Friday, 9 September 2011
The focus on the global economy means a declining pool of active traders is not discriminating much between the fundamental factors behind individual Middle East stocks. Instead, it is trying to ride the ebbs and flows of global sentiment to make a quick profit on the most liquid names.
Long-term investors and funds remain largely inactive, so markets are listless and will lack direction until a clearer picture emerges of the chances of a U.S. recession and the ultimate consequences of the euro zone debt crisis.
The notional premium of Oman crude climbed to about $1.50 a barrel to Dubai quotes on Friday, up from $1.30 a day earlier and discounts of 30 cents a month ago, tracking rising values in the Dubai Mercantile Exchange.
Refiners are still holding back from showing buying interest
for November cargoes as industry gatherings in Singapore wind down following the Asia-Pacific Petroleum Conference this week.
But the move shows how even stable Gulf governments, circa the Arab spring, are finding it harder than ever to move away from a culture of patronage towards economic diversification.
Saudi Arabia led the spending binge with pledges of $120bn and the promised creation of new government jobs after unrest swept north Africa. Money was then pledged by the Gulf Cooperation Council for Oman and Bahrain following unrest there. Qatar now will lift military salaries and pensions depending on rank, with 60 per cent raises for other public employees.
Brent for October delivery was on track for a weekly gain of more than 2 percent, trading up 27 cents at $114.82 a barrel by 0505 GMT.
U.S. crude oil nudged four cents higher to $89.09 a barrel and was set for a gain of more than 3 percent this week.
Six Gulf Arab crude producers have been mulling the joint VAT plan over the past five years, aiming to trim their budget dependence on volatile oil prices, expand tools to steer hydrocarbon-reliant economies and reform their low-tax systems.
"It is only at the discussion stage," Younis al-Khouri, undersecretary and director general at the United Arab Emirates finance ministry, told Reuters on the sidelines of a meeting of Arab finance ministers in the UAE capital on Wednesday.
Masoud Al Awar, CEO of Tasweek Real Estate Marketing and Development, said the motto for developers used to be "pretend and extend" — expanding their projects despite the market's oversupply — while in 2011 that changed to "delay and pray".
"By delay, I mean waiting to see whether there is a double-dip recession in the world. Praying is hoping that there won't be one."
Dubizzle.ae, the UAE listings website has 22,590 units available for rent and 17,482 for sale. There have apparently been around 2,000 new properties delivered so far this year, though talk of 20,000 units in 2011 looks very wide of the mark.
The bank's shareholders should feel just as safe.
For now, the signs at NBAD are promising.
That seems to be the message U.S. officials sent to Kuwait and Qatar during a symposium at the Treasury Department on Thursday about counter-terrorist financing. Each country was tagged as not doing enough — or anything — about stopping the flow of terrorism dollars.
Kuwait and Qatar “unfortunately have become permissive environments for extremist fundraising,” said David Cohen, Treasury undersecretary for terrorism and financial intelligence.
So today the question is: What is MGM Resorts really worth?
MGM's crown jewel
First, let's try to value the company's most valuable asset -- its 51% stake in MGM China. The company has one casino, and the prospect of building another one on the Cotai Strip in five years or so. In the past year, MGM China has generated $226.2 million of operating income for MGM.
I usually like to use enterprise value/EBITDA but since operating income, not EBITDA, was reported for most of the last year we'll use that instead. If we use an enterprise value/OI multiple of 15 times to 18 times -- more generous than EV/EBITDA multiples of competitors -- that would give me an enterprise value of $3.39 billion to $4.07 billion. Now we back out the $174 million in net debt at MGM China, which gives me an equity stake of $3.22 billion to $3.90 billion for MGM.
Analysts predict the negative trend will continue and gradually improve by November.
The HSBC PMI, which measures business activity of 400 private firms in the UAE across manufacturing, services, construction and retail sectors, dropped to 50.9 points in August from 53.3 points in July. In marked contrast, the PMI was 57.5 points in April — the highest level recorded since the index was started in August 2009 —with 50 being the no-change mark.
In the shadow of the US embassy in London’s leafy Mayfair district is a smart Georgian townhouse with a discreet brass nameplate: Dalia Advisory Limited. This is the London office of the Libyan Investment Authority at Upper Brook Street, a well-heeled parade that is home to some of the world’s most powerful hedge funds and secretive financiers.
Inside Number 11, the walls are bare, the rooms spartan and the carpets newly laid. For months, the office has stood empty. Barely a year ago, however, it was a staging post for the billions of dollars in investments Libya’s cash-rich wealth fund was making around the world.
When Muammer Gaddafi’s second son and heir apparent, Seif al-Islam, backed the establishment of the $65bn LIA in January 2007 it quickly became a high-profile vehicle for the regime’s efforts to re-engage with the global economy. “If you wanted to invest in the past, no one would take your calls. Now bankers fly on their private jets to see us,” Mohammed Layas, chairman of the LIA, said at the time.