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Sunday, 6 March 2011

The Grumpy Goat: It's cheap 'cos it's crap

This is getting to be too much of a habit. I took a week’s vacation last April, and was made redundant upon my return to the Lands of the Sand. It was fortuitous that I dropped straight into a new job, albeit in Abu Dhabi, but such good fortune does not last for ever.

I took a week off at the end of February to go to Barcelona for the wedding of two Dubai refugees, and to visit other ex-Dubai friends in Madrid. More fool me: I got my redundancy notice out of the blue the morning of my return.

Here commenceth the rant. Normal service will be resumed in due course.

March Seasonality — GCC Market Analytics

Historically, March has been good month for GCC stock markets. However, that was also the case for February but last month definitely didn't conform to historical tendencies.

The chart below shows the average daily percentage change for each GCC market during each calendar month.

As you can see, the average daily percentage change during March has been positive for all markets except Bahrain. However, with the continuing political and social unrest in the region I wouldn't place too much weight in seasonal effects at the moment.

MIDEAST STOCKS-Markets track Saudi gains, but volatility remains | Reuters

Gulf Arab markets rose on Sunday, with the Dubai and Kuwait benchmarks pulling away from six-year lows to track gains a day earlier on Saudi Arabia's bourse .TASI, the region's largest.

The kingdom's index rose 0.9 percent after surging 7.3 percent on Saturday to end a 14-session losing run.

"Buying is short-term and based on a market bounce, rather than a full recovery," said Walid Shihabi, Shuaa Securities chief executive. "Saudi Arabia is looking for direction and the main concerns remain."

FT Tilt - The 2011 Arab Uprising wipes out 2010, and then some(Registration_

The combined market capitalisation of all Arab stock exchanges has fallen by $140bn since the Egyptian revolution was kickstarted by protests on January 25, according to data from the Arab Monetary Fund.

By comparison, the total market cap of Arab bourses rose by about $100bn in 2010, the fund previously reported. By January 25 of this year the exchanges had a total capitalisation of just over $1000bn.

As we reported earlier, the market panic of 2011 has a very all-bets-are-off feel about it, with investors dumping stocks in Qatar and Abu Dhabi just as hard as they sold shares in Egypt or Tunisia. Saudi Arabia has been hit as much as the two nations whose governments were overthrown in revolutions, despite plenty of evidence that a revolt there is unlikely. Investors will eventually begin differentiating between riskier and less-risky Arab markets, but not while the revolutionary cloud hangs so thick over the region.

Already, sentiment in Saudi Arabia seems to have - at least temporarily - returned from the land of pure fear. The Saudi exchange has risen almost 8 per cent since trading opened on Saturday, after the exchange tumbled by almost 20 per cent in the previous month.

MENA stock markets close - March 6, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
DFM (Dubai Financial Market)
ADX (Abudhabi Securities Exchange)
KSE (Kuwait Stock Exchange)
BSE (Bahrain Stock Exchange)
MSM (Muscat Securities Market)
QE (Qatar Exchange)
LSE (Beirut Stock Exchange)
EGX 30 (Egypt Exchange)
ASE (Amman Stock Exchange)
TUNINDEX (Tunisia Stock Exchange)
CB (Casablanca Stock Exchange)
PSE (Palestine Securities Exchange)

Dubai Stocks Rise Most in a Month on View Prices Attractive After Declines - Bloomberg

Dubai shares advanced the most in a month, leading gains in the Middle East, as a rebound in Saudi Arabia’s index yesterday spurred speculation the selloff in regional stocks because of political unrest was overdone.

Emmar Properties PJSC, builder of the world’s tallest tower, increased 2.5 percent and Dubai Islamic Bank PJSC (DIB) advanced the most since October. The DFM General Index (DFMGI) climbed 2.7 percent, the most since Feb. 2, to 1,389.04 at the 2 p.m. close in the emirate. The gauge has lost 15 percent since Tunisia’s President Zine El Abidine Ben Ali was ousted in January. Saudi Arabia’s Tadawul All Share Index (SASEIDX) rallied 7.3 percent yesterday, the most since November 2008, snapping a 13- day losing streak. It gained 0.8 percent at 2:21 p.m. in Riyadh.

“The gains were prompted by what we saw yesterday in Saudi Arabia,” said Sebastien Henin, who helps oversee $110 million at The National Investor in Abu Dhabi. “Investors took this opportunity to buy. Looking forward, there is no visibility as the news flow is very rich and there are tensions across the Gulf Cooperation Council countries.”

Weekly Market Analysis (Week 10) — Weekly Index Review — GCC Market Analytics

The weekly market analysis pages have been updated for trading week 10 (March 5th - March 11th). Use the links below to view the individual market analysis pages:

The table below shows the market outlook based on each study.

Visit the links above to view the full analysis reports for all GCC markets.

Spain's battered savings banks race to find funds - Hurriyet Daily

Spain's ailing regional savings banks are scrambling to raise billions of euros of fresh funds to meet strict new capital requirements by a Thursday deadline.

The country's 17 savings banks, known as "cajas," are weighed down by loans that turned sour after the collapse of a housing bubble in 2008 and are at the heart of fears the country could need an Irish-style international rescue.

Last month the government approved stricter rules on the amount of core capital that banks must hold on their balance sheets. Under the new rules, savings banks must raise the proportion of core capital they hold to 8 percent of total assets from the current 6 percent, or to 10 percent if they are unlisted.

Official Holiday For Qatar Exchange On Sunday March 6th 2011

Qatar Exchange would like to inform the brokers, investors and all concerned parties, that Sunday March 6th 2011 will be an official holiday for Qatar Exchange. This is in compliance with the Council of Ministers’ Resolution No. (33) of 2009, considering the first Sunday of March every year as an official holiday to Qatar Central Bank, banks and financial institutions regulated by Qatar Central Bank, Qatar Financial Markets Authority (QFMA) and Qatar Exchange.

FT Tilt - No winners in MENA's tumbling markets(Registration)

While Egypt's crash and the woes of the Saudi exchange have been getting their fair share of coverage, it is worth noting that every stock index in the Arab world bar Morocco is down in 2011. From a weekly market wrap send out by Kuwait's Global Investment House:

MENA stock markets, March 5

Source: Global Investment House

Saudi Arabia has dropped by about as much as Egypt and Tunisia, both markets that were closed last week as post-revolution transition governments got their house in order. Qatar has also taken a serious hit. Qatar!

As Credit Agricole outlined recently:

Markets have a tendency to differentiate less during crises and, as we saw during the Dubai debt crisis in 2009, risk premiums spiked for all. Differentiation took time, however.

The strength of events in Tunisia, Egypt, Bahrain, Libya as well as Yemen has led most to expect the worst to come for the rest. Differentiation and re-classification of risk is warranted, but it takes time for the dust to settle. Regional stock markets will continue to reflect the higher perceived risks.

We think that markets will continue to price additional risk premiums despite the arguments put forward about Saudi Arabia's fiscal and political capacity to weather the regional crisis.

As was the case during the Dubai debt crisis, being a step ahead of that differentiation curve can be a profitable exercise. Just ask Pimco, which snapped up sovereign debt from Abu Dhabi and Qatar at the height of the panic over Dubai.

But, as charted by Credit Agricole below, definitively picking the Middle Eastern country that is safer than the market is pricing, is no easy feat. When mapping emerging markets on two axes - one measuring a country's political and personal freedoms and the other showing average GDP per capita growth in the last decade, almost the entire Arab world sits in the dangerous corner of the graph. This is not pretty:

Credit Agricole graph freedom vs growth

Source: Credit Agricole

MENA stock markets midday GMT+4 - March 6, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
DFM (Dubai Financial Market)
ADX (Abudhabi Securities Exchange)
KSE (Kuwait Stock Exchange)
BSE (Bahrain Stock Exchange)
MSM (Muscat Securities Market)
QE (Qatar Exchange)
LSE (Beirut Stock Exchange)
EGX 30 (Egypt Exchange)
ASE (Amman Stock Exchange)
TUNINDEX (Tunisia Stock Exchange)
CB (Casablanca Stock Exchange)
PSE (Palestine Securities Exchange)

Gulf Daily News » Major blow to Bahrain industries

Industry is the most severely affected sector in Bahrain with 80 per cent to 90pc of its performance being crippled due to recent incidents.

A group of business leaders said the commercial sector could ask government institutions to freeze monthly fees levied on them, according to a survey conducted by our sister paper Akhbar Al Khaleej.

They did not rule out that these companies may ask for the same thing from financing institutions.

Islamic finance chiefs wait to see big picture - The National

There was something of a pall over the Yas Marina Hotel last week, where industry figures had assembled to discuss what had been expected to be a bumper year for the Islamic finance industry.

The outbreak of political unrest in parts of the Mena region left financiers at the Global Financial Markets Islamic Forum in a difficult position.

Maturing debts for Gulf companies could total as much as US$70 billion (Dh257.11bn) this year, according to a recent research note from Standard Chartered.

Uncertainty marks transition in Tunisia and Egypt - The National

Companies in Egypt and Tunisia are slowly getting back to business as usual following the uprisings that toppled their governments.

But many questions linger over the future of growth and investment in both countries.

Elections are expected to take place this summer and new governments should take power. In the meantime, there is uncertainty.

Islamic finance comes of age - The National

Islamic finance is experiencing a growth spurt as new products and services come online to tap into nascent demand for Sharia-compliant products.

But as the trillion-dollar market starts to mature, many in the industry are wondering whether the industry is growing too fast and innovating faster than regulators can keep up.

Philippe de Backer, the global head of financial services at Bain and Company, says there is some doubt as to whether Islamic banking has enough momentum to move into the mainstream.

Two more brokerages suspend operations - The National

Two more stock brokerages have suspended operations in the UAE, bringing the total number of financial services companies operating to 70 from 90 last year.

Brokerages are suffering from depressed trading volumes on the country's bourses, exacerbated in recent weeks by unrest in parts of the Mena region, which has driven away investors.

The Dubai Financial Market General Index has lost 15.9 per cent since protests began in Tunisia, while the Abu Dhabi Securities Exchange General Index has lost 5.9 per cent over the same period.

gulfnews : GCC will clear path for customs union this year

The Gulf Cooperation Council (GCC) will this year resolve outstanding issues to clear a path toward creating a customs union, its secretary-general said yesterday.

"Pending issues need to be resolved to reach a final deal on the customs union ... in line with an agreed timetable in 2011," said Abdul Rahman Al Attiyah, GCC secretary-general.

The introduction of a customs union in 2003 had been hailed by officials as a major achievement countering critics' claims that the Gulf Arab bloc would be unable to realise economic integration in the world's biggest oil exporting region.

gulfnews : More action needed to enhance liquidity

Abdul Aziz Al Ghurair, Chief Executive Officer of Mashreq, believes that the worst is over for the banking sector. While he is optimistic about economic recovery and strong growth in the banking sector, he believes concerted action by the government, Central Bank and the banking industry is needed to kick-start the economy and revive loan growth.

In an interview with Gulf News, Al Ghurair shared his views on what should be done to get the economy and the banking sector back to a strong growth trajectory.

Gulf News: Despite being a difficult year for the banking industry as a whole, Mashreq's results for the fourth quarter and the full year 2010 indicate that the bank has made significant progress in the recovery. What were the key elements of your strategy when you were hit by the steady rise in non-performing loans (NPLs) and portfolio impairments in the last two years?

Abdul Aziz Al Ghurair: Our position was very clear, that we wanted to be very transparent and conservative when it comes to recognising NPLs and wanted to be more open to our shareholders and to the market. I think the market should reward banks that have been transparent in recognising their problems. I think the tendency of banks to hide the problem assets over a period of three or four years should not be allowed.

Prices for Versace hotel flats cut by half - The National

The Palazzo Versace hotel in Dubai has cut the price of its apartments by half, but there has been no skimping on the fittings.

A high number of defaults has meant several properties in the Dh2 billion (US$544.4 million) development coming back on to the market at a discount, but all the 169 private homes and 213 hotel rooms will still come with furniture and accessories, right down to the $120 drinking glasses, designed by Versace, the Italian designer.

Eighty per cent of the residences were sold before the financial downturn, with buyers from the UK, Russia and around the region among those who jumped at the offer. But many did not follow through with payments, said Soheil Abedian, the managing director of Emirates Sunland Group, the company behind the project.

Saudi Aramco Raises April Crude Oil Prices for Asia, Northwestern Europe - Bloomberg

Saudi Aramco, the world’s largest oil exporter, raised official selling prices for all crude grades for customers in Asia and Northwest Europe for April shipments and cut prices for customers in the U.S.

Saudi Arabia’s state-owned producer increased the formula prices for Arab Extra Light, Light and Medium crudes to Asia by 65 cents a barrel, a person familiar with the pricing decision said today. Arab Light to Asia will sell at the highest since July 2008 at $1.95 a barrel above the average of the Oman and Dubai grades, the two Gulf benchmarks used by traders.

Six officials at refineries in Asia polled by Bloomberg said they expected a price increase reflecting gains in fuel processing profits. The difference between gasoil and fuel oil prices, the so-called black-white spread, rose to the widest since 2008, suggesting refiners with the ability to break fuel oil into higher value oil products are earning more.

Egypt GDRs Hit Post-Crisis Low as Bourse Debacle Threatens `Pariah' Status - Bloomberg

Egyptian stocks listed overseas are trading at the lowest levels since before the protests that toppled Hosni Mubarak as the Cairo exchange’s continued closure threatens to deepen losses for investors the bourse is under pressure to protect.

Global depositary receipts of Commercial International Bank Egypt SAE (CBKD) sank 15 percent in London last week to the lowest level since July, while Orascom Telecom Holding SAE (OTLD) traded 5.2 percent below its close on Jan. 27, when the Egyptian Exchange shut down. The U.S.-traded Market Vectors Egypt Index ETF has lost 6.2 percent in two weeks even as the MSCI Emerging Markets Index rose 1.5 percent.

Egypt’s bourse on March 3 postponed plans to resume trading today, citing the resignation of Prime Minister Ahmed Shafik, and didn’t give a new opening date. Regulators said on March 2 they may require investment funds to disclose their shareholders as part of a probe of officials linked to Mubarak. The new rules and the exchange’s 24-day shutdown are deterring foreign investors and may spur a selloff when trading resumes, according to F&C Asset Management Plc and ING Investment Management.

Libyan fund manager slams Austrian asset freeze | Reuters

A top Libyan official accused Austria on Saturday of betraying its liberal traditions by freezing his assets as part of a hunt for offshore wealth held by Libyan leader Muammar Gaddafi and his inner circle.

Austria on Friday added Mustafa Zarti, deputy head of the Libya Investment Authority (LIA) sovereign wealth fund, to its blacklist of suspected Gaddafi cronies, calling him a "close confidant of the regime in Libya".

Zarti, who has an Austrian passport and lived for years in Vienna as a youth, hit back in an interview with Reuters, denying any links to the clan other than Gaddafi's son Saif al-Islam, whom Zarti called a long-time friend.