Friday, 4 March 2011
Underlining the complexity of managing the Gaddafi financial asset freeze on Friday, HM Treasury has carved out an exception for any traders dealing with ‘non-Libyan financial institutions’:
(H/T Natsuko Waki of Reuters)
Effectively it’s a licence to continue trading with British-Arab Commercial Bank, a London-based name active in short-term financing (letters of credit and so on) of trade in Arab markets.
Protests have spread to oil-exporting nations, especially Libya, Oman and Bahrain but also Iraq, raising the risk of fuel-supply vulnerabilities. While we do not expect prolonged supply reductions, the escalation of violence could reduce output and impair energy and transport infrastructure, as it already has in Libya. Saudi Arabia's efforts to boost production and redirect OPEC crude to European refiners and the reopening of key Libyan ports have dampened oil prices for now, but risks to prices seem tilted to the upside in the near term, at least until Saudi Arabia's scheduled "day of rage" takes place.
Moreover, international oil companies are putting both current operations and further exploration on hold in Libya, fearing political risks, the sabotage of energy infrastructure and even changes in the royal regimes. If this occurs more broadly in the region, it could add to decades of underinvestment (only Saudi Arabia and Qatar have invested heavily in new infrastructure in the past decade). Continued underinvestment in MENA, which accounts for two-thirds of global oil reserves, could raise future supply risks.
By 0858 GMT, Brent crude futures for April delivery were up $1.16 to $115.95 a barrel. U.S. crude futures for April rose 86 cents to $102.77 a barrel, but earlier had rallied over $1 to touch $103.03 a barrel.
Investors and traders have been nervously tracking the progression of the civil unrest in North Africa and the Middle East for any sign that Saudi Arabia, OPEC's leading oil producer, would be affected.
And a close friend of Saif Gaddafi.
Which tells you exactly why an asset freeze initially targeted at the Gaddafi family has now also brought down a sovereign wealth fund.
Net income climbed to 1.06 billion dinars ($3.8 billion), or 275 fils a share, from 195 million dinars a year earlier, Zain said today in an e-mailed statement.
Profit included a 770.3 million-dinar capital gain from the sale of Zain’s African assets, excluding Morocco and Sudan, to Bharti Airtel Ltd. (BHARTI), India’s largest wireless carrier, for $9 billion in June. Customer numbers rose 23 percent to 37.2 million, Zain said.
The rise in the oil price is not induced by a shortage of oil in the world. Indeed, if we ignore rumors of uncertain reliability in Saudi spare production capacity, there is substantial unused global capacity in oil production. It seems that the oil price reflects expectations of a very significant supply disruption – something more than a temporary decline in oil supplies from Libya, Egypt, Tunisia and Yemen. The current oil price thus includes a risk premium for a spread of middle east unrest to Saudi Arabia, Iran, Iraq or some combination of one of more of these nations. Granted, such as spread
could have significant negative influence on oil supply.
This sense of overall increased risk has a number of side-effects aside from an increase in the oil price. Increased risk perception causes increased risk aversion followed by a decrease in investment in riskier assets, such as stocks, which then decrease in price. This increased risk perception has caused some weakness in international equity markets ex energy sector, although a strengthening of the oil price and the ruble has muted this effect in Russia.
Consecutive visits by the prime ministers of Britain and Spain and president of Germany to Doha over the past week highlight the Qatar Investment Authority’s (QIA) growing global profile.
Flush with cash thanks to abundant natural gas resources, the QIA has cannily mixed smart investing with goodwill generation.
A bench comprising Justice GS Singhvi and Justice AK Ganguly had on Thursday directed the agency to probe these matters and report to it by March 15. Advocate Prashant Bhushan appearing on behalf of NGO petitioner Centre for Public Interest Litigation alleged that the Telecom Department's directive on March 5, 2010, cancelling STel mobile permits, had forced the company to drop its case against the Government . He alleged this resulted in S Tel telling the Supreme Court that it was willing to wait for the Government to award it a pan-India permit and airwaves. Bhushan's allegations had led to Additional Solicitor General Indira Jaising furnishing documents related to the S Tel case earlier this week. "File placed by the Additional Solicitor General says something more.
It tells about a new dimension which is all together different" , the bench had said on Wednesday. S Tel' had applied for pan-India mobile permits but was given the nod to launch services in only 6 circles , This was because, former telecoms minister A Raja had arbitrarily announced that the first-come , firstserved basis for allocating telecom licences — which come bundled with 2G spectrum — will only apply to companies that applied before September 25, 2007. This was despite Raja and DoT announcing earlier that the cutoff date for filing applications was October 1, 2007. The Delhi HC had in 2009 ruled in S Tel's favour, in what turned out to be a major embarrassment for the Communications Ministry. The court also set aside September 25, 2007, as the cut-off date for granting telecom licences and opened up a Pandora's box for the government , exposing Raja's move to award licenses selectively to a handful of companies.
The per capita incomes of the UAE, along with Qatar, remain among the highest in the world -- eighth and third, respectively -- thanks to their relatively small populations and oil and gas wealth.
Emboldened by popular protests sweeping across the Arab world, intellectuals and political activists in the UAE have become more vocal in calling for political reform and less censorship, but there has been little sign so far of any call for organised demonstrations that would trigger unrest
The fact that the protests have spread from oil importers such as Tunisia, Egypt and Jordan to oil exporters such as Bahrain, Libya and Oman was a sign that the wealth earned from natural resources was not enough on its own to contain the intense political pressure, S&P analysts said. The analysts also underlined the danger that Iran continued to pose to stability in the region.
“We consider that the possibility of political unrest can’t be excluded for the remaining Mena [Middle East and north Africa] sovereigns where political upheaval has as so far been modest or absent. Still, in our view, the likelihood of such events decreases with levels of wealth and fiscal resources.”
Dubai’s stock market fell another 1.6 per cent on Thursday, ending the week at seven-year lows amid growing turmoil in the Arab world. The index has fallen 16 per cent since unrest reached the oil-rich Gulf two-and-a-half weeks ago. But Dubai has a history of coming out of crises relatively unscathed.
In fact, problems for its neighbours prove to be a boon for the outward-looking emirate. Certainly, Dubai is unlikely to face protests of any significance.
Kuwait's Gulf Investment Corp (GIC) just issued its maiden local currency sukuk, becoming the first GCC issuer in the Malaysian sukuk market. The 600m Malaysian ringgit ($164m) sukuk is an inaugural issue from GIC’s $1.1bn sukuk Medium-Term Note programme, and is GIC’s third bond offering in Malaysia. There are bound to be more as issuers - and some investors - seek the stability of the Malysian Islamic market.
"GCC issuers have to look elsewhere, and Malaysia’s is the most established sukuk market. I'm not sure GCC investors would come so soon, as they are yield-driven and our yields are quite tight," said Raja Teh Maimunah, global head of Islamic Markets at Bursa Malaysia.