|TASI (Saudi Stock Market)||6626.95||0.02%|
|DFM (Dubai Financial Market)||1559||0.22%|
|ADX (Abudhabi Securities Exchange)||2729.28||0.52%|
|KSE (Kuwait Stock Exchange)||6213.7||0.31%|
|BSE (Bahrain Stock Exchange)||1317.28||-0.03%|
|MSM (Muscat Securities Market)||5950.31||0.27%|
|QE (Qatar Exchange)||8501.68||0.24%|
|LSE (Beirut Stock Exchange)||1326.76||-0.02%|
|EGX 30 (Egypt Exchange)||5438.78||0.20%|
|ASE (Amman Stock Exchange)||2111.25||0.39%|
|TUNINDEX (Tunisia Stock Exchange)||4252.21||-0.12%|
|CB (Casablanca Stock Exchange)||11513.2||-0.81%|
|PSE (Palestine Securities Exchange)||494.04||0.34%|
Tuesday, 5 July 2011
Gulf capital markets must confront a stark dichotomy in 2011. Robust fundamentals, underpinned by reviving post-crisis economies and buoyant hydrocarbons prices, have generally failed to lift investor sentiment as political turmoil afflicts much of the region.
The Jasmine revolution that wafted across from Tunisia late in 2010, swiftly bringing political change in Cairo in its wake, has mutated into a series of violent conflicts that have pitted state security forces against protest movements in countries from Libya to Syria and Yemen.
A deadly stalemate has descended, bringing to an end the hopes that the tide of unrest could swiftly usher in democratic change.
The ongoing political troubles across the MENA region pose only a minor risk to Gulf banking institutions, S&P said, as the majority of GCC banks covered by the agency have limited operations and exposures to those "underbanked" economies. Nevertheless the ratings agency could not rule out a further real estate correction, and noted that nonperforming loans (NPLs) have risen in Bahrain and theUAE.
One of last month's most interesting developments in Persian Gulf power politics played out not in the Middle East, but in Vienna, Paris, and Washington. For these Western cities were the venues for an important series of exchanges that revealed much about the changing balance of power among the Middle East's major oil producers, including the Islamic Republic of Iran and the Kingdom of Saudi Arabia. In particular, these exchanges underscored how Saudi Arabia's current regional strategy -- which we have previously described as"counter-revolutionary" -- is weakening the Kingdom's position.
Saudi Arabia came to last month's OPEC ministerial meeting in Vienna determined to get the oil producers' group to raise production quotas for member states, in order to lower oil prices around the world. The Saudis have long had a more conservative view of the price elasticity of demand for crude oil than their OPEC brethren. Under current circumstances, however, the Kingdom had a number of other reasons for wanting to engineer a reduction in oil prices -- something that the United States and other Western countries were eager to see.
Among other considerations, lowering oil prices is seen in Riyadh as a way of increasing economic pressure on the Islamic Republic. In this regard, it is useful to review the speech given last month by Prince Turki al-Faisal (Saudi Arabia's former intelligence chief and Ambassador to the United States, whom we know and regard as a highly capable diplomat, strategist, and defender of the Kingdom's interests and regional position) to a closed-door gathering of U.S. and British military officers at a NATO air base in the United Kingdom. According to the Wall Street Journal, which obtained a copy of Turki's remarks, the Prince told his audience that "Iran is very vulnerable in the oil sector, and it is there that more could be done to squeeze the current government." More pointedly, Turki said that "Saudi Arabia has so much [spare] production capacity -- nearly 4 million barrels per day -- that we could almost instantly replace all of Iran's oil production."
Standard & Poor’s discussed, among other issues, the above-average profitability of Saudi banks in a report published on Monday.
In a series of questions and answers, Standard & Poor’s analysts Goeksenin Karagoez, Emmanuel Volland, Paul-Henri Pruvost and Nicolas Hardy also addressed issues such as debt restructuring and provisioning for banks in the GCC, especially Dubai, Bahrain and Kuwait.
Here are extracts of some of the questions and answers, from the report titled “Q&A: Trends And Events Affecting Banks In The Gulf In 2011.”
Over half of this ($18.5 billion) is debt taken on to finance the Dubai Financial Support Fund (DFSF) which has used the money to provide finance to Dubai's struggling government enterprises (GREs), specifically Dubai World & Nakheel. In theory these GRE's have until 2014 to repay the DFSF through asset sales and their own revenues.
This should allow the government to meet the $20 billion spike in debt repayments in 2014 when its borrowings to fund the DFSF mature, according to Samba Financial Group's Dubai Government Debt Update Note issued on Monday.