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Wednesday, 3 August 2011

GCC should stop pricing oil in US dollars, says DIFC chief economist - Zawya

As the US debt situation has revived concerns about the strength of the US dollar, the Dubai International Financial Center (DIFC) Authority has advised GCC countries to move away from pricing oil in dollars towards a basket of currencies that would include the Chinese yuan.

Commenting on the impact of US monetary policy on GCC economies, Dr Nasser H Saidi, chief economist and head of external relations of DIFC, told Muscat Daily that to avoid the danger of deep depreciation of the dollar, GCC countries should move away from pricing oil in US dollars towards a basket of currencies that would include the yuan.

'Indeed, I am in favour of using the yuan for clearing and settling all GCC trade with China, who has become our biggest trade partner.'

MENA stock markets close - August 3, 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's biggest fall in week - The National

Dubai shares fell the most in a week yesterday but avoided the sharp drops seen in the US as ratings agencies warned they may downgrade the world's biggest economy.

Emaar Properties declined 1.3 per cent to Dh2.95. The Dubai Financial Market General Index was down 0.5 per cent to 1,527.42 points, the most since July 25.

But Mohammed Ali Yasin, the chief investment officer at Abu Dhabi's CAPM Investments, said: 'It's encouraging we did not see the same drops as we saw in the US. What's happening abroad is putting additional pressure on these markets.'

Crude Oil Declines to Five-Week Low on Concern U.S. Economy Is Faltering - Bloomberg

Crude oil dropped to a five-week low on concern that a faltering economy will curb fuel demand in the U.S., the world’s biggest oil-consuming country.

Futures declined as much as 2.2 percent after a report showed service industries expanded in July at the slowest pace since February 2010. The decline accelerated after the Energy Department said crude oil inventories climbed 950,000 barrels to 355 million last week.

“The main driver is the economy,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “If the U.S. economy is slowing the easiest path for oil is lower. We’ll soon be testing support just below $90.”

UAE's First Gulf Bank issues 5-year US$650 million Sukuk to expand Islamic operations -

First Gulf Bank PJSC, (FGB), the leading financial partner of choice in the UAE, has received excellent investor endorsement through a six times oversubscription of its USD 650 million Sukuk (Islamic bonds) issuance.

The FGB Sukuk roadshow started on Thursday, 21st July 2011and invited Fixed Income investors from the UAE, Asia and Europe to participate. The book building exercise and the roadshow were closed on 26th July.

The final price for the five-year Sukuk was set at 200 basis points above midswaps. The Regulated S Bonds are listed in London and retain a fixed profit rate of 3.797 % p.a. Proceeds from the Sukuk are to be used for Islamic general corporate purposes and to fund the growth of the FGB’s Islamic loan book.

Bahrain escapes downgrade at Fitch after political risk abates -

Bahrain's creditworthiness escaped a possible downgrade at Fitch Ratings because of reduced near-term political and economic risks in the island-kingdom that contended with anti-government protests earlier this year.

Fitch said it removed the Gulf kingdom from its Credit Watch Negative list for borrowers facing a possible downgrade.

Bahrain’s long-term foreign-currency issuer default rating was affirmed at BBB, the second-lowest investment grade, and its local-currency issuer default rating at BBB+.

Saudi Arabia’s Twin Peaks Oil Story - The Source - WSJ

The world has changed so much in the last 30 years that the political and economic landscape of 1980 is almost unrecognizable today. Back then, China had barely begun its economic transformation, the U.S. was locked in an arms race with the Soviet Union and globalization was just a glimmer in economists’ eyes.

But one aspect of that landscape remains familiar today: When energy supply is threatened, today as in 1980, the world turns to Saudi Arabia for help.

In July, Saudi Arabia’s oil production rose to 9.85 million barrels a day, just shy of the previous high of 9.90 million barrels a day the kingdom produced in 1980, according to data from the U.S Energy Information Administration.

The reasons for these twin peaks in output are also similar, despite the 30 year gap between them.

This year, Saudi Arabia has raised production significantly to make up for the loss of almost all oil exports due to the Libyan civil war. In 1980, the kingdom opened its taps wide after the revolution in Iran and subsequent war with Iraq shut down millions of barrels of production there.

In both cases, there was nobody else able to fill the gap and Saudi action prevented a political crisis turning into a severe and prolonged oil price spike.

However, the similarity with past events goes only so far. The oil market in 2012 will be very different to that in 1982.

After the 1980 price spike, oil prices fell into a long slump. A combination of improvements in energy efficiency, consumer reaction to high prices and new production from Alaska, the North Sea and Mexico, led to a 20 year supply surplus. The market for OPEC oil dried up and by 1985 Saudi Arabia was producing just a third of its 1980 peak.

There’s little danger of this history repeating. Outside OPEC countries, oil supply is growing incrementally, but nowhere near the scale of the new wave of 1980s production. In rich countries, oil consumption is still falling for similar reasons to 30 years ago. However, rapid demand growth in the developing world will more than offset this, even if oil prices remain high.

Even after Libyan oil exports are restored, the world will probably need more oil every year from Saudi Arabia. Some analysts are already questioning whether this is possible.

The constancy of Saudi Arabia in its role as global oil supply lynchpin for 30 years has been remarkable. If it can still fulfill that role in another 30 years, it will be a miracle.

Kuwait Projects Rises to Week-High as Profit Surges Fourfold - Bloomberg

Kuwait Projects Co. advanced to a one-week high after the country’s biggest privately owned investment company said first-half profit surged fourfold on higher growth in commercial banking and insurance.

The shares increased 1.4 percent to 360 fils, the highest since July 27, at the 12:45 p.m. close in Kuwait City.

Net income jumped to 16.6 million dinars ($61 million) from 4.2 million dinars a year earlier. Second-quarter profit rose to 8.5 million dinars from 2.2 million dinars a year earlier, the company said.

Kuwait's CBK Q2 earnings drop 91 pct on provisions | Reuters

Commercial Bank of Kuwait (CBK) reported a 91 percent drop in its second-quarter net profit, missing forecasts after booking provisions against its investment and loan portfolio.

Net profit in the three months to June 30 was 198,000 dinars ($724,478), compared to 2.3 million dinars a year earlier, the lender said in a statement on the bourse website.

'The bank has continued its prudent policy towards building up a strong provision base, the bank has total provisions for credit facilities of 180.3 million dinars,' CBK's Chairman Ali al-Awadhi said in another statement.

Investors weigh pros and cons of Iraq debt -

Iraq’s hydrocarbons sector has been slowly turning a corner, supported by investment by international oil companies. Now, investors are turning their attention to the country’s debt.

In 2004, after the US invasion of Iraq and the subsequent toppling of Saddam Hussein, the former president, the Paris Club of 19 western creditors agreed to forgive roughly 80 per cent of the $37.2bn owed to them.

The Paris Club debt deal was used as a template for resolutions with other creditors and prevented the Iraqi government from favouring other countries outside the group.

Routine measures delayed sukuk issue: Nakheel - Emirates 24/7

Plans by Nakheel properties to issue Dh4.8 billion sukuk (Islamic bonds) to creditors in the first half of 2011 have been delayed by routine procedures but they remain the company’s top priority, its chairman has said.

Ali Rashid Lootah said the company, which has been locked in a restructuring programmes, would still issue sukuk in the near future but he provided no dates in his remarks to the semi official daily Alittihad on Wednesday.

“Nakheel had spared no effort to issue sukuk on time in the first half of this year but a number of routine administrative procedures took more time than had been expected or planned as they coincided with the summer vacations,” he said.

Islamic bond yields drop as supply falls short |

Although sales have doubled this year, it seems that global Islamic bonds are approaching record lows. Yields dropped for a fifth month to an average 3.66 per cent on July 29.

PT Danareksa Investment Management and Franklin Templeton Investment Management Ltd stated that Asia and the Middle East will keep attracting foreign investment as economic growth outpaces that in developed markets this year. As oil prices are being kept above the five-year average, demand for sukuk in the Gulf Cooperation Council (GCC) nations, after Dubai World and Nakheel PJSC restructured debt, is more and more.

UAE telco du's Q2 net profit rises 51 pct, misses view - Maktoob News

UAE telecoms carrier du on Wednesday said its second-quarter net profit rose 51 percent, but the results fell slightly short of analysts forecasts on increased costs.

The operator, which ended Etisalat's domestic monopoly in 2007, reported a second-quarter net profit after royalty of 207.2 million dirhams ($56.4 million), up from 137.4 million dirhams in the year-earlier period.

Analysts polled by Reuters had on average expected the firm to post a quarterly profit of 209.9 million dirhams for the second quarter.

Bahrain's Investcorp FY 2011 net income rises 37 pct | Reuters

Investcorp , the Bahrain-based alternative investment manager, on Wednesday said its net income for the fiscal year 2011 rose 37 percent aided by profitable portfolio exits and strong performance at its corporate and real estate investment divisions.

The company, which floated luxury brands Gucci and Tiffany & Co , saw net income for fiscal year ending June 30 rise to $140.3 million from $102.2 million for the year-ago period, it said in a statement.

Investcorp said it realised more than $1 billion in proceeds from alternative investments during the fiscal year and its asset-based income, which includes its hedge funds, corporate and real estate investments, rose 52 percent to $216.2 million.

Regional adversity enables DP World to boost business - The National

It has been a pretty good 'Arab Spring' so far for DP World, the global ports operator based in Dubai.

Last week's trading figures confirmed what the optimists have been saying since disturbances broke out in Tunisia in January: that adversity in other regions of the Gulf and wider Middle East would be an opportunity for DP World to take in business at Jebel Ali, the UAE's premier port.

So it has proved. Terminals in Egypt, Saudi Arabia and Yemen have experienced a decline in business, but Jebel Ali is up, handling more containers than ever before in the second quarter.

Regional mergers rise despite Arab Spring - The National

Mergers and acquisitions blossomed in the Middle East and North Africa despite the Arab Spring, with a 33 per cent rise in the first half of the year.

During that period 173 deals were completed, compared with 130 in the first six months last year. The total value of the deals also increased by 30 per cent to US$21.17 billion (Dh77.75bn) from $16.26bn in last year's first half, a report said.

The results could presage 'a positive outlook for regional [mergers and acquisitions] activity towards the end of the year', said Youssef Saada, the head of financial research at Zawya, a financial information and research firm based in Dubai.

Dubai 2024 - UAE - Zawya

Dubai's bid to host the Olympics in 2024 is completely in line with the emirate's efforts to raise its international profile and emerge as a vibrant global city capable of hosting major events.

Hosting the Olympics is seen as the ultimate stamp of approval and shows that a city is capable of hosting a complex global event, across multi-disciplines that bring together the city's political, economic, social and leisure capabilities to the fore. For the duration of the event, the host city would have the entire world as a captive audience and it is a once-in-a-lifetime opportunity for the city to put all its greatest attractions and capabilities on display.

That sounds like something Dubai would thrive in. But while the event may give the emirate just the fillip it needs, it would also raise interesting questions on how the emirate will fund its Olympic-related investment needs.

VAT On The Way? - Zawya

With little diversification, Kuwait's economic prosperity is inextricably linked to oil prices. But the government has launched an ambitious Development Plan focused on the non-oil sector and examining the prospects of launching VAT, according to IMF reports.

But will political deadlock delay progress on much-needed economic plans?

By the end of this year, Kuwait will become the fourth largest economy in the Gulf, relinquishing its third position to Qatar.