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Friday, 18 March 2011

[snap] Oil: prices plunge on Libyan ceasefire announcement, pledge to protect foreign assets | beyondbrics – FT.com

A rollercoaster ride for oil prices on Friday. Having risen sharply on the UN security council Libya resolution, they have plunged on reports of a ceasefire announcement from the Gaddafi government.

Tripoli closed Libyan airspace in response to the no-fly resolution but also pledged to stop fighting in a move that was clearly designed to give foreign power fewer reasons to intervene.

April brent, which touched $117.20 a barrel earlier in the day, plunged from $116.30 to $113.48 in the space of a few minutes on the news from Tripoli.

S&P Lowers Ratings on Bahrain Two Notches, May Cut Further - Bloomberg

Standard & Poor’s Ratings Services lowered Bahrain’s short- and long-term sovereign credit ratings by two levels, citing increasing political tensions in the Persian Gulf country.

S&P cut Bahrain’s long-term local and foreign currency sovereign credit ratings to BBB, the second-lowest investment grade, and the short-term ratings to A-3, the fourth-lowest. The country may be downgraded further, S&P said.

Bahrainis are gathering in the village of Sitra today to mourn the death of a protester, a day after security forces arrested opposition leaders and accused them of having ties with foreign countries. The government declared a three-month state of emergency on March 15, after troops from Saudi Arabia and other Gulf states arrived to help.

Batelco faces struggle to raise funds for Zain Saudi | Reuters

Bahrain Telecommunications Company (Batelco) faces difficulties raising international financing for its purchase of Zain's Saudi assets due to political tension in Bahrain, banking sources said on Thursday.

Bahraini telecom Batelco BTEL.BH teamed up with Kingdom Holding (4280.SE), the investment vehicle owned by Saudi billionaire Prince Alwaleed bin Talal, in a joint bid for the 25 percent stake in Zain Saudi Arabia 7030.SE. [ID:nLDE72F056]

Batelco could not immediately be reached for comment.

FT.com - Middle East crisis could delay Naimi’s retirement

As oil traders braces for fresh geopolitical turmoil, Ali Naimi, the veteran oil minister of Saudi Arabia, will be once again on the spotlight to reassure the market.

For him, the Libyan crisis will be the latest of a long list, including the collapse of oil prices in 1998-1999, the Venezuela oil strike of 2002, the Iraqi war of 2003, the Katrina hurricane of 2005 and the spike in prices between 2005 and 2008. But some people in the market believe that the current crisis could be the last one for Mr Naimi.

The oil market has been abuzz with talk about his retirement for months as part of a long-delayed reshuffle of Saudi Arabia’s cabinet. The country’s King Abdullah will address the nation on Friday, raising further talk about an imminent change. Mr Naimi’s retirement is not, however, a done deal; amid a volatile oil market and a geopolitical crisis, it would be strange to replace the most reliable and experienced pair of hands.

FT Alphaville » Egypt’s MSCI countdown

Tick tock, tick tock.

Egypt faces another problem.

If the Cairo stock exchange does not reopen by the end of the next week, it could be kicked out of the MSCI regional indices (that’s Emerging Markets, All-Country World, EMEA and Arabian Markets ex-Saudi).

So what you might say. Does it really matter?

In a word, yes. ETFs, index funds and any passive investors benchmarked against the MSCI indices would be forced to sell equities, says Citigroup.

How much might foreigners be looking to sell? Current free float of the MSCI Egypt index was $14.3b as of the close in late January. Assuming that 25% of free float is owned by foreigners, and discounting share prices by 20% in-line with the move in GDRs, we arrive at around $3b of Egyptian stock that is held by foreign investors who could be looking to sell. Of this, we estimate about 20% ($600m) is owned by passive investors and the rest by active funds.


FT Alphaville » Not just a no-fly zone

There is a good chance that the fast money in the oil and stock markets will take fright at any ‘unexpected’ escalation of use of force in Libya beyond the UN no-fly zone in the coming days.

So…

We thought we’d point out ahead of time that there are several provisions in Security Council resolution 1973 that allow for this escalation, with broad implications for infrastructure and rebels’ chances of quickly supplanting Gaddafi.

And thus, implications for the oil price as well:

Fund Flows: Russia joins the exodus from EM funds

After such a turbulent week in global markets, it is no surprise that investors again withdrew a sizeable amount from emerging market (EM) funds. And this week, after fifteen straight weeks of positive flows, Russia funds also reported net redemptions, albeit modest. Funds focused on Turkey were amongst the very few to attract new money last week. But the redemption from Russia funds should be short-lived. Based on current trends, we can expect to see good inflows for this current week. (see below)

Knee-jerk reaction to events in Japan. For the week ended Wednesday, EPFR datashows that investors withdrew approximately $2.2 bln from all EM funds. That came against a small net inflow of $17 mln the previous week but is consistent with the large weekly redemptions seen in the six weeks before that. Investors have now taken over $25 bln from all EM funds since the exodus started in the last week of January. Last year’s total inflow was close to $90 bln. Asian markets were unsurprisingly the hardest hit with a total loss of $971 mln while EM Balanced funds lost $435 mln and BRIC themed funds reported outflows of $334 mln.

Turkish delight. Amongst the major country specific funds, Russia fared relatively well compared to China, India and Brazil but could not extend the previous run of fifteen straight weeks of positive flows. Last week Russia dedicated funds reported redemptions of $58 mln while India funds lost $183 mln, China funds reported outflows of $172 mln and Brazil funds lost $121 mln. Turkey dedicated funds were amongst the few winners with a net inflow of $46 mln. Turkey funds have been negative for six of the last seven weeks and last week’s net inflow was the largest since the last week of October.


FT Alphaville » Sunrise over Ebril

Oil: Another turn of the screw | beyondbrics – FT.com

The UN Security Council voteon a Libya no-fly zone has brought joy to anti-Gadaffi rebels and the British/French diplomats that worked for the resolution. But in the oil market, it has raised tensions a notch, with April Brent crude rising on Friday by $1.76 a barrel to $116.66.

The break in the price surge earlier this week – when Brent fell back to $107 on the Japanese disaster – now seems a temporary blip. Oil-importing emerging markets headed by China and India will feel the pain in their inflation numbers.

Whatever military action the UK, France and allies take, it is likely to inflame tensions in the short- and medium-term, even if the move is justified on humanitarian and other grounds. A market already rife with fears of a possible oil supply disruptions has one more set of risks to comprehend. Egypt. Libya. Bahrain. And now more Libya.


Brent jumps above $116 as U.N. approves action on Libya - Maktoob News

Brent crude jumped by more than $1 to stand above $116 on Friday on fears of rising geopolitical tensions in the oil-rich Middle East and North Africa, after the U.N. approved military action to curb Libyan leader Muammar Gaddafi.

Front-month Brent rose $1.24 to $116.14 at 12:38 a.m. ET, after earlier touching a high of $116.50, while U.S. crude rose $1.60 to $103.02.

Last week's devastating earthquake in Japan, the world's third-largest oil consumer, shattered confidence across world markets and sent Brent to a three-week low near $107 two days ago.

gulfnews : Pumping energy back into GCC economy

The Bahrain Financial Harbour

  • The Bahrain Financial Harbour. Currently, Bahrain and Oman require development projects that contribute to raising standards of living.
  • Image Credit: Reuters

The Gulf Development Programme, which was announced during the GCC foreign ministerial meeting last week, closely resembles the European Marshall Plan that was launched after the Second World War to revitalise the European economy, which had been destroyed by the war. The Marshall Plan effectively contributed to once again restoring prosperity in Europe.

However, this resemblance depends on whether this programme will be further improved and changed into a development fund that will contribute to developing Gulf countries' productivity. This will in turn help diversify sources of income, provide more work opportunities, and help towards increasing the GCC's economic integration.

Although the project's capital, administrative structure or the future functions have not yet been announced, allocating $20 billion (Dh73.4 billion) as a contribution for the development of Bahrain and Oman's economy for the coming ten years represents a good start for this project's operations.

Abu Dhabi's Ipic uses bond funding to expand European oil refining network - The National

International Petroleum Investment Company(Ipic), the Abu Dhabi Government's strategic energy investment enterprise, has raised the equivalent of US$4.4 billion (Dh16.16bn) from a bond sale to buy Spain's Compania Espanola de Petroleos (Cepsa).

The Mena region's first euro and sterling-denominated multi-tranche bond issue will help to expand Ipic's European oil refining and petrochemicals network.

The conclusion of the two-tiered offering suggested there was still a healthy international appetite for debt backed by the Abu Dhabi Government.

The time to buy in the Middle East is near - The National

Over the past two months, events in the Mena region have dominated headlines. While the situation keeps constantly evolving, many investors are also asking how the events will affect global stock markets in the long run.

While the events may cause a modest decline in the short term, Credit Suisse regards this as a buying opportunity for the medium to long term. Political change may result in short-term uncertainty and a temporary loss of output, but over a period of time it can unleash faster long-term growth, especially in countries that have civil institutions with deep historical roots such as Egypt.

Market moves in the past may be an imperfect comparison, but they do provide a guide. In 1991, as the collapse of the Soviet Union gathered pace, global emerging market equities fell about 5 per cent over the month to August 19 when Mikhail Gorbachev, the then president, was briefly arrested. However, they were up by about 20 per cent within a year and by more than 50 per cent in two years.

Oil Surges as UN Approves Libya No-Fly Zone; Credit Suisse Raises Forecast - Bloomberg

Oil surged in New York after the United Nations Security Council voted to ground Libyan leader Muammar Qaddafi’s air force as continuing unrest in the region renewed concerns the turmoil may spread and disrupt supply.

Futures jumped as much as 2.2 percent after the UN voted to establish a no-fly zone over Libya and demanded a cease-fire with rebels. Oil climbed 3.5 percent yesterday, the most in three weeks, after Qaddafi’s jets dropped bombs around Benghazi while Bahraini security forces arrested opposition leaders. Credit Suisse Group AG raised its forecast for Brent crude traded in London, citing Middle East unrest.

“We’ve had a sharp return of risk concerns,” said Yingxi Yu, a commodities analyst at Barclays Capital in Singapore. “The market is starting to come to grips with the fact that we aren’t going to return to the balance of power that’s held the Middle East together for the past 30 years. It’s going to be a much more uncertain world.”

Qatar bourse adopts new rule - Arab News

The Qatar stock exchange moved a step closer to acquiring emerging market status from influential index compiler MSCI by adopting a standard international settlement system for stock trading.

The bourse, under review by the MSCI for an emerging market tag for the last two years, said effective April 11 it will switch to a “delivery versus payment” (DvP) and will seek to implement reforms in the equity markets throughout the year.

“These changes...attract more participants when achieving the ultimate goal of upgrading the classification of Qatar to emerging market status in MSCI Index,” said Nasser Al-Shaibi, chief executive of Qatar Financial Markets Authority, in a statement.

BBC News - Turning knowledge into the new oil

It might seem like pouring water onto sand - almost literally - but the Gulf kingdom of Qatar is banking on a remarkable transformation in its fortunes.

The small but fabulously wealthy state is using its hydrocarbon earnings to try to convert itself into a global knowledge hub.

Billions of pounds are being pumped into a 2,500-acre complex for 80 educational, research, science and community development organisations, under the umbrella name of Education City.

Oman provides a renaissance for traders with stock rise - The National

Oman-based Renaissance Services rose as much as 4 per cent to its three-week high ahead of its subsidiary's $500 million London listing.

Topaz Energy and Marine announced its intentions to go public on Thursday, subject to the approval of shareholders at Renaissance's general assembly scheduled to take place on March 28.

Shares of Renaissance ended 2.1 per cent higher to 1.148. Oman's index lost 0.7 per cent to 6247.33.

Dubai's RERA mulls more real estate cancellations - Real Estate - ArabianBusiness.com

Dubai’s real estate watchdog is mulling fresh project cancellations this year under a new scheme to evaluate the financial viability of developments, its CEO has said.

"We are in the process of analysing the data. Project cancellations won't happen just like that - there is a process involved and we are working on that," Marwan Bin Ghalaita told reporters on the sidelines of a property event in Dubai.

"Any project that is not good for Dubai and the investors will not go on. We have a new criteria. All the projects are going through a process which asks if they are fit for investment or not.”

Bahrain, the business hub that was | beyondbrics – FT.com

Bahrain’s hopes of wresting back its crown as the regional finance and business centre from Dubai has gone up in a puff of tear gas and with the crunch of truncheons.

The island kingdom’s security forces – recently reinforced by troops and police from neighbouring Saudi Arabia and the United Arab Emirates – may be back in control of the capital of Manama, after a brutal crackdown on protesters, but its reputation as a relatively liberal, business-friendly hub in the Gulf has been shattered.

The economy has ground to a halt, with businessmen reporting that some companies may not be able to make payroll unless commerce picks up. A general strike called this week will worsen the situation – and hurt government finances, as Bapco, the important state-owned oil refinery, has been shut down.

FT Alphaville » Beware the simple sectarian story in Bahrain

In Bahrain, 5-year CDS spreads are widening as the violent crackdown continues. Sheikh Ali Salman, the leader of Al-Wefaq (the largest of the protest groups), called for the withdrawal of the 1,000 or so Saudi Arabian security forces that arrived on Monday.

Chart from CMA.

Not that there is a lot of trading going on in the financial centre — despite continuing reports of capital outflows. Reuters also reports on Thursday that:

Bahrain’s index .BAX resumed trading on Thursday following a one-day suspension, rising 0.1 percent as six stocks traded, generating a combined volumes of less than 770,000 shares.

“There has been no trading at all because of the curfew. The brokers in Bahrain have not really been in the offices. The market has been very quiet, and market-making and the two-way prices have been non-existent.”


Egypt's SODIC posts 2010 net profit, reversing loss | Reuters

SODIC, Egypt's third-biggest listed developer, swung to a net profit of 135.3 million Egyptian pounds in 2010 and doubled project sales, it said on Thursday.

The high-end real estate firm, which does not fully recognise revenues until it delivers units, made a net loss of 112.5 million pounds in 2009.

Egypt's property sector has been a major driver of foreign investment and growth but is now reeling from a string of legal