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Monday, 30 May 2011

Moody's Downgrades Three Bahraini Banks, Outlook Negative

Moody's Investors Service downgraded the long-term deposit ratings of three Bahraini banks on Monday.

The rating of BBK B.S.C. was cut to to Baa2 from A3, while those of BMI Bank B.S.C. was lowered to Ba1 from Baa3. The agency also downgraded the ratings of the National Bank of Bahrain B.S.C. to Baa1 from A3. The outlook on all of these ratings is negative, Moody's said.

The latest move comes after Moody's downgraded on May 26 Bahrain's government bond rating by one notch to Baa1 and assigned a negative outlook. - Bahrain hopes bail-out will allay opposition

As Bahrain’s economy struggles to recover from the tumult of pro-democracy protests, much hope is invested in a bail-out package for the kingdom and for Oman, another member of the Gulf Co-operation Council that has faced domestic unrest.

But details about the package, pledged by fellow GCC members at $10bn over 10 years, remain scant, despite signs that the Bahraini economy needs a kick-start after the disruption triggered by February and March’s street protests.

One official says most of the stimulus will be spent in the first three to five years. But further details of what was originally called a Marshall-style plan are under wraps until the government decides between two options, says the official.

MENA stock markets close - May 30, 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)

gulfnews : Prominent Saudi businessmen and academics object to cap on expat workforce

A number of prominent Saudi businessmen and academics have objected to the new move by the Ministry of Labour not to renew residency permits (Iqama) of foreign workers after the completion of their six-year stay in the Kingdom.

Speaking to Gulf News, they urged the ministry to work out a comprehensive plan to find jobs for the Saudi jobseekers in the private sector and review government procedures, which they say force them to hire foreign workers at the expense of employing Saudi youth.

The reaction comes following the accouncement by Labour Minister Adel Fakieh that residency permits of expatriates who have lived in Saudi Arabia for six years would not be renewed in the future.

Qatar to Set Up Junior Market for Small, Medium-Sized Companies - Bloomberg

Qatar plans to create a secondary market at the Qatar Exchange for small and medium-sized companies, the bourse said today in a release on its website.

The May 25 decision by the Supreme Council for Economic Affairs and Investment would increase small and medium-sized companies’ “efficiency and enhance their role, so they will be able to occupy advanced positions regionally and internationally,” the Qatar Exchange’s vice chairman, Ahmad Al- Sayed, said in the statement.

The regulations for listing on the junior market will be “lighter” and more “flexible” than the regulations for listing on the main Qatar Exchange, the bourse said.

Qatar foreign ownership limits won’t change for 2011 - Arab News

Foreign ownership limits in Qatar, a key issue in the state’s potential upgrade by an influential index compiler, will remain at 25 percent for the coming year, the chairman of Qatar Exchange said.

“The ownership limits will continue to be 25 percent for the time being. We will see, maybe in a year from now we will change it, but for now it will remain the same,” Hussain Al-Abdulla said on the sidelines of an exchange event.

“We will change it gradually in the coming months, but not now.”

Emirates eyes benchmark 5-year dollar bond-leads

Emirates, Dubai's flagship carrier, is eyeing a benchmark five-year dollar bond with early talk indicating pricing of 350 basis points over midswaps, the lead arrangers said on Monday.

Emirates, one of the world's fastest-growing airlines, wraps up its bond roadshow, which began in Hong Kong on May 23, in Switzerland on Monday.

HSBC, Deutsche Bank, Emirates NBD and Morgan Stanley have been mandated as joint lead managers (JLMs) and joint bookrunners for the bond sale.

gulfnews : Blue chip companies drive Dubai market slump

The Dubai Financial Market (DFM) General Index slipped 0.63 per cent on Monday with blue chip companies leading the decline amid fears the UAE might not get an MSCI upgrade.

The bourse closed at 1,535.67 with property and construction stocks leading the slump. Real estate developer Emaar fell 1.6 per cent to Dh3.07 and construction firm Arabtec dropped 0.76 per cent to Dh1.30.

Drake and Scull International, Union Properties and utilities company Tabreed were among the top decliners as local investors sold up and reinvested their money in other markets.

Egypt payments balance plunges into deficit in Q1 | Reuters

Egypt's balance of payments swung into a deficit of $6.1 billion in the first quarter as revenue from tourism and foreign investment were hit by political turmoil in Egypt and the region, the central bank said on Monday.

The popular uprising that ousted President Hosni Mubarak from power in February scared off tourists and investors, two of Egypt's main sources of foreign exchange.

The balance was "affected by the repercussions of the events Egypt and the Arabic region are passing through, which have negatively affected revenue from tourism and foreign investments," the central bank said in an emailed statement.

Abu Dhabi's IPIC says assets grew 15 pct in 2010 - Maktoob News

Abu Dhabi's International Petroleum Investment Co (IPIC), which owns stakes in energy majors OMV and Cepsa , saw its assets rise 15 percent in 2010, the government fund said in a statement.

IPIC saw "continued asset growth to $47.9 billion, an increase of 15 percent (excluding assets of disposal group)," the company said in a statement.

IPIC, which also owns stakes in German automaker Daimler and Virgin Galactic through its majority-owned Aabar Investments, has embarked on an aggressive acquisition drive in recent years.

Total Acquires 25 Percent of Qatari Exploration License From China’s Cnooc - Bloomberg

Cnooc Ltd. (883), China’s biggest offshore oil producer, sold a 25 percent stake in a license to explore for hydrocarbons in Qatar to France’s Total SA (FP) as the Chinese company seeks to reduce risk.

The Beijing-based producer, which secured rights to the offshore concession two years ago, will retain a 75 percent stake and operate the area called Block BC, according to an e- mailed statement yesterday.

Qatar, the world’s biggest exporter of LNG, has awarded three exploration and production licenses in the past two years as it seeks to raise output outside the North Field, the world’s biggest gas reservoir. The Persian Gulf sheikhdom ordered a halt in new development at the field until at least 2014.

Egypt says agreed in principle on $3 bln IMF loan | Reuters

Finance Minister Samir Radwan said Egypt had agreed in principle on a $3 billion, 12-month loan agreement with the International Monetary Fund (IMF) and that he hoped it would be signed by Sunday.

"It can be signed any minute between now and Sunday," he said by telephone.

He said the loan would help Egypt help fill a budget deficit for the financial year ending in June 2012 that he estimated would be 11.3 percent of gross domestic product.

gulfnews : Emirates plans dollar bonds for cash buffer against future needs

Emirates, the world's biggest airline by international traffic, plans to sell dollar bonds as a "cash buffer" and will decide on the size after investor meetings end today, its president said.

"With the obligations we have coming up, it's nice to have the cash buffer to deal with anything ahead of us," including an increase in fuel prices and regional unrest, Tim Clark said in a telephone interview yesterday. "Can we do without it? Yes, we can. We are in a comfortable position." Emirates, which reported record profit of Dh5.93 billion for the financial year ending March 31, has a cash reserve of Dh16 billion.

Market Leader:: Saudi Arabia vs Iran: possible consequences of the “battle” between the oil “giants”.

crude oil

The current situation in the Middle East keeps worsening while the center of the “thunderstorm” is moving towards the Persian Gulf, which is rich in crude oil. There is a possibility of confrontation between the world’s 2 oil giants: Saudi Arabia, the world’s largest oil producer and exporter, and Iran, Saudi Arabia’s ideological and political opponent and the 2ndlargest producer of oil. If something like this happens, nobody will dare predict the future of the energy market and even the entire global economy.

What is the new pretext for the tensions in the Persian Gulf?

· This time it is about Bahrain, a small island kingdom.
· For 2 centuries Bahrain has been ruled by the Sunnite royal family Al-Halifa. The problem is that 75% of the population belongs to Shiites. In other words, the power belongs to the religious minority.
· Bahrain’s Shiites and Sunnites have been opposing each other for the last 30 years. The Shiites are supported by Iran while the Sunnites enjoy Saudi Arabia’s support (Saudi Arabia is the USA’s ally).

Uniform trading must to evolve pan-Gulf ETF

The GCC (Gulf Cooperation Council) region needs uniform trading days and hours to develop a pan-Gulf exchange traded fund (ETF) in view of the growing interest for such instruments that have outpaced mutual funds globally, according to BlackRock.

“I think there is the potential to bring more products in this region but we have to make sure that the ecosystem –regulations, tax system and market making – works,” Deborah Fuhr, managing director of BlackRock, said.

Observing that the number of institutions, including family offices (in this region) using ETFs have more than tripled in the last 12 years, she said there is more than one could see because many of the investors in this region have banking relations with private banks in the UK or Switzerland.

Forget politics, Gulf business leaders fear demographics - The National

Given the upheavals occurring across the Middle East, it might be seen as remarkable that business leaders in Saudi Arabia, the United Arab Emirates and Qatar report high levels of satisfaction in the economic environment in their countries and optimism about the future. This is despite the fact that some of the most difficult situations are right on their doorsteps.

This was one of the findings of a business confidence survey conducted by Zogby International and Oliver Wyman, querying 164 executives across these Gulf countries. Completed this month, this is the fourth in a series of biannual surveys measuring not only confidence but priorities for reform and satisfaction with government performance on a range of economic matters.

What we found is that six in 10 executives say business conditions have improved in the past year, and an even higher percentage (65 per cent in the UAE, 81 per cent in Saudi Arabia and 92 per cent in Qatar) expect conditions to get better in the next two years. While about a third expressed concern with political unrest in the broader region, less than one in seven were concerned that unrest would affect economic conditions in the three countries covered in the survey.

Al Suwaidi tells banks to cut rates for business - The National

Banks need to lower the cost of borrowing to help businesses struggling with high interest rates, says the Central Bank governor.

Current loan charges do not reflect the abundance of liquidity in the financial system, said Sultan al Suwaidi.

"Borrowers and especially merchants [and] businessmen are complaining about high interest rate margins on their financial budgets. Borrowers are the basis for the growth and prosperity of the banking business, therefore I would urge you to reduce interest margins on loans as much as realistically possible," he told a meeting of chief executives and other representatives of the country's banks at the Central Bank yesterday.

Oman city's property prices fall victim to street protests - The National

The violent protests in the industrial city of Sohar, which ended the first week of May after four months, have led to a steep drop in property prices and an increase in vacancies.

"I have six multi-floor commercial buildings in my book that are now on the market at a third the price the owners had originally demanded in December, a month before the protests had begun, ," Khalid al Jahwari, an estate agent in Sohar, said.

"There are still no takers even though there are no more protests here in the city."

Optimism on UAE recovery - The National

A growing sense of optimism over the recovery of the UAE's property and banking sectors helped markets rise yesterday, although thin volumes showed a lack of conviction behind the gains.

That led some to wonder whether the trading volume drought experienced last summer had returned already. The Abu Dhabi Securities Exchange General Index rose 0.36 per cent to 2,607.53, while the Dubai Financial Market General Index rallied 0.72 per cent to 1,545.42.

Some of the day's winners were Emaar Properties, which rose 1.96 per cent to D3.12 a share, and Arabtec, which rallied 3.15 per cent to Dh1.31.

Concern over trading system - The National

The deadline for the introduction of a new trading settlement system passed yesterday with confusion surrounding how many brokers were ready to use it.

The lack of clarity over the delivery versus payment (DvP) system has led to concern among some traders over the UAE's chances of becoming listed as an emerging market.

"Most brokerages aren't ready for [DvP]," said Fathi ben Grira, the chief executive of Wafa Financial Services.

In Gulf, divergent views on business consequences of unrest - The National

Top executives in the UAE, Saudi Arabia and Qatar say business conditions have improved since last year, but views are mixed about the long-term effects of regional uprisings on business confidence, according to a survey.

In the survey, conducted by Oliver Wyman, a consulting company, and Zogby, a polling firm, executives said external economic shocks constituted the biggest single threat to the GCC's business environment.

About 36 per cent of respondents from the UAE cited macroeconomics as the most pressing risk, while 34 per cent from Saudi Arabia and 40 per cent from Qatar said the same. But a central line of questioning in the latest Wyman-Zogby poll - the fourth in a series begun in October 2009 - was the role recent uprisings would play in prospects for the region's businesses.

What if the IMF Head was a Muslim, such as PIMCO’s El-Erian? alifarabia

The inflation adjusted billion dollar question has become, ‘what nationality should lead the International Monetary Fund (IMF)?’ It used to be the $64,000 question, and then became the million dollar question. This says something about the ‘naked’ dollar or US influence or both.

The tradition has been the Managing Director of the IMF was European. The traditional thinking has gotten us to where we are in today’s inter-connected, borderless, flat-wired world in real time, resulting in credit crisis induced systemic risks, corporate and government bailouts at the expense of hard working tax payers.

The established emerging markets like the BRICS countries, Brazil, Russia, India, China, and South Africa have raised valid points, and a recent FT article correctly mentioned, ‘… the IMF executive directors for Brazil, Russia, India, China and South Africa said the “obsolete unwritten convention” of appointing a European as managing director undermined “the legitimacy” of the fund and called for a “truly transparent, merit-based and competitive process”.