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Thursday, 25 August 2011

The Kingdom of Magical Thinking - By Robin M. Mills | Foreign Policy

In 1935, an oilman visiting the Middle East reported back to his headquarters, "The future leaves them cold. They want money now." Although the temptation of overspending has repeatedly undermined oil-rich governments from Caracas to Tehran, Saudi Arabia avoided this trap over the last decade through fiscal discipline that has kept its expenditures below its swelling oil receipts.

But in a recent report striking for the candor of its unpalatable conclusions, Saudi investment bank Jadwa laid out the kingdom's inexorable fiscal challenge: how to balance soaring government spending, rapidly rising domestic oil demand, and a world oil market that gives little room for further revenue increases. And that was before the recent economic turmoil knocked $20 per barrel off oil prices.

Saudi Arabia's government spending, flat since the last oil boom in the 1970s, is now rising at 10 percent or more annually. And it will rise faster still: The House of Saud's survival instinct in the wake of the initial Arab revolutions led King Abdullah to announce $130 billion of largesse in February and March. The resulting increases in government employment and salaries can be cut only at the cost of more discontent.


Oil Constraints - Zawya

Even as hopes arise of a quick resumption of Libyan oil, a whole host of new supply-side worries will ensure that crude production remains tight.

The resumption of Libyan oil will not dent oil prices as supply constraints continue to add up.

While the world searches for Moamer Gaddafi, oil traders are already factoring in the return of Libyan oil supplies to the market. Goldman Sachs expects Libyan oil production to come on line sooner than earlier estimated given the rapid progress made by Libyan rebels in taking over key strategic spots, including oil fields and export facilities.

gulfnews : Nakheel must focus on core business

Nakheel has effectively completed the restructuring of the company and its debts, clearing the way for it to concentrate on its core business, building master property developments.

The property developer was part of Dubai World, the conglomerate which shook international markets, when it requested that its debt be restructured, in late 2009. Nakheel has since signed an agreement with 90 per cent of its trade creditors and has been fully acquired by the government of Dubai. And, despite a shaky start, the professional and transparent way the debt negotiations were handled has restored investor confidence in Dubai and its companies.

But, there are lessons for the future. Perhaps the most important is that even while successful companies must take calculated risks to thrive, they must never over-extend themselves, even when times are good.

Before Nakheel needed to restructure, the easy availability of money made ever bigger projects seem financially viable. But, these projects were not sustainable in tough times, when financing and other costs were higher and consumer demand disappeared. Companies must focus on their core business and make sure their projects do not only thrive in good times, but also survive hard times. This is especially true now, when the global business and financial environment is more volatile than ever.


Financial crisis gives DP World wide berth - The National

DP World, one of the world's largest port operators, will focus on expanding its emerging market business as global economic uncertainty clouds the outlook for trade in the second half of the year.

Stalling economic growth in the developed world has not hurt the company's performance, with 80 per cent of its revenues already from emerging markets, said Mohammed Sharaf, the chief executive.

"With our focus on the more resilient emerging markets, we still expect to deliver full-year results in line with expectations," he said yesterday.

Libya rebels probe corruption at sovereign fund - FT.com

Libya’s rebels are examining possible corruption at the country’s $65bn sovereign wealth fund and its links to the family of Colonel Muammer Gaddafi, according the man in charge of the investigation.

Mahmoud Badi, a former technocrat with the Gaddafi regime, has been appointed by the rebel’s National Transitional Council to track down Libya’s foreign assets, including those held by the Libyan Investment Authority.

“We are collecting all the information and data needed to evaluate the state of these assets, and will look at all the misdoings and corruption and those responsible for it,” Mr Badi told the Financial Times in an interview in the LIA’s London office.


Wealth fund still conceals inner secrets - FT.com

The Tripoli seafront headquarters of Libya’s $65bn sovereign wealth fund lay empty and unguarded on Thursday, the only sign of recent human activity a giant torn poster of Muammer Gaddafi in the foyer.

Perched high in a tower overlooking the southern Mediterranean, the offices of an institution that was once courted by some of the world’s leading banks lay open to visits from rebel fighters and looters – even if its most interesting doors remain locked for now.

Before the Libyan leader found himself under siege from this year’s popular uprising and, quickly, a pariah once again, no institution symbolised Col Gaddafi’s return to the international fold more than the Libyan Investment Authority.

gulfnews : DP World poised to face bumpy road

Uncertain market conditions in the global economy have made it challenging for ports operator DP World to forecast its performance in the second half of the year, according to the company's top executive.

"There is uncertainty around the outlook for the global economy, making it more challenging to forecast how global trade will develop in the second half of the year," Mohammad Sharaf, CEO of DP World, said Thursday in a conference call to reporters.

He added that historically the "second half of the year has been stronger than the first half."

MENA stock markets close - August 25, 2011

ExchangeStatus IndexChange
TASI (Saudi Stock Market)
5979.30.99%
DFM (Dubai Financial Market)
1465.010.53%
ADX (Abudhabi Securities Exchange)
2590.490.32%
KSE (Kuwait Stock Exchange)
5785.60.06%
BSE (Bahrain Stock Exchange)
1260.95-0.06%
MSM (Muscat Securities Market)
5584.671.23%
QE (Qatar Exchange)
8171.480.77%
LSE (Beirut Stock Exchange)
1290.77-0.42%
EGX 30 (Egypt Exchange)
4676.050.25%
ASE (Amman Stock Exchange)
2028.10.02%
TUNINDEX (Tunisia Stock Exchange)
4475.88-0.02%
CB (Casablanca Stock Exchange)
11268.2-0.32%
PSE (Palestine Securities Exchange)
488.350.23%

MIDEAST STOCKS-Volumes peak in Oman, global sentiment helps lift Gulf mkts | Reuters

Oman's bluechip stocks surged on Thursday as volumes peaked and funds returned to the battered market, while most Gulf markets closed higher with investors optimistic that U.S. Federal Reserve Chairman will announce new measures on Friday to help the U.S. economy.

Oil services firm Renaissance Services surged 5.3 percent, accounting for the highest trading volumes in Oman. The stock plummeted to a 2009-low last week after it discovered financial fraud at unit Topaz and reported a 77-percent drop in first-half net profit.

Investors shifted focus to company fundamentals and bought battered stocks on cheap valuations. The benchmark index slumped to its lowest level in two-years on Aug. 11 amid a regional downtrend on fears the global economy is retreating into a recession.

Dubai Shares Snap 2-Day Decline on Bets Drop Overdone, U.S. Data

Dubai's shares gained, snapping a two-day drop, on speculation the decline this month was overdone and after U.S. economic data beat estimates, easing concern that the world's biggest economy is slowing. Crude oil rose.

Emaar Properties PJSC, developer of the world's tallest tower, advanced 1.1 percent. Emirates NBD PJSC, the United Arab Emirates' biggest bank by assets, increased the most in a month as four trades were made. The DFM General Index rose 0.7 percent, the most since Aug. 22, to 1,467.62 at 11:40 a.m. in the emirate, trimming this month's decline to 3.3 percent. About 15 million shares were traded compared with a 12-month daily average of 124 million, according to data on Bloomberg.

"The declines have not been justified, but there is uncertainty that is keeping liquidity out of the market," said Mohammed Ali Yasin, chief investment officer for CAPM Investment PJSC in Abu Dhabi. Investors are "tracking developments in the U.S. and Europe, but volumes are low."

Redback growing in the Middle East | beyondbrics – FT.com

Dubai’s Dragonmart–a 1.2km long shopping mall that is shaped like a dragon–claims to be the largest hub for Chinese products outside China.

It’s no surprise then that Standard Chartered has an office there advising merchants on how they could set up a renminbi account to settle their cross-border trade. With trade between China and the Arab world expanding, so too is the competition among banks to provide the particular financial services such traders might need.

The Industrial and Commercial Bank of China Middle East, a unit of one of China’s largest state-owned bank by market cap, has certainly headed Beijing’s call to expand overseas.

Libya: UAE calling | beyondbrics – FT.com

Libya is getting a visit from a possible knight in shining armour next week as Sheikh Abdullah bin Zayed, the United Arab Emirates foreign minister, plans a trip to Benghazi to see how he can help the reconstruction effort.

This could make for an interesting partnership, as the UAE has a whole lot of developers seeking work after real estate prices slumped in the emirates and Libya has a whole lot of sites that need re-building.

“The projects and programmes of the UAE in Libya are the main reason for my visit to Benghazi next week, and we will follow up on the issue and the needs and priorities,” Sheikh Abdullah told reporters at a press conference last night in Abu Dhabi, the UAE capital.


U.A.E. Banks Boosting Lending to Small Businesses: Arab Credit

After racking up losses from real estate and investment loans, banks in the United Arab Emirates are increasing lending to small and medium-sized companies to boost profit as the economy recovers from the credit crisis.

Abu Dhabi Commercial Bank PJSC, the country's third-biggest bank by assets, boosted loans by 25 percent to small- and medium-sized enterprises, or SMEs, in the past 12 months, said Colin Fraser, the company's Abu Dhabi-based head of wholesale banking. HSBC Holdings Plc's U.A.E. unit aims to generate 40 percent of its commercial banking revenue from SMEs, in coming years, up from 25 percent today, said Nick Levitt, HSBC's head of U.A.E. commercial banking.

Lenders are trying to tap a wider range of borrowers after real-estate prices plunged more than 60 percent in the past three years. The slump triggered a doubling in bad loans and forced corporations to restructure debt. Smaller companies are now seeking funds to expand as growth in the region accelerates. Dubai bank stocks climbed 2.5 percent this year, bucking the 11 percent decline in the Dubai Financial Market General Index.

Port firm DP World profit jumps on Australia deal - Wire - NewsObserver.com

Port operator DP World said Thursday its profit more than tripled in the first half of the year as trade increased and it booked a large gain by selling off much of its Australian business.

Even without that one-time boost, the Dubai-based cargo handler said profit was up 36 percent. But the world's third-largest port operator cautioned that its forecast for the second half of 2011 - typically a stronger period for the industry - remains foggy amid renewed concerns about a global slowdown.

"There is uncertainty around the outlook for the global economy, making it more challenging to forecast how global trade will develop," said Chief Executive Mohammed Sharaf. He added that "the impact of this uncertainty has not, as yet, been reflected in the markets in which we operate."

gulfnews : DIFC laws amended as new higher board appointed

A series of amendments to laws relating to the Dubai International Financial Centre (DIFC) were announced on Wednesday as a new Higher Board was appointed.

His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Wednesday issued a law amending some bylaws of DIFC Law No 9 of 2004.

The law states that DIFC will have a higher board that will be chaired by the DIFC President and include members with proven local and global expertise, capabilities in the field of financial services, banking, insurance and securities exchange.