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Wednesday, 16 March 2011

MENA stock markets close - March 16, 2011

Status 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)

FT Alphaville » Sovereign wealth, a Gulf ‘supply chain’ risk

As the jackboot comes down hard in Bahrain on Wednesday, it’s worth asking what happened to the ‘modern’ ambitions of the Gulf monarchies who are providing military, financial and political support to the ruling Khalifa family.

A good question for the vanguards of Gulf financial modernity: sovereign wealth funds.

So we’ve been finding this recent paper by Gordon Clark and Ashby Monk of theOxford SWF Project, who have drawn on contacts at Gulf funds, pretty useful. It’s well worth a read.

They’ve hit on a very topical distinction:

From our field research, it would appear that the Gulf States assumed that breaking with the past by adopting the SWF institution was preferable to remaking their inherited institutions. By this logic, the SWF is symbolic of a commitment among the Gulf states to adopt the instruments of advanced financial management to facilitate the modernisation of what were otherwise semi-feudal states. The SWF is more than just a tool for managing resource wealth; it is a step towards modernity and economic development…

According to official literature and formal communications, the process of SWF adoption appears to be going extremely well. On the surface, these funds are operating like any other globally-oriented financial institution… Upon deeper examination, interviews with current and former financial market-oriented employees at Gulf States’ SWFs have identified a variety of problems with these official characterizations.

For those wondering when the Gulf Cooperation Council turned into a Middle Eastern version of the Warsaw Pact, it might be a familiar sensation of things not being what they seem.

Islamic Bank of Britain taken over | Stock Market Wire

The Islamic Bank of Britain is being acquired by the Qatari International Islamic Bank in an unconditional cash offer.

Under the terms of the deal, shareholders in the Islamic Bank of Britain can receive one penny in cash for each share. The terms of the offer value its fully diluted share capital at £25,464,700.

The Offer represents a 70.4% discount to the closing price of 3.38p per share last night.

Bahrain Shuts Stock Market as Troops Battle Protesters Amid Emergency Rule - Bloomberg

Bahrain closed its stock exchange and the cost of insuring against default by the Persian Gulf nation held near the highest since July 2009 as clashes between security forces and anti-government protesters intensified.

The nation’s five-year default swaps dropped 7 basis points to 352 today after surging 44 yesterday to surpass Lebanon, whose debt carries a lower credit rating, for the first time in more than a year. Fitch Ratings cut Bahrain two levels yesterday as the government imposed a three-month state of emergency.

Clashes between the mainly Shiite Muslim protesters in Bahrain and forces from their Sunni government injured hundreds and drew criticism from Shiite-ruled Iran. Bahraini opposition group al-Wefaq said two of its members were killed when security forces moved to clear demonstrators from the Pearl Roundabout in the capital. Bahrain is home to the U.S. Navy’s Fifth Fleet and its ruling family has close links with Saudi Arabia, an ally of the U.S. in its attempts to halt Iran’s nuclear program.

Kempinski Mothballs Dubai Project as It Expands in Middle East - Bloomberg

Luxury hotel operator Kempinski AG is delaying a Dubai project by two years, even as it expands elsewhere in the Middle East because authorities have allowed the market to become oversupplied, according to the company’s president for the region.

A 253-room development on Dubai’s palm tree-shaped artificial island will remain a “shell” for the time being, with the opening pushed back until 2013, said Ulrich Eckhardt, the Geneva-based company’s head of the Middle East and Africa.

“I’m concerned about what I consider poor planning from those in a position to approve new hotels,” Eckhardt, 69, said in an interview in Dubai. Building permission was granted without studying “existing inventory, growth rates and future demand,” he said.

Kudrin: oil might go to $150-$200 | beyondbrics –

What does Alexei Kudrin (pictured), Russia’s finance minister, know about the oil market that the rest of us don’t? The answer might be quite significant since he is predicting a possible oil price surge to between $150 and $200 a barrel.

According to Bloomberg, Kudrin told a Moscow conference on Wednesday that turmoil in the Middle East and the nuclear disaster in Japan would drive up oil although “the growth will be speculative and short-lived”. As Russia’s the world’s largest oil producer, Kudrin is well placed to venture an opinion. But government ministers are rarely experts at forecasting markets.

At least Kudrin is in good company with the IEA, the international energy agency, on Wednesday issuing a monthly report warning of an “oil price shock”.

UAE telecom Etisalat to spend $15B over 5 years - Maktoob News

The chairman of telecommunications firm Etisalat says the Emirati company plans to spend more than $15 billion over the next five years to upgrade its international network.

Chairman Mohammed Omran laid out the investment plans on Wednesday at a media conference in Abu Dhabi. He says Etisalat will spend as much as 5 billion dirhams ($1.36 billion) to further outfit its UAE fiber-optic network alone.

Etisalat has expanded rapidly internationally in recent years after losing its monopoly at home.

Economy takes a hit due to violence - Money - Zawya

A political analyst in Oman has called for an end to “acts that hurt the country’s economy”, especially in the industrial port town of Sohar in the north.

“We are further dragging our country backwards in terms of its economy by blocking the movement of commercial goods or tourists,” Awad Bakhuwair, a senior political analyst, told Gulf News in an interview.

In the past two weeks, Bakhuwair believes, Oman’s Sultan Qaboos Bin Saeed has given its citizens more than they had bargained for.

China Approves $9 Billion Sinopec, Kuwait Guangdong Refinery - Bloomberg

China’s top economic planner has approved China Petroleum & Chemical Corp. (600028) and Kuwait Petroleum Corp.’s $9 billion refinery development in the southern province of Guangdong.

The companies will build a refinery with the capacity to process 15 million tons a year, or 300,000 barrels a day, and a 1 million ton-a-year ethylene plant in the city of Zhanjiang, according to a statement on the National Development and Reform Commission’s website today.

Kuwait has been in talks to build the refinery project since at least 2004. The complex, scheduled to start operations by 2013, will overtake Exxon Mobil Corp.’s $5 billion Fujian project to become China’s biggest refining venture with an overseas partner.

Oil Rises as Bahrain Violence Spurs Concern Middle East Supplies at Risk - Bloomberg

Oil rose from a two-week low in New York as escalating violence in Bahrain stoked concern turmoil may spill into neighboring Saudi Arabia, threatening supplies from the world’s biggest crude exporter.

Prices advanced as much as 1.5 percent as riot police cleared anti-government protesters from a central square in Bahrain’s capital. The country declared a state of emergency yesterday as Saudi-led military intervention failed to end demonstrations. Oil dropped 1 percent earlier today as Japan battled to prevent a nuclear meltdown that threatens to worsen damage to the economy from last week’s earthquake.

“Had it not been for the disaster in Japan, with the Saudi troops moving into Bahrain the oil price should have moved toward $120,” said Victor Shum, a senior principal at energy consultants Purvin & Gertz Inc. in Singapore. “The contagion effect on oil prices is still present.”

Bahrain: Pearl roundabout cleared, five protesters reported dead, oil spikes | beyondbrics –

Bahrain: smoke billows from burning tents at Pearl roundabout March16Bahrain security forces cleared Pearl roundabout where protesters have been camped out for several weeks as well as a medical complex, the state news agency said on Wednesday.

State television showed the square, the centre of a pro-democracy campaign, empty of protesters. According to Reuters, the BNA report denied that reports had aircraft and “weapons” had been used to clear the square.

Earlier the head of the Shi’ite Muslim opposition bloc in parliament said at least five protesters have been killed and hundreds wounded in a crackdown by Bahraini forces.

MENA stock markets 1200hrs (GMT+4) - March 16, 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)

Kuwait’s Capital Market Authority Bylaws Officially In Effect « Alpha Dinar- talking Gulf finance

On March 13th, Kuwait’s Capital Market Authority (CMA) bylaws were published in Alkuwait Alyoum official government newspaper. This action constituted the official declaration that the CMA bylaws are now in effect. Further, the CMA reminded of this in a statement posted on the Kuwait Stock Exchange (KSE) website today. Although most laws are in effect as of last Sunday, the law provides a time frame of between 6 – 12 months for the KSE, brokerages companies, and investment companies to fully comply. For example, according to the bylaws of the CMA, the KSE will have to transform into a private company equally owned by listed companies through an auction and Kuwaiti citizens through a free public offering. This process must be completed in the next 12 months.

All other laws, such as those pertaining to takeovers, are currently fully in effect. This deals a major blow to Zain, which can’t see its deal going thru anymore as new regulations force an acquirer of a stake of more than 35% to extend its offer to all other shareholders. The first takeover transaction compliant with CMA laws could be Injazat Real Estate’s takeover of Aqar Real Estate. The disclosures and other requirements for this deal will provide us with a valuable insight into the effectiveness of the CMA.

Congratulations to all Kuwaitis on this massive step that will hopefully instill more confidence in the KSE. We finally have an authority that will safeguard our stock market from major manipulations and the lack of transparency. According to Al-Qabas daily newspaper, investment companies committed 544 breaches to Central Bank regulations from 2004 to 2010. Most of those breaches faced minimal punishments. We hope this step will usher a new era of fairness, ethics, accountability, and transparency in Kuwait’s financial community.

Not the right time to buy cheap equities and real estate in Arabia « ArabianMoney

For those of a contrarian nature the imposition of marshal law in Bahrain and the recent high oil price, combined with much lower equity and real estate valuations might look an attractive investment proposition. Saudi investor Prince Al Waleed took the plunge last week buying up $126 million worth of Saudi stocks.

But caveat emptor, there is plenty of reason to think that this is not the bottom of the barrel. Prince Alwaleed’s timing caught the stock market low but that was before the Japanese earthquake last Friday. Now the risk trade is off, and Japanese investors who have been betting heavily in emerging markets are selling down these assets and repatriating money.

FT Alphaville » Meanwhile, in Bahrain…

This excerpt from a cogent piece of analysis from CFR fellow Ray Takeyh is illuminating:

Saudi rulers have made a major mistake in casting the crisis in Bahrain as a sectarian conflict in which Iran’s Shia proxies are battling a benign Sunni ruling class for sake of Persian aggrandizement. The rebelling in Bahrain, as indeed throughout the region, is about a disenfranchised and impoverished majority seeking political representation and economic justice. The proper path for Bahrain’s al-Khalifa dynasty is to renegotiate its national compact and appreciate that as the Middle East finally joins the twenty-first century it has limited options beyond a constitutional monarchy.

Bribes and violence, we’ve noticed recently, can only go so far. The structural factors here — ageing Saudi leaders and religious schisms — seem too great to promise quiet without reform for very long.

Global gas glut to stay even with more Japan demand |

The worlds biggest gas exporters will benefit from Japans increased need for liquefied natural gas (LNG), but the global gas glut that has weighed them down over recent years is unlikely to shrink significantly.

Japans worst recorded earthquake and tsunami Friday shut four nuclear power plants and threatens to keep at least one closed forever, driving up LNG demand for years to come.

Russia, the worlds biggest gas exporter, and Qatar, the worlds biggest LNG exporter, are ready and able to supply Japan with more LNG. Since the quake hit, shares in British LNG giant BG Group, which just days before finalized a 20-year supply deal with Tokyo Gas starting in 2015, have jumped over 7 percent while the FTSE-100 has fallen.

Five minutes in court mark milestone in tortuous Saudi legal saga - The National

There isn't much "normal" business going on in Bahrain at the moment, but one event went off, more or less as planned, in downtown Manama on Monday.

As the rest of the city was recovering from its worst day of violence for many weeks, a small gathering took place in the lower criminal court on the fringe of the area controlled by protesters.

Perhaps the gathering was smaller than it would have been in other circumstances. Apart from a judge, a smattering of court officials and a lawyer, there was hardly anybody present to witness the first criminal hearing in the long-running saga of al Gosaibi versus al Sanea.

S&P assigns 'negative' rating to Egypt banks - The National

Regime change may have renewed hopes of a more democratic society in Egypt, but the health of the economy still hangs in the balance.

Commercial International Bank (CIB) and National Bank of Egypt (NBE) were in the spotlight this week as the ratings agency Standard & Poor's (S&P) assigned a "negative" outlook to both banks.

"We believe Egypt's authorities face challenges in managing the country's political transition and pressures on its fiscal performance," S&P said in a note.

gulfnews : Fujairah oil storage facilities to double

The UAE plans to double fuel oil storage facilities by 2012 at Fujairah, combining with a new crude pipeline to create an alternative energy export hub outside the Strait of Hormuz.

"At present there are 121 storage tanks representing approximately 3 million cubic metres of storage," said Mohammad Saeed Al Kindi, managing director of Fujairah Petroleum Products at a conference on Tuesday.

"By the end of 2012 we expect this to increase through private investment to 262 tanks, representing a total storage capacity of over 7 million barrels."

gulfnews : A narrowing yield gap may aid sukuk

Abu Dhabi may find it cheaper to borrow with Islamic bonds than non-Sharia compliant securities, National Bank of Abu Dhabi and EFG-Hermes UAE Ltd say.

The yield on the emirate's 5.5 per cent dollar-denominated non-Islamic note due April 2014 fell 3 basis points, or 0.03 percentage point, last week to 2.32 per cent on March 11, the lowest in a month on speculation the UAE will be spared from protests.

The yield on neighbouring Dubai's 6.396 per cent sukuk maturing in Nov-ember 2014 was at 6.23 per cent, data compiled by Bloomberg show.

Crude Oil Falls to Two-Week Low as Japan Fuel Demand May Drop After Quake - Bloomberg

Oil fell to the lowest in two weeks in New York amid concern that the earthquake in Japan may reduce fuel demand in the world’s third-largest crude user.

Prices fell as much as 1 percent after reports of additional damage and fires at a nuclear plant underscored the extent of destruction across Japan. About 1.3 million barrels a day, or 29 percent, of the country’s refining capacity was closed after the country’s largest temblor on record. Oil earlier gained 1.1 percent on speculation unrest in the Middle East may lead to supply disruptions.

“The Middle Eastern premium seems to be eroding as we concentrate in an uptick in supply as a result of Japan shutting down refining capacity,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney.

Commodity firms attracted to Dubai amid record trading - Retail -

The cotton trading business of government-owned Dubai Multi Commodity Centre (DMCC) generated $100m last year, its CEO said on Tuesday, with a rising number of commodity firms setting up in the emirate's trade hub.

The centre, which also hosts trade in raw materials such as gold, diamonds, and oil, currently has about 2,800 registered companies involved in commodity trade, and aims to become a key link in the global cotton supply chain.

Two hundred new commodities firms registered in January and February this year, the centre said, boosting its business.

Bahrain Credit Risk Exceeds Lebanon After Fitch Cuts Rating - Businessweek

The cost of insuring against a default by Bahrain surpassed Lebanon for the first time since July 2009 as officials declared a state of emergency and Fitch Ratings lowered the Persian Gulf nation’s credit rating.

Bahrain’s five-year default swaps surged 44 basis points yesterday to 359.37 while contracts for Lebanon, whose debt carries a lower credit rating, climbed 4 basis points to 359.17. Bahrain’s swaps have increased the second most in the world this year after Pakistan, according to CMA prices in London.

Fitch lowered its rating on Bahrain’s foreign debt two levels yesterday and said another downgrade is possible. Bond yields and credit risk of governments in the Middle East surged this year as popular uprisings toppled leaders in Tunisia and Egypt. Iran’s government issued a statement condemning the “meddling into Bahrain’s internal affairs” as troops from the six-member Gulf Cooperation Council arrived to bolster security.

After Japan Tragedy, Saudi Arabia’s Role as Reliable Producer Highlighted

The unfolding crisis in Japan highlights, among so many things, the importance of reliable suppliers of energy. While the extent of the damage that failed nuclear plants will do to the already devastated nation, what is for sure is that those reactors that are experiencing meltdowns are done.
Japan consumes 4.4 million barrels of oil a day, according to this article in Bloomberg, yet that figure is very likely to increase as 11% of its energy consumption previously came from nuclear power. As the amount consumed from nuclear power declines, Japan will make up for that energy with fossil fuels.
That could mean up an increase of up to 300,000 barrels a day, according to Michael Lynch, as quoted in the same Bloomberg article.