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Monday, 13 June 2011

Saudi Arabia Prepares for a Crude Oil War

In a truly alarming development, Saudi Arabia is gearing up for all-out crude oil war in the Middle East.

Right now, the world is in a deflationary state.

While countless other outlets have gone on endlessly about inflation, we have warned repeatedly in these pages that the "D" word is not dead. U.S. Treasury bond yields, a harbinger of deflation, have been falling, not rising. Now the broad markets are falling too.

Reuters Summit-Oman a contender in oil benchmark title race | Reuters

Oman oil futures have the potential to overtake the world's top two benchmarks and limited progress so far reflects the difficulty of changing the status quo, the head of the Dubai Mercantile Exchange said on Monday.

The DME launched its Oman contract in 2007 with the aim of challenging Brent LCOc1 and U.S. crude futures CLc1, also known as WTI, but so far that has not happened.

On Thursday, there were 9,516 open interest positions on the DME Oman Crude Oil Futures Contract, compared to a record of more than 1.6 million held in U.S. crude futures on the New York Mercantile Exchange, which is owned by the Chicago Mercantile Exchange (CME.O: Quote). DME is part-owned by the CME

MENA stock markets close - June 13, 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)

Dubai Said to Sell 10-Year Bonds With Put Option in 5 Years - Bloomberg

Dubai is meeting investors in London today ahead of a planned sale of 10-year bonds that will have a put option after five years, according to three bankers familiar with the deal.

The Persian Gulf emirate will issue the notes as part of a $5 billion bond program and will use proceeds for construction spending and to fund the sheikhdom’s budget, according to a prospectus. Yields on Dubai’s $1.25 billion of sukuk bonds due in 2014 fell to 4.78 percent today, from as high as 6.69 percent on Jan. 31, according to data compiled by Bloomberg. The yield dropped to 4.573 percent on June 1, the lowest since their sale in October 2009.

“Investors are all the more comfortable with Dubai risk,” Rawad Hakme, co-manager of fixed income allocation at Dubai- based unit of Egyptian investment bank EFG-Hermes Holding SAE said in an e-mail today.

Middle East Crude-Dubai curve flips to contango | Energy & Oil | Reuters

Saudi Arabia's move to increase oil output dampened sentiment across the Middle East crude market on Monday as the Dubai swaps curve flipped into contango for the first time this month, indicating higher availability of prompt supply.

The Brent/Dubai Exchange of Futures for Swaps (EFS) jumped to an intra-day value of almost $8 a barrel in late trade, the highest since 2005, another sign that supplies of heavy sour crude are expected to remain ample in the months to come.

A contango, or a price structure where prompt oil is cheaper than for later delivery, set in for the first two months of the Dubai swaps curve, with July 11 cents cheaper than August as its expiry neared and August one cent cheaper than September.

QFC Authority Publishes 2010 Annual Review "Senior managers very pleased with the progress being made"

The Qatar Financial Centre Authority (QFC Authority) today published its 2010 Annual Review and gave a positive and upbeat assessment of the financial services sector. 2010 represented the first operational year for the QFC Authority’s three hub strategy, which is positioning Qatar as regional leader in asset management; reinsurance; and captives as well as providing support for a full range of financial services providers.

Shashank Srivastava, acting CEO of the QFC Authority commented: “With the guidance provided by the QFC Authority Board and support of the Qatari Government, last year exceeded expectations. The global financial community emerged from two difficult years, into a period of controlled growth. Business people are more risk adverse and diligent about the investments and relationships they enter into which consequently has highlighted Qatar as an attractive destination for capital.

“Qatar’s stable macroeconomic environment, strong institutional framework and the government’s diversification policies have helped the country to achieve a ranking of 17th in the World Economic Forum’s Global Competitiveness Index for 2010-11, the highest rank in the MENA region. The growing importance of Qatar as a place to do business in the region is demonstrated by the growing interest and enquiries from firms seeking licenses at the QFC”.

Mideast Borrowers Return to Loan Market After ‘Arab Spring’ - Businessweek

Sabic Capital, Commercial Bank of Dubai, and Investment Corp. of Dubai are leading a 43 percent increase in lending to Middle Eastern companies as political unrest in the region wanes.

Middle Eastern borrowers are in the market with $5.5 billion of loans, which if completed would bring second-quarter volume to $11.5 billion, according to data compiled by Bloomberg. That compares with $8 billion raised in the first quarter.

Companies are returning to the market after the so-called Arab Spring toppled autocratic leaders in Egypt and Tunisia. The cost of insuring Egyptian debt against default tumbled to the lowest since Tunisian ruler Zine El Abidine Ben Ali fled following weeks of protests against unemployment, corruption and dictatorship in January. President Hosni Mubarak of Egypt resigned less than a month later.

Saudi's Tuwairqi inks $1.9 bln restructuring deal -MEED, Saudi Arabia Industries - Maktoob News

Saudi steelmaker Al-Tuwairqi Group has signed a $1.9 billion debt restructuring of bank loans, London-based MEED said, citing anonymous bank lenders.

Final documentation for the restructuring has been signed by a group of 26 banks including National Commercial Bank, National Bank of Kuwait and Standard Chartered .

Restructuring details were not disclosed but banks are not taking a haircut on the principal loans made to the company.

HSBC raises DP World price target | Alrroya

HSBC raised its price target on DP World, and said the Dubai-based port operator has attractive container terminal assets and a "fairly healthy" profit growth forecast for the next few years.

The brokerage raised its price target on the stock to $13.93 from $11.20, but maintained a "neutral" rating citing valuation.

"DPW offers broad-based exposure to global container terminals, emerging markets generally and fairly healthy forecast profit growth in the next few years," the brokerage said.

Mashreq Qatar eyes 40 pct surge in 2011 revenue, Qatar Industries - Maktoob News

Mashreq Qatar, the Doha-based arm of Mashreq Bank , expects 2011 revenue to rise more than 40 percent to 350 million riyals ($96.20 million) backed by its treasury operations and strong deposit growth.

Capital markets and treasury are becoming an increasing contributor to Mashreq Qatar's business, despite the slowdown in bond issuance in the region following the political turmoil, Howard Kitson, country head of Mashreq Qatar, said in an interview.

"Towards the end of the year we will see an increased appetite for corporate bond issuance as the region calms down," he said. "We're short-listed for at least three issuances (out of Qatar) in the next 12 months."

Dubai Shares Rise on Bets Drop Overdone Given Earnings Growth - Bloomberg

Dubai’s benchmark stock index led Persian Gulf markets higher and headed for the biggest increase in almost two weeks on bets a decline the past month was overdone based on prospects for earnings and economic growth. Emaar Properties PJSC (EMAAR), builder of the world’s tallest skyscraper, advanced 1 percent and Arabtec Holding Co. (ARTC), the United Arab Emirates construction company, jumped the most this month. The DFM General Index (DFMGI) rose 0.3 percent, the most since June 9, to 1,556.38 at 10:54 a.m. in Dubai. The measure is headed for the biggest gain since June 1. Excluding today, it has lost 2.8 percent the past month. The Bloomberg GCC 200 Index (BGCC200) of the region’s stocks increased less than 0.1 percent.

“Markets were oversold during the last month, so some investors may now be positioning in preparation for second- quarter results,” said Samer Darwiche, financial analyst at Gulfmena Investments in Dubai. “It looks like summer has started in most markets with the low volumes we are seeing.”

A decline of 4.6 percent this year has left the 30 companies in Dubai’s benchmark index valued at about 8.9 times estimated earnings, data compiled by Bloomberg show. That compares with 10.9 times for the MSCI Emerging Markets Index. - Riyadh’s offshore progress marks bid to cool crude

Saudi Arabia’s crude production is surging and the kingdom is busy developing new super-giant fields in the clearest sign that Riyadh sees sustained demand growth for oil.

The kingdom has accelerated the development of its super-giant Manifa oil field, in the waters of the Gulf. State-owned producer Saudi Aramco announced in its 2010 annual review, published earlier this month, that the field would pump at its maximum rate of 900,000 barrels a day by 2014, a decade earlier than previously thought.

The accelerated timetable, which received little attention as it was overshadowed by the Opec meeting some days later, suggests that Riyadh sees greater oil demand. The company said in its 2009 annual review that Manifa, which has a price tag of about $11bn, would not reach full capacity until 2024.

Dubai Meets Investors in London on $5 Billion Bond Plan as Yields Decline - Bloomberg

Dubai’s government will meet fixed- income investors in London today and tomorrow ahead of a planned bond sale as yields fell to the lowest in 20 months.

The Persian Gulf emirate set up a $5 billion bond program and will use proceeds from the sale for construction spending and the budget, according to the prospectus. Yields on Dubai’s $1.25 billion of sukuk bonds due in 2014 fell to the lowest level since their sale in October 2009 to 4.573 percent on June 1 from as high as 6.69 percent on Jan. 31, according to data compiled by Bloomberg. The yield was at 4.76 percent today.

“There is likely to be solid demand for such a deal,” Chavan Bhogaita, head of the markets strategy group at state- controlled National Bank of Abu Dhabi PJSC (NBAD), said in an e-mail yesterday. “There has been a marked improvement in investor sentiment toward the Dubai credit story recently and credit default swaps spreads demonstrate this very clearly.”

gulfnews : Dubai investor floats aircraft seats joint venture

International Project Management Investment (IPM), a Dubai-based investor, yesterday said it has entered into an agreement with Corporate Consulta SA of Fribourg, Switzerland, to create a Dh1-billion advanced aviation technology joint venture — Jiahang United Seating Technologies (JUST).

JUST was structured by and between Aerospace Life-Support Industries and Corporate Consulta, a Swiss corporation that has Aerospace Life-Support Industries and United Seating Technologies. United Seating Technologies brings together design partner Bertone, and an engineering and manufacturing partner Optimares, with ultramodern capabilities.

United Seating Technologies UAE (UST-UAE), investment project of IPM Investment will be a 30 per cent equity shareholder in the Swiss United Seating Technologies.

gulfnews : New vehicle sales slow down in UAE

Automobile dealerships in the Gulf could be in line for their worst first-half performance since 2009 as new vehicle sales slow down to a crawl in the UAE. In Bahrain, sales continue to be under extreme pressure as the retail sector reels from the recent upheaval.

Saudi Arabia, in contrast, provides the sole silver lining and auto industry sources are hopeful that the second half of June will see heightened activity in the wake of the government's recent cash bonus payments for nationals.

gulfnews : Venture capital transactions pick up pace in the region

The venture capital industry in the region is expected to see more deals this year with most leading players claiming strong deal pipelines and improving the business environment in the Middle East and North Africa (Mena) region.

Releasing the first collaborative venture capital (VC) report in the Mena region in Dubai yesterday, Mena Private Equity Association (MPEA), which is made up of leaders from venture capital industry in the region, said there had been a three-fold increase in the number of venture capital deals in the past two years, despite the global financial downturn.

"There are clear indications of an uplift in the industry. When we consider deals in private equity and pure venture capital deals together, the upward trend is more evident," said Tom Speechley, chief executive of Riyada Enterprise Development (RED), the private equity platform of Abraaj Capital.

Complex legal minefield in need of a federal overhaul - The National

In May 2010 Sultan bin Saeed Al Mansouri, the UAE Minister of Economy, said that by the end of the year the Government expected to pass a law governing commercial arbitration.

The idea was to strengthen the country's investment environment. The minister said arbitration "is one of the key instruments to resolve disputes amicably, and thus enhance investor confidence". And, he added, the law would "help prevent accumulation of cases in courts".

But 13 months later, the proposed law remains a work in progress, its final form still being debated.

Nothing left to chance this time - The National

Sovereign wealth funds have poured billions of dollars into ailing western banks in the past three years, but the chequered record of those investments leaves doubt about their willingness to support a new wave of bank re-privatisations. Asa Fitch and Gregor Stuart Hunter report

At the height of the credit crunch in 2007, rising defaults on sub-prime mortgages forced big western banks to raise capital from large investors who were not looking for a quick profit.

Back then, banks were still wary of government assistance, so they found help from what were the world's only large-scale investors who fitted the bill: sovereign wealth funds. For the funds, the investments presented golden opportunities to get a slice of the lucrative global banking pie.

Rasmala ends equity fund as focus shifts - The National

Rasmala, a Dubai investment bank, has withdrawn its private equity fund as part of its restructuring efforts.

The fund, which is Sharia-compliant, was launched last year and had targeted investment of US$300 million (Dh1.1 billion). Rasmala will now focus on single deals.

"We felt in this private equity fund investors had less of an appetite but we have completed a very extensive restructuring," said Ali al Shihabi, the founder and chairman of the bank.

Gulf Times – Qatar introduces withholding tax

Qatar has introduced withholding tax and will also issue tax cards to corporates that are subject to taxes, according to PricewaterhouseCoopers (PwC).

The PwC has welcomed the finalised executive regulations for the Qatar Tax Law (Law No 21 of 2009), which were published last Thursday by the Ministry of Economy and Finance but sought tax rulings from the PRTD (Public Revenues and Taxes Department) to ensure more clarity.

“One of the most significant developments of the new tax law was the introduction of withholding tax on payments made to non-residents who do not have a permanent establishment (basically a fixed place of business) in Qatar,” PwC said.

Egypt, UAE back Lagarde's IMF bid - The National

The UAE and Egypt have thrown their support behind the IMF candidate Christine Lagarde as the French finance minister tours the Arab world to drum up support for her bid for the agency's top job.

Ms Lagarde said Bahrain and other Middle East nations were also backing her campaign.

Obeid Humaid al Tayer, the UAE Minister of State for Financial Affairs, said yesterday the "UAE's support for Lagarde to take up the post of the IMF director general sprang out of her role in leading the French Ministry of Finance and in recognition of her achievements, as well as the efforts she made during the G20 meetings under the rotating presidency of France."

FULL: Dubai investment arm's holdings total $70bn | Dubai Investment Co.

The Investment Corporation of Dubai (ICD) owns 23 billion dirhams ($6.26 billion) in listed assets and 235.8 billion dirhams in unlisted companies, a government prospectus showed on Sunday.

Dubai's investment arm agreed in May to a $2.8 billion, five-year loan refinancing with banks which will be the largest loan to emerge from Dubai since its financial crisis.

Here is a breakdown of the fund's investment portfolio of both listed and unlisted companies.

ICD portfolio of listed companies as of April 2011

* Emirates NBD Bank - ICD's 55.6 percent stake in the biggest banking group in the Middle East is valued at 11.75 billion dirhams.

* Emaar Properties - ICD owns a 29.4 stake, worth 6.25 billion dirhams in real estate bellwether firm.

* Dubai Islamic Bank - ICD holds a 29.8 percent stake in the Islamic lender, valued at 2.58 billion dirhams.

* Commercial Bank of Dubai - ICD has a 20 percent holding in the bank with its stake worth 1.17 billion dirhams.

* Union National Bank - The Abu-Dhabi listed bank is 10 percent owned by ICD with the stake worth 834 million dirhams.

* Dubai Investments - ICD has an 11.5 percent stake in the UAE conglomerate worth 404 million dirhams.

* National Bank of Fujairah - ICD holds a 9.8 percent stake in the bank, valued at 457 million dirhams.

Portfolio of companies wholly-owned by ICD as of December 2010

* ICD is the sole owner of 8 unlisted firms, including Dubai Real Estate Corp., valued at 160.2 billion dirhams and Emirates Group, worth 24.4 billion dirhams - its two largest investments.

* ICD is also the sole owner of Dubai Aluminium Company, Emirates National Oil Company, Dubai World Trade Centre, Dubai Duty Free Establishment, Dubai Silicon Oasis and Dubai Airport Free Zone Authority.

Dubai Shopping-Mall Builder Extends Expansion in Egypt on Retail Strength - Bloomberg

Majid Al Futtaim Group, the shopping-mall developer that built Dubai’s indoor ski slope, said the violent change of government in Egypt won’t stop the company from proceeding with its expansion plans.

“Egypt’s fundamentals from a consumer perspective haven’t really changed because of the revolution,” Chief Executive Officer Iyad Malas said in a telephone interview. Sales at the company’s Cairo mall are back to “pre-revolution levels,” he said.

Majid Al Futtaim, based in Dubai, last week asked for permission to construct a mall in Cairo with 160,800 square- meters (1.7 million square feet) of leasable space at a cost of 2.8 billion dirhams ($760 million). The company also plans to extend its Maadi City Centre development.

Dubai's financial crisis laid bare as 217 new properties axed - Telegraph

The revelations came as Dubai laid out plans for a bond issue, in part designed to restore its finances in the wake of the crisis.

The bond documents showed that the country's real estate watchdog cancelled the registered real estate projects over the past two years after the bursting of the property bubble.

The Real Estate Regulatory Authority (RERA) determined that the properties were unlikely to be completed after a review of 450 projects.