Diar and Mubadala(Registration)

On Feb 24, BNP Paribas credit analysts Raffaele Semonella and Vivek Tawadey argued that given current elevated (although confined) geoplitical risk:

investors should consider switching out of some of the more tightly priced European consumer and industrial companies (that are vulnerable to higher commodity input prices) into some of the best regional credits in the MENA region, particularly those more resilient to political instability in the region.

we caution that elevated levels of regional geo-political risk add to the timing of such investments as negative headlines will lead to volatility, and therefore might suit buy and hold investors.

Their criteria:

- Recommended names are in Abu Dhabi or Qatar – the two wealthiest sovereigns in the MENA region which are unlikely to suffer from regional contagion.

- All credits rated in the AA or A category with a stable outlook.

- In key sectors like hydrocarbons that are likely to benefit from high oil and gas prices.

- All companies benefit from implicit or explicit state support.

- Companies benefit from significant liquidity.

- Spreads trade in the mid - low BBB category (if not lower) - offer compelling risk return on a relative value basis.

And their calls:

TAQAUH (A3/Stable) is an Abu Dhabi based electric and water utility with international oil and gas activities. The Government of Abu Dhabi (Aa2/AA) owns 72.1% of the company and has recently stated that it will continue to offer broad and ongoing support to TAQA. The company’s domestic downstream utility portfolio accounts for 98% of the emirate of Abu Dhabi’s electricity and water requirements. TAQA’s upstream division engages in exploration, production, development and storage of oil and gas in Europe and North America. In 9M 2010, power and water activities accounted for 58.4% of the company’s revenues, while revenue from oil and gas accounted for 41.6%. The company’s international upstream activities are likely to benefit from the increase in oil prices while remaining largely unaffected by protests in the region.

- The closest peer we can think of for TAQA is Dong Energy (Baa1/A-, Stable), a company with a portfolio of exploration and production as well as power assets. TAQAUH 5.62% $ notes due 2012 trade at an adjusted I- spread of 230bp, which is 205bp wider than DANGAS 3.5% € bonds due 2012 trading at an I-spread of 25bp.

Qatari Diar (Aa2/AA, Stable) is a real estate investment fund fully owned by the Qatar Investment Authority, the sovereign wealth fund of Qatar. The bonds carry an irrevocable and unconditional guarantee by the Qatari government but trade significantly wider than similar dated sovereign bonds. QATDIA 5% $ bonds due 2020 trade at an I-spread of 188bp offering a 33bp pick up compared to the Qatari Government sovereign bonds.

- The bonds offer an attractive yield of 5.3% compared to similar maturity peripheral European sovereign bonds, including Italy 3.75% € bonds due 2021, currently offering a yield of 4.8%.

Mubadala (Aa3/AA/AA, Stable) is a fully owned government entity based in Abu Dhabi and was created with the main mandate to implement the Government’s diversification strategy both locally and internationally. The Government of Abu Dhabi has in the past provided significant financial support and has in a number of occasions publicly stated that it stands fully behind the company. Mubadala domestic investments include a 51% stake in Dolphin Energy, a project responsible for transportation of gas from the Qatari north field to the UAE. Mubadala’s portfolio also includes a number of international investments, including a 7.5% stake in Carlyle Group, a 0.65% stake in General Electric and a 19.9% stake in Advances Micro Devices, a California based semi-conductor company.

- Mubadala’s 7.625% $ notes due 2019 trade at an I- spread of 198 and offer a yield of 5.2%, which compares favourably to similar rated European investment holding companies, including Investor AB 5.25% notes due 2019, which currently offer a yield of 4.9%.


Egypt market reopening delayed – again | beyondbrics – FT.com

Investors and brokers in Egypt began the week frantically preparing for the Cairo stock exchange to reopen on Tuesday after a month-long shut down – but all to no avail. Word came overnight that the restart, scheduled for 10.30am in Cairo (8.30am in London), had been delayed once more, this time until Sunday 6 March.

Everyone expects prices to fall when trading finally does begin, but it seems that the authorities want to keep deferring the pain.

The state-run news agency MENA reported the delay and said trading would resume on Sunday “in order to allow investors to profit from the backing of the government to guarantee the bourse’s stability”, according to the BBC. It offered no further detail on what that “backing” means.


Dubai Stocks Make New Bear Market Low — GCC Market Analytics

Bad day for the Dubai market yesterday. The DFM General Index was down 3.83% for the day, finished down 8% for the month and made a new barket market low.

The Index closed at 1410.70. That's the lowest level since the previous bear market low was made in Februrary 2009. The first time the Index was trading at the current level was.........wait for it.........back in June 2004!



The good news is that the DFM General Index can only go down another 1,410 points before it hits the zero level. I'm fairly confident that it can't go any lower than that.

Kuwait fund will not liquidate MENA investments- paper | Reuters

Kuwait Investment Authority (KIA), the Gulf state's sovereign fund, is not considering liquidating any of its investments in Middle East North Africa region, an unnamed source said in published remarks on Tuesday,

Recent political unrest in the region has roiled financial markets and threaten to derail investment prospects of the region.

"KIA assesses its investments periodically, assuring that it does not mean existing or liquidating any of it," Arabic newspaper al-Watan quoted the source as saying.

gulfnews : Bargain homes in Dubai for Dh2m

The year 2008 may have seen Dubai's property market at its peak but it is better known for the buzzing market that, at that point of time, was ruled by speculators who mastered the art of flipping properties and making millions in seconds. Things have changed dramatically since then. Investors are still taking cautious steps when it comes to investments. However, Dubai property market is now witnessing a substantial interest from owner occupiers who are lured by the affordable prices for high-quality units in attractive locations that were way beyond their reach during the peak time.

Property spoke to a few agents in the market to find out what a prospective buyer with a budget of Dh2 million could have managed to buy during those crazy days and what he or she can buy today with the same amount.

Dh2 million in 2008

During the boom time, a buyer with a budget of Dh2 million had limited options to choose from. While good-quality villas didn't fit into this budget, a one-bedroom apartment was all a buyer could purchase with this amount. "Dh2 million in 2008 was good enough to buy only studios and one-bedroom apartments," says Mario Volpi, sales manager, PowerHouse Properties.


Developers exposed abroad - The National

Construction companies that aggressively moved to diversify into other countries during the downturn in Dubai property have seen their shares sold heavily due to the political turmoil in the Mena region.

Several UAE developers and builders have expanded into Egypt, Saudi Arabia, Libya, Tunisia and Bahrain in recent years. Diversification was considered a crucial ingredient for companies looking to avoid overexposure to the struggles of the Dubai property market.

Now such diversity is viewed as a negative.

Doha's towering ambition - The National

The skyline is filled with construction cranes and striking architecture - towers that zigzag, glow and undulate in the night.

New man-made islands are designated for opulent luxury resorts. Business leaders talk of creating a global centre for tourism and business. It sounds like Dubai, but this is Doha. The Qatari capital is undergoing its own property boom.

Projects worth more than US$40 billion (Dh146.9bn) are under construction in the city, according to industry estimates. Expectations are sky-high after Qatar was selected as the host of the 2022 Fifa World Cup.

Turkey Is Biggest Loser in Worst Emerging Bond Rout Since 2008 on Mideast - Bloomberg

The biggest selloff in emerging- market debt since 2008 is hitting Turkey hardest as unrest in the Middle East threatens to widen the country’s current-account deficit and boost inflation.

The nation’s foreign-currency bonds have dropped 7.9 percent since the end of October, leading a slide in developing- nation debt, according to JPMorgan Chase & Co. Government securities in lira lost 10 percent for dollar-based investors in the period as the currency touched an eight-month low. Credit- default swaps on Turkey jumped to 174 basis points from 133, the biggest advance among 16 emerging markets, CMA prices show.

Political turmoil from Libya to Oman is lifting the cost of oil imports and curbing demand from a region that buys about 27 percent of Turkey’s exports. The January trade gap was 78 percent wider than the median estimate in a Bloomberg survey of economists, government data showed yesterday. Interest-rate cuts since December aimed at narrowing the shortfall by depreciating the lira have dented the appeal of fixed-income assets on concern inflation may jump from a record low.

World's Biggest Stock Losses in Egypt May Extend Decline - Bloomberg

Egypt’s benchmark stock index may extend losses that made it the world’s worst performer this year after a monthlong suspension ends on March 6 amid political unrest in the Middle East.

The EGX 30 Index slid 16 percent in the week before the bourse stopped trading on Jan. 27 because of a popular revolt that ended the 30-year rule of President Hosni Mubarak two weeks later. That brought the drop for the year to 21 percent. Dubai’s DFM General Index closed yesterday at the lowest since June 2004 and the Bloomberg GCC200 Index of companies in the Persian Gulf lost 6.3 percent in February.

Tourists fled Egypt as protests turned violent, companies closed and the government’s borrowing costs rose. Corporate profits may drop, meaning the EGX 30 needs to fall a further 13 percent to trade in line with the average price-to-earnings ratio of Middle East and North Africa markets, investment bank AlembicHC said in a report yesterday. The regulator is seeking to stem a slide by limiting daily share moves.

Qatar to invest €300m in Spanish banks: Premier

Qatar yesterday said it would invest ¤300m in Spanish banks besides seeking tie-ups with Spain in several other investments.

“We discussed details of Memorandum of Understanding on investment in infrastructure in Spain and Qatar’s investment interests in other fields, especially in Spanish banks. There is a commitment in principle that Qatar is investing ¤300m to these banks as capital,” said the Prime Minister and Foreign Minister

H E Sheikh Hamad bin Jassem bin Jabor Al Thani addressing a joint press conference with his Spanish counterpart José Luis Rodríguez Zapatero.

UAE bankruptcy law in early draft stages

The UAE government has an initial draft for a new bankruptcy law, an official at the ministry of economy said, a move seen simplifying existing legislation for lawyers and companies.

Lubna Qassim, director of economic legislations department at the UAE ministry of economy, said although the legislation was in early stages, there had been progress since talks to change existing laws - considered cumbersome - began about two years ago.

'There is a draft - yes, it's in the initial stages but now its more than dialogue. It is time that effort is put in for the exit of companies,' Qassim said on the sidelines of a conference in Dubai, declining to comment on a timeframe for approval.

UAE bank hires ex-RBS executive as COO - Arab News

Abu Dhabi Commercial Bank has named Jerry Mollenkramer, formerly at UK lender RBS, as group chief operating officer, a new position at the bank, the lender said.

The move follows the acquisition of RBS’ retail assets in the UAE by ADCB last year for about $100 million, to expand its domestic footprint.

“The bank has experienced substantial growth in recent years, especially following the acquisition of the RBS retail bank in the UAE,” Ala’a Eraiqat, chief executive officer of ADCB, said in the statement.

A setback for business-friendly Bahrain

Two weeks ago, Bahraini business leaders touched down in Phoenix to push more trade between the Persian Gulf monarchy and the Arizona city twice its size. The same day they met with the mayor, demonstrations erupted at home and one protester was killed.

The Bahrainis signed a trade agreement, but they cut the trip short and jetted home. The unrest that has convulsed the island nation for two weeks has shaken investors and damaged Bahrain's efforts to present itself as the most business-friendly country in the gulf, analysts say.

Top Bahraini officials said that they were confident the country will ride out the storm and that they had not seen investors pulling money off the island, which has turned itself into a banking hub.

FT.com - Bahrain riven with fears of sectarian conflict

The immediate threat of bloodshed may have receded from Bahrain, but the tiny Gulf kingdom still feels like a country at war with itself.

Over the past week, hundreds of thousands of Bahrainis have attended rallies in the capital, Manama. While Shias have chanted for the royal family’s ousting, Sunnis have loudly shouted their support.

The size of the demonstrations has been impressive – given that there are only about 500,000 Bahrainis – but underline the polarisation of Bahrain along sectarian lines.

FT.com - Don’t expect autocratic oil to flow smoothly

Oil prices rose again on Monday, as unrest in Oman compounded worries over the crisis in Libya. This seems a simple story. Regimes in major oil producing countries are crumbling, disrupting production. Speculation then pushes prices up until the Saudis step in to cover lost production, and the status quo ante is restored. This simplicity, however, is deceptive.

The current price spike is a blip brought about by short-term market reaction, but a series of much more important underlying trends are making the global oil market more vulnerable, and carry with them significant threats to a fragile global economic recovery. In particular, beyond the drama on the streets of Libya, the world is increasingly reliant on oil supplies from countries that are authoritarian, or worse.

The contours of the oil market are well known. Rising demand, led by the rapidly emerging economies of east Asia, is happening in step with declining production in the North Sea and Alaska, as old fields mature. As a result oil is increasingly traded, as the US, Europe, Japan, China and now India rely on imports to meet their needs. Twenty years ago, two-thirds of world oil was produced in the country in which it was consumed. Now half – more than 40 million barrels a day – is traded.