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Wednesday, 18 May 2011 - Gulf looks for clarity from Cairo

bell of the Egyptian stock exchange

Egypt is looking to oil- and gas-rich Gulf countries for help in dealing with its post-revolution fiscal deficit, but analysts and investors say loans and investments may not be forthcoming as quickly as Cairo is hoping.

The country is already in talks with the International Monetary Fund over a $4bn loan, but with a fiscal deficit projected to reach 10 per cent of gross domestic product and foreign reserves and investment falling, its financial situation is deteriorating sharply.

Egypt’s international re­serves fell for a fourth month in April to $28bn, the lowest since April 2007. In December, before the start of a revolt that toppled Hosni Mubarak as president, reserves were $36bn.

MENA stock markets close - May 18, 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)

MIDEAST STOCKS-Oman at 17-mth low on earnings; Egypt ends rally | Reuters

Most Gulf Arab markets fell on Wednesday as Oman's bourse hit a 17-month low on low investor demand, while Egypt's market ended a seven-day rally on concerns over company earnings. In a ninth straight loss, Oman's index .MSI fell 1.4 percent to its lowest close since Dec 10, 2009 on muted buying interest after lower-than-expected earnings.

"We expect to face a strong support at 5,965 points -- this level depends on the movement of the index within the next week," said Osama Ibrahim al-Qinna, head of brokerage at Oman Arab Bank.

Yet the market will find it difficult to stay above 6,000 point, he added.

Saudi pension body bought $533 mln stocks in March - Maktoob News

Saudi Arabia's public pension agency invested 2 billion riyals ($533.3 million) in the kingdom's stock market in March, its governor said on Tuesday.

"We bought (stocks) worth 2 billion riyals ... we will keep investing. The market is promising," Mohamed al-Kharashi told Reuters on the sidelines of a conference.

He said the agency invested in the bank, telecom, pharmaceutical and cement sectors.

Al Baraka eyes $300 mln sukuk, further expansion - Emirates 24/7

Bahrain's Al Baraka Bank expects to sell $300 million worth of Islamic bonds by September as it looks to secure long-term financing to fund its expansion plans, its chief executive said on Wednesday.

Previous plans to issue Islamic bonds, or sukuk, were thwarted by the onset of the financial crisis and, more recently, the regional unrest, said Adnan Ahmed Yousif in an interview with Reuters.

The Islamic lender had previously announced plans for a $500 million sukuk programme but had shelved that, he said.

Etisalat must take extra care on how it rings the changes - The National

No company is guaranteed perpetual growth. All face the challenge of the corporate cycle, when changing external market conditions and internal dynamics have to be recalibrated and fine-tuned.

Etisalat is in such a position now. For a host of reasons, the UAE's telecommunications champion finds itself at a crossroads. The decisions it makes in the next few months will be crucial, not just for its own corporate wellbeing, but also for the UAE.

It's hard to overstate the importance of the company. It is the biggest stock on the Abu Dhabi Securities Exchange, with a capitalisation of about US$23 billion (Dh84.48bn); it is a major contributor to the UAE federal budget, via royalty payments that pulled in $2bn last year; it is a big local employer and a focus of the Emiratisation strategy, with enormous consumer interface.

Atic plans to raise stake in Globalfoundries to over 90% - The National

Abu Dhabi's Advanced Technology Investment Company (Atic) plans to increase its stake in the Globalfoundries microchip business to over 90 per cent by the end of the year, a senior executive said today.

ATIC's stake rises as it pours investment into Globalfoundries, in which it last year acquired a 65.8 per cent stake for US$2.1 billion (Dh7.71bn).

"Today, it's an 87 per cent ownership stake in Globalfoundries. By the end of the year it will be around 90 per cent or just over 90 per cent as we continue to contribute capital to the company," said Daniel Durn, executive director in charge of Atic's investments and strategy.

Dubai Shares Rise a Second Day as Oil, Global Stocks Rebound; Emaar Gains - Bloomberg

Dubai shares rose for a second day, led by Emaar Properties PJSC (EMAAR) and Emirates NBD PJSC (EMIRATES), as oil prices jumped and stocks rebounded globally. [bn:WBTKR=EMAAR:UH]

Emaar [], builder of the world’s tallest skyscraper, increased a second day and Emirates NBD PJSC, the United Arab Emirates’ biggest bank by assets, surged 1.9 percent. The DFM General Index (DFMGI) advanced 0.3 percent to 1,582.53, the highest intraday level since May 16, at 12:48 p.m. in Dubai. The Bloomberg GCC 200 Index (BGCC200) rose 0.2 percent and the MSCI Emerging Markets Index jumped 1 percent.

“There seems to be a higher correlation between the Dubai Financial Market and global markets lately,” said Ahmed Talhaoui, the Abu Dhabi-based head of investment at Royal Capital. The increased correlation has been driven by growing concern about complications of the European crisis, U.S. debt reaching its ceiling and the sell-off in commodities, he said.

Bahrain was the Gulf’s Tiananmen now comes the Chinese-style growth « ArabianMoney

Trying to make sense of the Arab Uprisings of the past four months and to understand what this means for the future of the Middle East and North Africa has become a major preoccupation for analysts who often draw parallels with events that followed the fall of the Berlin Wall in 1989.

Then all the former East European communist dictatorships were toppled, while in China there was a brutal suppression of the democratic opposition in Tiananmen Square. Twenty-two years later and the Chinese communist party is much changed but still very much in power, and China has enjoyed one of the most rapid rises to economic dominance in world history.

It is debatable whether this would or would not have happened under more democratic rule, but a centralised command economy is generally acknowledged as the more efficient economic development model.

Oil climbs to above $111 on gasoline, dollar | Reuters

Oil rebounded more than $1 to above $111 a barrel on Wednesday, after falling for two sessions, supported by a surprise drop in U.S. gasoline inventories and a weaker dollar.

U.S. gasoline stocks fell 676,000 barrels last week, the American Petroleum Institute said on Tuesday ahead of government supply data in the Energy Information Administration report due at 1430 GMT.

"We're waiting for the data from the U.S., the market wants to bounce a bit and if it's strong it will give the market a lift, but if it comes in weak, then it will just confirm what everyone thinks, so there won't be too much downside," Helen Henton, analyst at Standard Chartered said.

Qatar's Aamal To Up Freefloat With London GDR Offer -

Qatari building materials-to-shopping centers conglomerate Aamal Co. (AHCS.DO) said Wednesday it will raise its freefloat to around 24% by offering global depositary receipts in London.

Selling shareholder Sheikh Faisal Bin Qassim Al Thani will offer up to 118.8 million shares, or 24% of the company's share capital, in the form of GDRs. Aamal has been listed in Qatar since 2007 but its freefloat is only around 0.3%.

The company said the offer will "further enhance the liquidity and profile of the company's shares among international institutional investors seeking high-quality exposure to Qatar's rapid economic growth."

Rescue of Dubai Bank exposes Emaar again - The National

Emaar Properties, already faced with Dubai's struggling property sector, has run into another obstacle as its investment in Dubai Bank, now state-owned, may soon be wiped out.

The builder of Burj Khalifa, the world's tallest tower, may write down the entire value of its Dh172.4 million investment in Dubai Bank as soon as the second quarter, the investment bank EFG-Hermes told investors in a note yesterday.

The Dubai Government has taken control of the lender and says it will inject capital "to ensure that Dubai Bank's business continues uninterrupted".

Differences in sukuk markets within the GCC - FT Tilt

As I mentioned in an earlier post, the sukuk market is not a unified market. It is made up of many different markets, each with their own characteristics. In that earlier post, I broke down the sukuk market into 4 separate regional markets for sukuk: GCC, South Asia, Malaysia and primarily non-Muslim countries. However, even within these regions there are stark differences in the factors which impact the sukuk market health and today I saw four different article that demonstrate the differences within half of the GCC countries: Qatar, Bahrain and the UAE.

In the UAE, the sukuk markets could be on the verge of coming back strongly with what is reported to be a heavily oversubscribed $400 million sukuk issued by Sharjah Islamic Bank. The sukuk, which is in the mid-range in terms of size from the expectation is rated BBB+ by S&P and Fitch, at the bottom end of the investment grade rating category. The order book is reported to have attracted $5 for every $1 in sukuk being issued ($2 billion reported order book). Given the overwhelming dominance of sovereign sukuk issuance in the years since the markets froze up, it is a positive development to see corporate issuers, particularly one with a low-investment-grade rating to see strong reception for its sukuk. In part, this could be due to the UAE being viewed as a safe haven having not seen the protests that spread across much of the region, including the financial hub of Bahrain.

In Bahrain, the government's harsh crackdown on protests and assistance from Saudi troops stationed in the country has restored some level of calm in the markets with the yield on the sovereign sukuk from the Central Bank of Bahrain at its lowest yields since the protests began in mid-February. However, there remains a lot of uncertainty about whether the grievances which led to the protests will be dealt with or whether the calm is just a lull created by the government crackdown on protesters. For example, the US government lifted its 'voluntary departure' status for US embassy staff also noted that "potential for spontaneous civil and political unrest continues" and "Clearly, fears have subsided to an extent but given current spreads and CDS levels the market is telling you things are not back to normal" according to a director, Akber Khan, of Al Rayan Investments as quoted by Bloomberg from Qatar. Bahrain, which had become a large hub for finance--including Islamic finance--in the region has lost its status as a stable country, at least for the time being. Still, it will remain at the center of a good deal of Islamic finance in the region due to its accommodative central bank and the presence of international organizations like the International Islamic Financial Market (IIFM) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). However, the reputation for stability has not (and probably cannot entirely) return to the pre-protest levels, which will impact future sukuk issuance coming out of Bahrain.

OMV plan to raise capital spooks investors - The National

A plan to finance acquisitions by raising share capital and selling bonds has prompted investors to dump the shares of OMV, the largest central European petroleum company.

Shares of the Austrian integrated energy and chemicals group, in which Abu Dhabi's International Petroleum Investment Company (Ipic) holds a 20 per cent interest, fell more than 4 per cent in Vienna early yesterday, suggesting investors were unhappy that OMV had decided not to sell assets to meet part of its financing requirements.

Earlier, the company said it was considering selling shares or hybrid debt securities - bonds with a long repayment horizon and options to skip interest payments - as well as asset sales to finance major acquisitions in Turkey and Tunisia.

gulfnews : Taqa gets clearance for Dutch gas facility

Abu Dhabi National Energy Company (Taqa) said Tuesday all required statutory approvals and permits to construct and operate the Bergermeer gas storage facility in the Netherlands have been signed by the Minister of Economic Affairs, Agriculture and Innovation, Minister of Infrastructure and Environment and other authorities.

In a statement, Taqa said, "The statutory notices have been published in local newspapers today and will be published in the State Gazette on 19 May".

Bergermeer gas storage operations will start in 2013 with full commercial operations in 2014. Bergermeer gas storage will provide the northwest European gas market with 4.1 billion cubic metres of seasonal storage, thereby almost doubling the Netherlands' total storage capacity, Taqa said.

Exchanges worldwide feel the urge to merge - The National

Jeff Singer, the chief executive of Nasdaq Dubai, says three factors are driving merger activity. Satish Kumar / The National

    London Stock Exchange's proposal to take over Toronto's bourse is of interest to shareholders in the Gulf and indicative of a wave of such movements, writes Frank Kane

    Jeff Singer is chief executive of Nasdaq Dubai, having joined the company in 2008 when it was called Dubai International Financial Exchange. He has since been a leading advocate of reform and consolidation of UAE markets.

    DGCX mulls end of oil, steel deals - The National

    Dubai's commodities exchange is weighing whether to stop offering oil and steel contracts because of a lack of interest among traders.

    The exchange is considering the move although those commodities are trading at or near new highs, its chief executive said yesterday.

    "We are reviewing the contracts because they're not doing any volume," said Eric Hasham, the interim chief executive of the Dubai Gold and Commodities Exchange (DGCX).

    Kingdom to overspend budget by up to 15%: Al-Assaf - Arab News

    Finance Minister Ibrahim Al-Assaf said on Tuesday that Saudi Arabia will overspend its budget by up to 15 percent this year due to supplementary spending on construction and job-creation measures.

    “Because of decrees issued by (Custodian of the Two Holy Mosques) King Abdullah, there will be additional spending,” Reuters quoted Al-Assaf as telling reporters following the inauguration of the Euromoney Saudi Arabia Conference in Riyadh.

    He predicted overspending would be between 10 and 15 percent and stressed an earlier forecast that Saudi economic growth this year would exceed 4 percent, up from 3.8 percent growth last year.

    Doha Bank provides opportunities for long-term investors

    R Seetharaman, Doha Bank Group CEO delivered a keynote address on fixed income at an event hosted by Thomson Reuter’s recenlty. This event was held at La Cigale, Doha. Top business professionals, key industry players in fixed income market and experienced bankers participated in this event and spoke on “GCC economy and emerging trends in GCC Bond Market”.

    He also highlighted the economic outlook of GCC economy. He stated that “GDP at current prices in 2011 will rise to 1.4 trillion reflecting a growth of 29 percent over 2010. Qatar’s real GDP will grow at a rate of 20 percent in 2011. The current account balance of GCC will be 124 percent of GDP at current prices on account of high oil prices in 2011”

    He stated that: “The total size of bonds issued in 1st Quarter 2011 for GCC bonds was close $20bn with Qatar Govt being the leading issuer amounting to $13.7bn. The other major bond issues in 2011 where from International petroleum Investment company – $4.3bn, Mubadala Development company $1.5bn and Emmar properties – $0.5bn. The refinancing requirements of regional corporations in the coming years is expected to increase, with debt more than $60bn debt maturing in next 2 years. The soaring high yields in 1st quarter of 2011 due to crisis also provided opportunities. Massive projects and huge Infrastructure development in GCC will create demand for bonds”

    Developer Nakheel prepares to issue Dh5bn worth of Islamic bonds - The National

    Banks are gearing up to handle about Dh5 billion of Islamic bonds to be issued to contractors and other trade creditors by Nakheel as part of its restructuring.

    The Islamic bonds, or sukuk, are a prime component of the property giant's reorganisation, made necessary by the global financial crisis and the downturn in the local property market. After months of piling up unpaid bills, Nakheel last year began paying cash to contractors owed Dh500,000 (US$136,130) or less. Those owed more were to get 40 per cent in cash and 60 per cent in the form of sukuk shares returning 8 per cent profit per year.

    With Nakheel expected to issue the sukuk in the weeks ahead, banks are beginning to advertise custody services to contractors set to receive them. Once the sukuk is issued, contractors must nominate a custodian for their shares, typically a division of a large bank.

    gulfnews : Dubai Bank appears better positioned for merger

    The acquisition of 100 per cent shares in Dubai Bank by the Government of Dubai on Monday makes it a more acceptable candidate for merger, according to bankers and analysts.

    "After recapitalisation and non-performing loan (NPL) cleansing, we see increased chance that Emirates NBD could acquire both Amlak, [an Islamic mortgage provider] and Dubai Bank on commercial terms," said Jaap Meijer, head of the bank team at AlembicHC.

    Analysts said in the context of Investment Corporation of Dubai holding a 55.6 per cent stake in Emirates NBD, a consolidation of Dubai Bank with the group looks more likely.