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Tuesday, 7 June 2011

Kuwait’s Net Assets Increase to $296 Billion, Lawmaker Says - Bloomberg

Kuwait’s government assets, managed by the country’s sovereign wealth fund, rose to 81.2 billion dinars ($296 billion) in the fiscal year that ended March 31, from 75.8 billion dinars in the previous year, lawmaker Waleed al-Tabtabai said today.

Al-Tabtabai was speaking to reporters after a closed meeting of parliament to discuss the financial position of the country. Bader Al-Saad, managing director of the Kuwait Investment Authority, attended the meeting.

MENA stock markets close - June 7, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
6614.13-0.65%
DFM (Dubai Financial Market)
1564.880.09%
ADX (Abudhabi Securities Exchange)
2690.050.45%
KSE (Kuwait Stock Exchange)
6314.10.02%
BSE (Bahrain Stock Exchange)
1339.160.50%
MSM (Muscat Securities Market)
6053.320.16%
QE (Qatar Exchange)
8183.50.81%
LSE (Beirut Stock Exchange)
1357.95-0.94%
EGX 30 (Egypt Exchange)
5421.230.35%
ASE (Amman Stock Exchange)
2154.77-0.27%
TUNINDEX (Tunisia Stock Exchange)
4131.14-0.02%
CB (Casablanca Stock Exchange)
12085.2-0.42%
PSE (Palestine Securities Exchange)
500.950.17%

Negative outlook for GCC property - Emirates 24/7

Moody’s Investor Service has kept its negative outlook for the real estate sector in the UAE and other Gulf oil producers but changed it into positive for Saudi Arabia following the massive public financial initiative announced by King Abdullah over the past few months.

Moody’s noted that business conditions in the six-nation Gulf Cooperation Council (GCC) are continuing to stabilise, underpinned by the modest global economic recovery that is currently underway.

It said that since the start of 2011, elevated oil prices – which recently increased even further as a result of political unrest in parts of the Middle East and North Africa (Mena) – have added momentum to the GCC’s overall economic growth.

Bahrain Bourse Plans Short-Selling, DvP Next Year to Boost Trading Volumes - Bloomberg

Bahrain’s exchange plans to start short-selling and the so-called delivery-versus-payment system in 2012, criteria for an upgrade at MSCI Inc. (MSCI), as it seeks to boost trading volumes amid unrest in the Middle East.

"The changes will lead us eventually to meet the criteria" at the index provider, Khalifa Bin Ebrahim Al Khalifa, deputy director at Bahrain Bourse, said in an interview at the Bloomberg office in Dubai today. "We have a competitive advantage against the regional stock exchanges; with these changes, we’ll have even more."

The measures will be implemented in the first quarter of 2012, and DvP will be started "to an extent," he said. Bahrain has no foreign ownership limits in stocks, Al Khalifa said, unlike Qatar and the United Arab Emirates, which also have frontier market status at MSCI.

Capital Drain - Money - Zawya/alifarabia

The Middle East, led by troubled states such as Egypt and Lebanon, is expected to see private capital flows in the region drop to $56-billion in 2011 from $77-billion in 2010.
Capital inflows in the Middle East North Africa region will drop this year, as investors avoid the region's uncertain political and economic conditions.

"In the MENA region, we project economic uncertainty to result in a sharp retrenchment in flows. Relative to our January report, inflows to Egypt and Saudi Arabia are forecast to be some $17 and $15 billion lower this year, respectively," says an Institute of International Finance (IIF) report.

Egypt has suffered withdrawals of about $16 billion in private foreign capital following the political turmoil earlier in the year. Moreover, a sharp slump in tourism resulted in a deterioration of the current account deficit. These two losses have been financed by running down reserves. Official reserves fell by about $8 billion between December 2010 and April 2011, says the IIF.



The capital drain in the Middle East is in sharp contrast to increased inflows in other emerging markets.

After rising to $990-billion in 2010, private flows in emerging economies are expected to cross $1.04 trillion in 2011 and $1.06 billion ion 2012, with majority of the flows heading towards China and Brazil.

Of course, not every country in the region is expected to suffer. Oil-exporting countries are generally expected to see capital inflows into their economies.

In fact, the turmoil has shuffled capital flows considerably. While oil-exporting countries have seen their exports revenues rise, and while some portion is being used to launch large-scale projects, much of it is being refinanced back into the global economy.

A recent Morgan Stanley report estimates that up to $1-trillion petro-dollar assets will be looking to find a home over the next year.

Markets undeterred by UBS downgrade of UAE - The National

Local markets rose even after UBS downgraded the UAE, citing lacklustre growth and declines in return on equity for shares of publicly listed companies.

The country was removed from UBS's "preferred country basket," citing a lower growth compared with other frontier markets.

"The UAE market no longer makes returns above its cost of capital," the Swiss bank said in a note to clients. "Uncertainty around the MSCI decision on June 21 to reclassify UAE as an emerging market adds to the risk short term."

Oman, Qatar and Lebanon will remain in the "preferred country basket," it added.

Kuwait sovereign fund says open to RBS stake buy | STV News

The Kuwait Investment Authority (KIA) would consider buying a stake in Royal Bank of Scotland but no offer has yet been made, the sovereign wealth fund's managing director said on Tuesday.
"They did not offer us a stake... When we get an offer, we will look at it," Bader al Saad told reporters outside Kuwait's parliament, adding the KIA had met with RBS.

FT.com - Aabar eyes farm deals with Glencore

Aabar is eyeing joint investments with Glencore as the multibillion-dollar Abu Dhabi sovereign wealth fund seeks to deepen its relationship with the world’s largest commodities trader.

Aabar became the largest non-employee shareholder in Glencore after the trader’s $10bn flotation last month in London, owning a 1.4 per cent stake worth $850m.

Mohamed al-Husseiny, Aabar chief executive, said the investment was part of a strategy similar to one that the sovereign wealth fund has followed with Daimler, the German car manufacturer in which it owns a 9 per cent stake. Besides the shareholding, Aabar and Daimler have partnered in other ventures, including the Formula 1 racing team, truck production in Algeria and electric vehicles.

$2.8bn loan deal largest for Dubai since the property crash « ArabianMoney

Rising optimism about the recovery prospects of Dubai has allowed the government’s Investment Corporation of Dubai to borrow $2.8 billion, the largest loan deal since the property crash and global financial crisis, with the $1.6 billion conventional tranche priced just 350 points above Libor.

The Financial Times reports that HSBC, Citi and Emirates NBD are co-ordinating the conventional funding while the $1.2 billion Islamic tranche is being led by Standard Chartered and Dubai Islamic Bank. The Investment Corporation of Dubai is a holding group whose assets include Emirates Airline and Dubai Aluminium, two of Dubai’s most profitable wholly state-owned companies.

Oxford Economics report on why Dubai’s aviation model works - Hurriyet Daily

Aviation supports more than 250,000 jobs and contributes over $22 billion, representing around 19 percent of total employment in Dubai and 28 percent of Dubai’s GDP, according to a report by a leading global research firm announced last week.

Emirates Airline and Dubai Airports announced last week the results of a report conducted by leading global research firm Oxford Economics, which examined Dubai’s aviation sector. The report found the sector to be consensus-based, highly competitive and consumer-centric; generating significant economic benefits for Dubai and the countries it connects. The 60-page report entitled, “Explaining Dubai’s Aviation Model,” further concludes that Dubai’s success is not evidence of unfair competition or government support but the result of an effective aviation model.

Oxford Economics’ research calculated that Dubai’s aviation sector supports 125,000 total jobs in the emirate. The study also quantifies the wider catalytic benefits aviation generates through tourism and connectivity. As the overwhelming majority of foreign visitors who travel to Dubai arrive by air, Oxford calculates their spending supports nearly 134,000 jobs and contributes an additional $7.9 billion to Dubai’s GDP. In total, aviation supports more than 250,000 jobs and contributes over $22 billion; representing around 19 percent of total employment in Dubai and 28 percent of Dubai’s GDP, according to the report. The report also examines the direct and flow-on economic benefits of 10 case-study countries.

Tameer repossesses 400 units across projects in Dubai - Emirates 24/7

Tameer Holding, a Dubai-based developer, has repossessed 400 units till date and expects no more defaults ahead of handover of its two projects next year, the company president told Emirates 24|7.

“During the last two years we put in place a strategy to deal with each investor particular situation, which has resulted in a considerable reduction in the rate of defaults already. We don’t expect defaults at handover of our Princess Tower and Elite Residence in Dubai Marina, since the customer that are reaching that point have already paid a significant percentage of the purchase price,” said Tameer President Federico Tauber.

In November, Tauber told this website that they company had repossessed 200 units.

FT.com - Loan deal highlights Dubai recovery hopes

Dubai’s government has agreed terms on the largest loan issued by the emirate since the global financial crisis hit the business hub.

The five-year deal underscores rising optimism in a recovery for the emirate’s trade and tourism focused economy, though longer-term issues over debt repayment linger.

Investment Corporation of Dubai, the government holding company, will refinance $2.8bn of the $4bn tranche of its $6bn loan that matures this year, bankers and officials said.

Brent drops below $114 on expectations of OPEC target hike | Energy & Oil | Reuters

Brent crude fell below $114 a barrel on Tuesday on expectations OPEC may raise its production target this week and lingering concerns that a weak economic outlook will dent demand.

Top oil exporter Saudi Arabia and other Gulf producers, including Kuwait and the United Arab Emirates, favour a hike in output on concerns that high oil prices are limiting economic growth.

But delegates gathering in Vienna for the OPEC meeting on Wednesday say a deal to do anything more than just close the gap between OPEC's out-of-date official production target and actual supplies could prove difficult.

Economy takes top place among Egypt's concerns - The National

Good governance is arguably a country's best resource. In Egypt, according to the US-based Global Financial Integrity, corruption and crime cost the country $6 billion (Dh22 billion) a year during the presidency of Hosni Mubarak. So with Mr Mubarak facing charges, can Egypt balance its books any better?

Donors are hopeful. The United States and Saudi Arabia have together pledged to inject the same amount of cash into the economy that was once stolen on an annual basis. The G8 is also throwing in billions, and Washington plans to forgive more than $1 billion in Egyptian debt. These are all statements that will build much-needed confidence for a fledgling government burdened by foreign debt.

But as national rescue packages have proved time and again, aid alone does not grow an economy. Targeted programmes must be bottom up, encouraging democratisation and judicial reforms that an open economy needs to flourish. Those may be overly ambitious goals for today's Egypt, but an economic recovery has to be felt in the street to make a difference to the country's long-term stability.

Appeals court orders inquiry into al Boom liquidation committee - The National

Abed al Boom's lawyer told the Court of Appeal yesterday a liquidation committee's list of people who had filed for compensation did not match the names listed in his client's case files.

The court then ordered an inquest into the liquidation committee.

The Emirati property magnate al Boom was convicted by a special tribunal court on February 28 of 3,695 counts of fraud and sentenced to 923 years and nine months in prison - three months for each offence.

Egypt drops dividend tax plan - The National

Egypt's finance ministry has scrapped plans to impose a capital gains tax on dividend payments after receiving a torrent of criticism from the business community.

The plan's many detractors, including the chairman of the Egyptian Exchange and Naguib Sawiris, an Egyptian billionaire businessman, argued the move would be detrimental to the country's economic recovery, particularly in the capital markets.

"We sat with them [the finance ministry] and showed them the numbers, and asked for the exemption," said Mohammed Abdel Salam, the chairman of the Egyptian Exchange. He said he showed the ministry officials that the taxes would have generated less than 2 billion Egyptian pounds (Dh1.23bn) in extra revenues while hurting companies' ability to attract investors.

Adia buys stake in Norway gas - The National

The Abu Dhabi Investment Authority, one of the world's biggest sovereign wealth funds, is part of a consortium paying US$3.25 billion (Dh11.93bn) for a stake in Gassled, a venture that owns almost all of Norway's natural gas pipelines.

Solveig Gas Norway, a holding company 25 per cent owned by the Abu Dhabi Investment Authority (Adia), has agreed to buy 24.1 per cent of the Gassled joint venture from Statoil, Norway's largest oil company. The other shareholders in Solveig Gas are the Canada Pension Plan Investment Board and Allianz Capital Partners, based in Munich, which own 45 per cent and 30 per cent, respectively.

The deal is one of the largest of late for Adia in energy infrastructure, and comes as sovereign funds shift away from investments in financial services companies and increasingly towards infrastructure and commodities. According to an annual review from last year, between 1 and 5 per cent of Adia's portfolio is targeted for investments in infrastructure.

ADCB hits two-year high - The National

Abu Dhabi Commercial Bank was a bright spot on the capital's exchange yesterday as the lender proceeded with the auctioning of its 25 per cent stake in a Malaysian bank.

ADCB's shares rose to their highest level in more than two years, gaining 2.7 per cent to Dh3.03 after Reuters reported the bank was going ahead with plans to sell its holding in RHB.

Two other Malaysian lenders, Maybank and CIMB, are separately trying to merge with RHB.

Saudi Arabia to lead push for oil rise at Opec meeting - The National

Saudi Arabia and its Gulf allies are expected to press for an increase in Opec oil supply at a policy meeting in Vienna tomorrow, in the face of opposition from Iran.

Delegates from the 12-member group are scheduled to meet tomorrow at Opec's headquarters for the first time since political unrest began shaking the Middle East.

It is feared the recent regional problems, which have helped to force the price of Brent crude oil as high as US$127 a barrel, the nuclear disaster in Japan that began in March and debt crises across Europe are threatening to slow the pace of the global economic recovery.

Gulf Times – RBS ‘unaware of Qatar discussion to buy stake’

The Royal Bank of Scotland is not aware of any specific discussion in relation to Qatar or anyone else trying to pick up a stake in RBS, which is now 80% owned by the UK government.

“At the moment, of course, anyone can buy into RBS through the normal stock market route - as we are a major listed company. So that can happen anywhere, any time,” said RBS Group chief executive Stephen Hester in an interview with Gulf Times.

“I think what you are referring to, is linked to speculations about when the UK government might actually begin to sell its shareholding in RBS. But unfortunately that is not in my control. The UK government will make its own decision though they have not made any announcement on when they will sell the RBS shares.

Cabinet members discuss Kuwait's financial status » Kuwait Times Website

In an extraordinary meeting of the cabinet held yesterday at Bayan Palace and chaired by His Highness the Prime Minister Sheikh Nasser Al-Mohammad Al-Sabah, the cabinet members discussed Kuwait's financial status for the fiscal year that ended on March 31, 2011.

Following the meeting, Minister of State for Cabinet Affairs Ali Al-Rashid stated that Minister of Finance Mustafa Al-Shamali, along with the Managing Director of the Kuwait Investment Authority Bader Al-Saad and senior ministry officials, provided the cabinet with details of the state's financial status, including liabilities, and statements on the future generations fund and public reserve for 2011 in comparison to the corresponding period in 2010.

The ministers then discussed the best means to channel the state's revenues, as well as searching for new sources of income, also conferring on cutting down on expenditures and managing financial waste in all aspects, Al-Rashid noted.

FT.com / Commodities - Saudis raise oil production to curb prices

Saudi Arabia has been quietly increasing its crude oil production ahead of Wednesday’s meeting of the Opec oil cartel, in a sign that Riyadh is trying to bring oil prices down to more comfortable levels for consumers in the US, Europe and China.

The kingdom boosted production in May by about 200,000 barrels a day and it is on course to increase it by another 200,000-300,000 b/d this month, taking its output above the critical 9m b/d level for the first time since mid-2008.

The rise comes as the seasonal refining maintenance seasons ends, increasing global demand for oil.

FT.com / Comment - Time to stop propping up Egypt’s currency

Since January’s ousting of Hosni Mubarak as president, Egypt’s economy has come under enormous strain. Tourism has plummeted, foreign capital has fled and domestic investment has all-but stalled. The International Monetary Fund’s $3bn budget support plan, announced on Monday, came not a moment too soon.

Even so, Egypt’s problems continue to mount. Unemployment is rising: some estimates suggest about 800,000 people have become unemployed in the past three months, while the country’s workforce amounts to only a third of its population. Labour protests across several sectors have also become a source of unease for international investors

The biggest worry, however, is Egypt’s currency. The military caretakers are deploying foreign reserves to try and prop up the Egyptian pound, with the result that reserves have dropped from $34bn to $28bn in three months. If this trend accelerates Egypt is likely to come close to having no hard currency reserves by the end of the year. Market speculation and sales of pound-denominated holdings could then follow, plausibly leading to a currency collapse, and yet more economic and political turmoil.

Replacing Expats - Zawya

Creating jobs is central to the new Saudi economic strategy. After unleashing a $130-billion investment programme, the Kingdom has now unveiled its accompanying job creation plan with a renewed push for Saudiization. Can it solve Saudi Arabia's unemployment problems, or hurt the economy and drive talent foreign labor away from the country?

Saudiization has been given a new lease of life. Worried about domestic unrest and the political fallout of unemployed Saudis, the Kingdom has recently made a concerted push to embark on an unusually aggressive drive to encourage companies to recruit Saudis and "compete with one another in employing Saudis in order to qualify for the various incentives offered by Labour ministry," according to the minister Adel Fakieh.

The speed and earnestness with which the Kingdom has moved on "Nitaqat" has taken analysts by surprise.