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Friday, 3 June 2011

MOROCCO: What a GCC membership would mean for the economy -

The Gulf Cooperation Council’s unprecedented decision to invite Morocco and approve Jordan’s request to join its ranks came as a surprise to political observers in the region and outside. Since its inception, the council has been reluctant to grant membership to other states in the region. Even though Yemen represents a natural geographic extension and strategic depth for the Gulf states, the council has always refused its membership request. It has also dealt cautiously for a decade with Jordan’s application for a free-trade zone agreement.

Political uprisings and new security concerns that surfaced in the Middle East and North Africa over the past few months explain the unexpected move by the GCC. Gulf countries are in the process of building new strategic alliances to face the Arab Spring’s ramifications on both domestic and regional politics. Yet, Morocco’s membership in the GCC does not seem to be the right option. The cost of its membership may be incommensurate with the expected benefits for both parties.

The GCC was founded in 1981 to achieve the economic and security integration of the six Gulf States -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates -- based on shared historical, geographical, and cultural ties. The council evolved progressively, moving from a free-trade zone in 1983 to a customs union in 2003 and finally to a common market in 2008. Moreover, the council began discussions a few years ago to shift to a common currency zone.

GCC market capitalisation falls to $758.5bn - Emirates 24/7

GCC stock markets had a turbulent performance during the month of May 2011, and ended on a lower note, barring the Saudi market which had marginal gains.

In the absence of new drives, regional bourses had no choice but to follow the international markets, which declined on renewed debt woes concerning Greece, Kuwait’s Global Investment House said in its monthly report.

Among GCC bourses, Oman’s MSM 30 index posted the steepest decline down by 5 17 per cent for the month.

Regional airlines suffer as the nationals thrive - The National

The continued growth of the Gulf's national airlines - which are expanding their fleets and route networks - does not bode well for regional carriers such as Air Arabia, according to Nomura Holdings.

A Nomura analyst downgraded the Sharjah carrier to neutral from buy yesterday.

"Smaller, domestically focused regional carriers have less operational and financial strength to compete with national carriers," said Scott Darling, the analyst. National carriers were becoming increasingly comfortable in operating Boeing 777 and Airbus A380 aircraft on short-haul routes "to maintain fleet load factors and access specific premium cabin traffic", he said.

Trading of GFH resumes after months-long hiatus - The National

Trading in shares of Gulf Finance House (GFH), a Bahraini Islamic investment bank, has resumed after a suspension that lasted almost eight months.

The hiatus began in October, when GFH said it was asking shareholders to contribute up to US$500 million (Dh1.83 billion) to a recapitalisation of the company after it ran into financial trouble during the global economic crisis.

The bank also said it would engineer a share consolidation, reducing the number of outstanding shares to increase the stock price.

Egyptian investment tax triggers criticism from exchange chairman - The National

A tax on investments that is being adopted to plug Egypt's budget deficit has sparked a wave of criticism from the business community, led by the chairman of the stock exchange.

Dividend payments and profits from mergers, acquisitions and asset revaluations will be taxed 10 per cent starting next month. Taxes would not be levied on profits gained through trading in stocks.

The government also plans to increase the income tax levied on individuals and companies earning more than 10 million Egyptian pounds (Dh6.1m) a year to 25 per cent, from 20 per cent.

Saudi employment plan could shake economy

Saudi Arabia's plan to limit foreign worker visas in an effort to boost the employment of nationals will have negative effects on the economic growth and inflation rates, according to Citi’s Middle East chief economist.

“There is the possibility that many private sector companies will be shut down as a result of strict implementation ... Their possible failure would be likely to have an impact on economic growth, as the private sector goes through an adjustment period,” Citi’s Farouk Soussa said in a research note.

Companies in Saudi Arabia will have a three-month period to September 7 to achieve a set quota of Saudi employees, Labor Minister Adel Fakieh told Al Arabiya TV on Tuesday.

Saudi Arabia Grants $400 Million to Support Jordanian Economy - Bloomberg

Saudi Arabia granted $400 million to support Jordan’s economy and ease its budget deficit, the Jordanian state-run news agency Petra said, citing Finance Minister Mohamed Abu Hammour.

The grant will help to finance a number of projects “which will reflect positively on the level and the quality of services provided to citizens and will help overcome the difficulties faced by the public budget,” the Jordanian minister was quoted as saying.

Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants to support its budget and current-account deficits. Political turmoil that has engulfed the Middle East in recent months led to unrest in Jordan by opposition groups seeking faster social and political change.

Fitch assigns long-term IDR of ‘AA-’ to NBKI; short term ‘F1+’

Fitch Ratings has assigned National Bank of Kuwait (International) plc (NBKI) a Long-term Issuer Default Rating (IDR) of ‘AA-’, a Short-term IDR of ‘F1+’ and a Support Rating of ‘1’ The Outlook is Stable.

NBKI is the London-based subsidiary of National Bank of Kuwait (SAK) (NBK; ‘AA-’/’F1+’). NBKI’s ratings reflect expected support from its parent, NBK, in case of need. Fitch’s expectation of support is based on NBKI’s close integration with its parent, both from a business and a risk management perspective. It represents the European arm of the National Bank of Kuwait Group. Fitch has not assigned an Individual Rating due to NBKI’s close integration with its parent: virtually all of the bank’s franchise and business is in some way related to its parent.

NBKI’s business focuses mainly on private banking for high net worth (mostly GCC) individuals, and handling relationships with large European and multinational corporate entities that conduct business in the Middle East, and are usually also clients of NBK.

gulfnews : Central Bank Islamic CDs climb to Dh12b

Islamic certificates of deposit issued by the UAE Central Bank have run up a balance of Dh12 billion, equivalent to $3.27 billion, Central Bank Governor Sultan Bin Nasser Al Suwaidi said in Abu Dhabi yesterday.

In his welcoming speech to delegates at a seminar titled ‘Islamic finance in a global perspective', Al Suwaidi said: "During the fourth quarter of 2010, the Central Bank of the UAE was able to create an Islamic CD [certificate of deposit], which has been very successful since inception in November 2010."

Figures of Islamic banks are impressive, but there are some challenges, Al Suwaidi said. The first such challenge is the short-term liquidity management at Islamic banks and other Islamic financial institutions, he added.